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December 4, 2018

3 Minutes to Building Contract Management Success

3 Minutes to Building Contract Management Success

CLM implementation do’s, don’ts and steps to take…and mistakes to avoid.

It would take a lot more than three minutes to learn what we have in over two decades of contract management solution implementations. But, by the time you finish reading this article, you’ll come away with a better understanding of steps you should take to achieve CLM success simply by avoiding some basic but common mistakes that put implementations at risk.

Determine CLM Starter Kit

The following  simple “Do’s and Don’ts” outline those solution implementation practices that consistently drive faster ROI and more complete user adoption, regardless of organization size, needs, market sector, previous expertise with a CLM, regulatory requirements or other factors. Whether you’re just moving on from manual contract processes or considering leaving your on-premise solution for the cloud, the same basic strategies apply.

DO: Adopt lean business practices in your CLM implementation and iterate your way to success.

DON’T: Take a “big bang” approach to your contract management implementation.

It’s tempting to aim for a unified contracting process throughout the organization from the outset. Unfortunately, comprehensive implementations often require organizations to run two systems in parallel for 6-12 months, exasperating users whose priorities are often tied to their business units’ immediate concerns and priorities.

Instead, opt for realistically-sized phases to an implementation, each with a unique set of expected, quantifiable performance indicators. Then drive your phases to meet or exceed each phase’s desired result. Iterative implementations of this sort often provide ROI benefits in as little as eight weeks, and drive up to 45% higher adoption rates.

DO: Involve stakeholders early on to encourage a sense of ownership across the organization.

DON’T: View CLM implementation as the sole responsibility of legal or IT.

According to Gartner, up to 80% of business transactions are governed by contracts, and over 50% of Fortune 1000 organizations spend over $1 million annually on contract arbitration and litigation. Those costs are the quantifiable result of poor insight into contract terms.

Prior to implementing a contract management solution, create a sense of shared responsibility that will drive stakeholder ownership across the organization. For example, does finance need to automate revenue recognition from signed contracts? Are we extending a supplier net 90 terms on a purchase from us, while the supplier insists on getting paid net 30? How does production quality control obtain contracts visibility to ensure our production process complies with local sourcing or diversity requirements stipulated in the contract? The more business areas that see where self-interest lies helps drive ownership into the contract lifecycle and analytics.

DO: Implement to address current business challenges, but keep your options open for growth.

DON’T: Back your organization into a corner by implementing a solution that’s dependent on one specific CRM or ERP.

It’s seductive to select a contract management solution based on the extent the vendor is tied into or built on top of your specific CRM or ERP system in place currently. However, beware the myriad hidden costs. For example, lack of enterprise scale can drive other business units to go with a different CLM solution, leading to poor visibility due to fragmentation of contract data. Worse still, if a current CRM or ERP system is replaced, the organization is left without a functioning contract management solution (and the untold potential risk that represents).

Instead, put the time into finding a cloud-based modular and scalable solution that ensures your organization will meet your current challenges, but allow for organization-wide growth regardless of factors like increasing business diversification, M&A activity and global footprint. At a minimum, implement a CLM solution that will still support your organization if the current CRM or ERP system is replaced (without having to run two CRM or ERP systems), and whether solution updates and upgrades can be scheduled separate from CRM or ERP downtime, in order to make updates as painless as possible for users.

CLM ROI Infographic

Run your numbers through our CLM ROI Calculator above to see how much more contract efficiency, effectiveness and savings you can achieve. If you’d like to see how to implement a Contract Management solution that provides the modularity, scalability and agility to meet all your business needs, schedule a personalized demonstration of the Determine Cloud Platform.

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