Considering the challenges facing modern business, CLM continues to increase in importance across the wider enterprise.
Contract management technology may very well be the unsung hero of the procurement technology landscape. It has been steadily improving for two decades, from straight document storage, to metadata and redlining, to today’s full enterprise contract lifecycle management (CLM) solutions. Let’s see what’s ahead for CLM.
Because the internal user group for CLM is far more limited than user groups for eProcurement or supplier management, it has been less of a flashpoint from procurement’s perspective. Our relationship with legal is stable (if not necessarily joyful), and they know what to expect from us and from our technology. This has made it possible for CLM to evolve slowly and steadily, year by year, without being subject to the reactionary trends and changes reflected in the development roadmaps for other procurement technology.
While procurement was busy facilitating self-guided buying and supplier self-onboarding, CLM came of age. This critical technology is now entering its third decade – and not a moment too soon. Emerging technologies such as AI, machine learning, and advanced analytics have been accepted by procurement and adopted by our internal stakeholders. CLM is ready for yet another leap forward, one that will be far less gradual and behind-the-scenes than the improvements we have seen over the last 20 years. CLM is now positioned to leverage improvements in product maturity and process discipline, becoming the centerpiece for governance, compliance, value creation, and corporate competitive advantage.
CLM by the Numbers
As a result of all this progress, enterprise contract management is no longer a functional “box check.” The difference between flat, legacy contract management and fully powered CLM platforms is significant and measurable according to some of the most trusted organizations and analyst firms:
- Aberdeen Group: Ineffective contract management costs companies $100M per year in lost cost savings
- Ardent Partners: 69.7% of Best in class companies store all of their contracts in a centralized, searchable repository
- PayStream Advisors: 70% of companies that have implemented a CLM solution report a 70% improvement in their ability to manage contract renewals
CLM Steps into the Limelight
So why now? Why is CLM suddenly receiving so much attention? Part of it has to do with the complete reversal of the earlier point about CLM having fewer internal stakeholders. As we enable distributed buyers to do more on their own, including selecting pre-qualified suppliers for new agreements, existing contracts become stepping off points for a much larger group of users. The same is true externally; with supplier collaboration moving from the occasional project to a regular approach to solving business challenges and fueling growth, contracts are being consulted on a regular basis so decision-makers can determine how much latitude they have to innovate.
The Third Decade of Contract Management
Contracts are no longer reactionary safety nets. They have become roadmaps to value, and this expansive trend is one that will continue over the next decade. Contracts contribute to visibility just as much as spend analysis and supplier management do. The difference is, they also provide context and understanding. Contracts outline what is possible v. what is uncharted, and they lay the groundwork for experimenting with new approaches without unnecessarily increasing risk.
Contract management technology has been quietly and consistently evolving in the background while procurement was consumed with efforts to put out fires elsewhere. CLM is now ready for organizations that have not already realized its full benefits to leverage the operational and knowledge-based advantages of allowing contracts to have a full and robust lifecycle instead of languishing in metal (or digital) filing cabinets.
For more information about the evolution of contract management, including details about the third-party sources referenced above, download our new whitepaper, “The Third Decade of Contract Management Technology Begins.”
To see first hand the third decade of advanced contract management solutions in action, schedule a personalized, no-obligation demonstration.