In the scramble to stay up to date on all the most relevant technology, many businesses fall into the common trap of purchasing the wrong tech solution. Technology is a huge investment, so having a solution that doesn’t fit the needs of your business can be even worse than having no solution at all.
Whether it’s because an executive has a connection to the vendor or you were rushed into making a decision, you run the risk of wasting thousands when you pick software that no one ends up using, and it’s no different for CLM tools.
A CLM solution is a huge asset, especially for companies managing a high volume of contracts. It allows you to lower costs, speed up cycle times, and lessen the workload for lawyers and contract professionals. But, implementing the wrong tool or even the right tool at the wrong time won’t give you the right results.
So, how do you make sure you can take full advantage of your CLM tool? You first have to establish a strong foundation of knowledge about your contract processes among all relevant stakeholders. By understanding the current state of contracting in the business and taking the necessary steps to patch holes in existing processes, you can ensure that your team will be ready to implement a CLM and start seeing a return on investment ASAP.
Read on to learn how to evaluate your team’s CLM readiness by following a few simple steps.
Step 1: Gather Stakeholders
Before you make any moves with your CLM implementation, you have to make sure everyone who plays a role in the contract lifecycle is aware of the process and has their voice included in the conversation. You don’t want to start making progress on an implementation only to find out a whole team of important individuals had no idea about it. Not only will you miss out on their contributions to the conversation, but you might also lose much-needed support for the project.
Every business does contracts differently. Be thorough in your evaluation to ensure that no one goes without representation. This may include bringing in people from legal, sales, procurement, finance, business development, and even IT. Having different perspectives will allow you to paint a more comprehensive view of your contract lifecycle.
Questions to ask during Step 1:
- How many different departments and users contribute to the contract lifecycle? How many of those contributors will need to have access to the CLM tool?
- What are the specific roles each department plays in the contract lifecycle?
- Does outside counsel play a role in the contract lifecycle? If so, how?
- Do all current stakeholders have open lines of communication with each other?
- Do all relevant stakeholders have visibility into the contract lifecycle?
Step 2: Define Your CLM Goals
Once you have all your stakeholders on the same page, you can put your heads together to figure out what you want from your CLM tool. Different stakeholders might have different priorities, so it’s important to consider all perspectives and arrive at a fair, but reasonable, list of CLM objectives. Some examples include helping reduce cycle times or lowering risk exposure.
Questions to ask during Step 2:
- What outcomes does each department expect from a CLM tool?
- What are your current contract pain points?
- How could a CLM tool help solve existing problems?
Step 3: Evaluate Your Current Processes
Before you can move forward with a CLM implementation, you have to gain a clear understanding of how your business currently handles contracts. What does your team do well? Where does your team frequently run into problems? Map out your entire contract lifecycle and try to identify problems while proposing potential solutions.
Remember, CLM tools aren’t a magical fix for every problem, so you have to make sure your processes aren’t too broken to be helped by technology alone.
Questions to ask during Step 3:
- Are there inefficiencies in your current contract processes?
- What changes can you make to fix gaps in your processes right now?
- Are there problems you can solve without implementing a CLM tool?
- Do you have established workflows, templates, and playbooks?
- What are your most frequently negotiated clauses?
- What is your average cycle time?
Step 4: Pick a Project Champion
Since CLM undertakings are such a huge undertaking, it helps to have a dedicated project manager who can oversee the entire process and keep everyone both involved and excited. They should be able to communicate the benefits of the implementation to the entire enterprise, not just the stakeholders, and field any questions that pop up along the way, especially from naysayers to the project.
Questions to ask during Step 4:
- Is there anyone among the current stakeholders who would be suited for the role of project champion?
- Are current stakeholders equipped to take on the extra responsibilities that come with the role of project champion?
- Would you benefit from bringing in an outside hire or a consultation team to assist with the project planning and execution?
Step 5: Create a Business Case
A project champion alone probably won’t be enough to garner support from every corner of the organization. But, if you can secure backing from the executive team, you should be able to add more credibility to the project for those who might not see the benefits right away.
Your business case should outline both the costs and the benefits of implementing a CLM tool. Demonstrate exactly how the tool will positively impact business goals. You can start by itemizing the costs caused by current contract issues and showing how the tool will solve those problems, thus eliminating the costs.
Questions to ask during Step 5:
- What outcomes will the executive team expect from a CLM tool?
- How will a CLM tool help contract stakeholders demonstrate their business contributions to the executive team?
- How will a CLM tool positively impact business goals?
Step 6: Organize Must-Haves and Nice-to-Haves
As you start to head toward selecting a specific tool, create a list of features and functions that would benefit your team. Then, organize that list according to which features are necessary to the success of the tool and which would simply be nice to have. Since there may be disagreements between different departments, try to incorporate the voices of all stakeholders as you prioritize.
Questions to ask during Step 6:
- What are your bare minimum required functions for a CLM tool?
- Are there certain features each department expects from a CLM tool?
- What are the features that would be nice to have but aren’t a necessity?
- Are there any CLM features that are unimportant to the success of your implementation?
Step 7: Create a Vendor Checklist
Having a vendor checklist makes it much easier to compare vendors in a quantifiable way. The checklist can include any required features you expect from both the tool and the vendor. Some companies find that using the checklist to assign scores to each vendor can be useful during the selection process.
Questions to ask during Step 7:
- How does each vendor meet your established requirements?
- Do the vendors have a good reputation for customer service?
- Are vendors able to meet your customization and integration needs?
Step 8: Set Up Performance Metrics
In order to determine whether or not your CLM tool is actually successful, you need to have a way to measure its performance. By establishing KPIs that track your desired outcomes, you can quantify your tool’s success, identify where it may be underperforming, and come up with solutions that improve its performance.
Questions to ask during Step 8:
- What KPIs can you track to measure the performance of your CLM tool?
- How will you keep track of KPIs?
- How often will you evaluate CLM performance and make improvements?
Step 9: Establish an Ongoing CLM Task Force
A CLM implementation doesn’t end once the tool goes live. As the business continues to grow, the tool must be able to grow and improve as well. The best way to make sure that happens is to create a dedicated team of contract professionals who manage and maintain the CLM tool. They can make improvements, field questions from end users, and stay in contact with the vendor.
Depending on the size of your operation, you may only need one person for the job, but you might need to distribute the tasks among a few people if you have a high volume of contracts and end users.
Questions to ask during Step 9:
- What duties will members of the CLM task force be expected to handle?
- Are there current stakeholders who are equipped to handle the responsibilities of running the CLM task force?
- Do you need to bring in more specialized staff to support and maintain the CLM tool?
- How will the task force support and incorporate feedback from end users?
- How can end users communicate with the task force?
For more help evaluating your team’s CLM readiness, reach out to Koho Consulting to schedule a consultation today.
