The contract lifecycle management (CLM) software market is currently exploding with potential. Hundreds of new technology solutions crop up every day, each one sporting its own unique features. But what can these tools really accomplish for an organization? Do they bring in as much value as they claim? And how does that value manifest itself? These are all questions that every company at the beginning of its CLM journey should be asking, especially those employees who are the most deeply involved with contracts. Legal ops employees in particular may be anxious to know how a CLM tool will impact their daily lives before they pour valuable time and effort into a lengthy implementation process.
In this article, we will discuss the immensely positive impact that a good CLM tool can have not only for legal operations, but for the entire enterprise as a whole.
A Holistic Approach to Contract Management
As the lifeblood of most organizations, contracts are touched by many different departments. Even those who don’t have direct involvement in the contracting process still depend upon them for the overall success of the business. Due to the holistic nature of contracts themselves, it only makes sense that companies are beginning to shift toward finding a solution that both centralizes and standardizes their approach contracts.
For many, this solution comes in the form of CLM software. Once you have a handle on your processes and the various types of contracts your company needs in order to carry out business successfully, you can implement a solution that helps regulate that process for everyone involved. This typically involves a cloud-based contract repository and an interconnected system of workflows that facilitates communication between departments and keeps track of important milestones.
With this system in place, you can really begin to use the inherent interconnected nature of contracts to your advantage. Each department learns more about their own role as well as the roles of others in the larger scale of the company. They can better understand what they need to accomplish and how to help others accomplish goals. Legal ops then, for their own part, can use that deeper understanding to improve the company’s contracts overall and reduce risks.
Another major perk of this holistic approach to contracting is the increase in visibility across all departments. Lack of visibility inevitably leads to a host of problems when it comes to contract management. The inability to find the correct version of a document breeds miscommunications during negotiations. Even the loss of older versions of documents can be detrimental to standardization, as it impedes the ability to standardize language based on past known successes. Not to mention, human error becomes increasingly more likely without clear, transparent workflows and search functions.
Handling contract management departmentally creates rifts between departments as well. Sales may deal with a contract differently than procurement, and those differences can quickly create unnecessary risks to be worked out by the legal team. Centralization of contracts places every department on the same page regarding each and every step of the contract process. This eliminates common bottlenecks and opens up the channels of communication between employees. Not to mention, it creates an environment that is much more friendly toward remote and global workers. In an increasingly global economy, opening up your enterprise to worldwide opportunities via a virtual contract management system is essential to gaining a business edge.
Flexibility for the Future
A CLM software not only pushes your company into (or even a bit beyond) the current age of technology, but it also gives you the ability to adapt as your business grows and expands. At the start, a small company may only require a very simple form of CLM, maybe even one that features little other than a contract repository. Having this technology in place early on prepares your entire enterprise for the adoption of more advanced technology in the future as you grow more successful and your contract needs change.
More advanced features will then allow you to shift or narrow your focus accordingly moving forward. The use of AI, for example, is not required for a company early on in its contract management. However, a few years down the line, AI may be able to automate menial tasks that free up more time for your employees. Its predictive and analytical abilities can also be extremely useful for risk management and tracking company metrics to build better business strategies.
Tangible Value Measurements
The current business world has become more and more demanding when it comes to measuring departmental value. For companies like sales and procurement, proving value is relatively simple via financial and agreement metrics. The legal department, however, often faces a challenge when proving its value to company higher ups. Aside from avoiding litigation, what other tangible metrics can the legal team offer when asked to show their worth?
CLM provides an excellent solution to this newfound issue. Even without AI capabilities, it can keep track of important metrics related to the success of your company’s contracts. These metrics may include some of the following:
- Annual contract value. Calculates the value of ongoing contracts. Can be used to determine which types of contracts are bringing in the most value and which might be resulting in losses.
- Average contract lifecycle. Indicates the average amount of time it takes for a contract to reach its final stage, from beginning to end. Can help you identify which stages of the contracting process are taking up the most time and need improvement.
- Risk level. Estimates the amount of risk associated with a given contract based on the language used, approved playbooks, and past successful instances of the same type of contract. Can be used to help lawyers organize their priorities and devote more time to higher risk contracts.
And those are simply a handful of the hundreds of different metrics offered by CLM software! Depending on your company’s current goals, you can adjust which metrics are being measured at which time to prioritize the right information and formulate effective business strategies. Not to mention, the legal team can state their worth to the company by providing concrete figures to back it up.
Does all this sound too good to be true? We promise it’s not! You can explore the wonders of CLM for yourself today by scheduling a free evaluation with our friendly staff here at Koho. Our proven implementation process helps you get up and running 35% faster than the industry standard. And, with over half a dozen document management solution partners, we are prepared to find the perfect solution to match your company’s unique needs, budget, and timeline.