Presenting the Value of CLM
It may be difficult to present the benefits of a contract life cycle management system to your superiors, especially during a pandemic when budgets are tight. By effectively describing the current issues that manual contract management presents, it becomes easier to present solutions. Offering these solutions can help decision-makers within the company determine their options.
Compare what the company stands to lose without CLM with what the company may gain by embracing CLM.
Present Current Issues
It’s important to define the current issues facing the company in clear terms. Describe the risks that the company experiences at every turn and explain that there has to be a solution for them. For example, if you have contract management processes, but they’re not working well, explain how.
Explain that the company is missing contract deadlines and bypassing contract renewal/termination dates because the current workload is too high. When there isn’t enough staff to manage contracts, the company loses revenue.
When explaining the risks and challenges, it’s important to be candid and use language that your stakeholders will understand.
Provide specific examples and explain the total cost of these errors.
For example, if a contract’s automatic renewal isn’t canceled before the deadline, use that information to quantify the cost of the oversight.
True costs help illustrate why the company needs a contract management system. Compare the losses with the company’s targeted revenue growth and explain how these losses impact the target.
Present CLM As a Solution
If you’re presenting CLM as a solution to your company’s legal process shortcomings, be sure to address each aspect of the current issue. Explain how CLM is going to fix the issue and how it will benefit the company overall.
For example, when addressing how the company does not have enough staff to handle the contract management workload manually, explain that CLM technology can greatly reduce labor time and cost.
Discuss the useful features that come with CLM technology and use examples to explain how each feature stands to improve company processes. Digital signatures can reduce paper waste, automation can ensure that deadlines are never missed. The contract templates can help reduce the risk of using vague language, thus clarifying liabilities.
When presenting the total value of a CLM system, use tangible numbers to make the benefits difficult to reject. For example, some wordage you use could be, “We expect that with an investment of (sum of money), a contract management system will earn the company an ROI of (sum of money) within (time period).”
Address CLM Challenges
One key part of introducing CLM as a solution for contract management issues is addressing the challenges a new system presents.
Initiating the use of new technology can present a challenge for contract-impacted employees. There is a learning curve for most new programs, so you’ll want to define what to expect, the time it may take to see results, targeted success rates, and total costs of ownership.
In addition to listing the benefits of adopting a CLM system, list the challenges that will need to be met in order to achieve those benefits. Explain what can go wrong and how long it may take for employees to learn the new system properly. What are the new risks and what is the benefit of having your staff learn to use the new system?
Support Your Claim
After carefully listing and addressing the current issues the company faces, the solution for these issues, and the challenges of CLM, support your claim. Use facts and figures from experienced sources to cement the value of CLM.
For example, in terms of ROI, better management of contracts can keep companies from losing up to 9% in annual revenue. According to Goldman Sachs, CLM can save about 20% of a company’s budget in terms of contract operations.
Supplement these figures with some that are directly related to your company’s operations.
The key is to compare the potential for success with the risks of doing nothing at all to improve contract management. Make it clear that there is something to lose and even more to gain. The closing of the presentation could state that, “Should we continue with no solution, we stand to lose (sum of money) in value as a company.”
Reducing the manual workload of contract managers can benefit companies of all sizes. In addition, having advanced contract management can benefit the business as a whole, compounding each year.
When presenting the need for a CLM system, it should be made clear that a solution is necessary. By having the solution ready to be accepted, you can save your stakeholders time and make accepting the solution that much easier.