There’s a lot to consider when you’re evaluating CLMs to see what will be the best fit for your business. Whether you’ve worked in several different CLMs before or this will be your company’s first software solution for contract lifecycle management, it’s easy to feel overwhelmed after just a few Google searches. Fortunately, you don’t need to consider every detail on your own, and using the most important factors to narrow your options can save you a lot of legwork.
Here are the top 5 factors that you should consider when choosing a CLM and why they matter for your long-term success.
1. Your Current Contract Management Steps
While you don’t need to migrate every single contract management step that exists into your CLM, it is usually more effective at helping your team when it includes your entire process. As a result, it’s a good idea to start by talking to people who are currently involved in your contract management process and discussing what steps are involved in each document.
Then, once you’ve talked to each person, create a list of the current contract management steps as you understand them and run that list by the same people. Make sure they are able to review it thoroughly and alert you to any steps that may have been overlooked. Then, you can use that list of steps to filter through CLM options and only look further into solutions that will actually meet your team’s needs, rather than narrowing it down to your top three, only to discover that each of them is missing a function that is essential to your team.
This is also a good time to talk to your team members about what they would like to change about your current process. Are there specific steps that are the bane of their existence, or that could be easily automated to free up their working hours? They may not be able to answer off the top of their heads, but getting them thinking about it is a great opportunity to discover what they consider problems with the current process and increase team buy-in by showing how a CLM can solve those problems.
2. Reporting Needs and Dashboards
Whether you’re working with just a few contracts each month or into the thousands, there will be data points you want to collect so you can get an overview of what is going on in your contract lifecycle management. Most CLMs have some sort of reporting solution, but they are not all created equal. Some offer more compelling dashboards, whereas others let you get down into more of the nitty-gritty details of each metric.
Some CLMs will also offer more advanced contract analysis. Instead of simply compiling data, such as the total value of contracts signed or the total number of contracts completed, they will also use that data to tell a story. This at-a-glance analysis can help you and your team members understand where you’re succeeding and where you may be falling short of industry benchmarks, without having to do a deep dive into each specific data point.
3. Security and Compliance
No matter what your industry is, it’s important to make sure any software you use is compliant with consumer data requirements. From financial data, like credit card numbers, to personal contact information, like phone numbers or home addresses, the people you are working with will want to rest assured that their data is secured with encryption
It’s also important to consider the industry- and location-specific requirements that may apply to you or to your vendors or clients. Even if you aren’t directly in the healthcare industry, if you work with vendors or clients who are, they may be concerned about whether your software is HIPAA compliant. In the same way, if you don’t operate in the EU, you may not be impacted directly by GDPR compliance, but if your clients are, it will be important that your software is too.
4. Integration of New Technologies
Technology continues moving faster and faster, but software that moves too fast or too slow can leave you in a heap of trouble. Adding new features too quickly could end with you juggling errors, missed opportunities, or not being able to access old features that were impacted, while taking too long to update can mean your team ends up behind the curve when it comes to optimizing your CLM and overall efficiency. It’s a good idea to take a look at the track record of any software you’re considering to see whether they’ve had issues in the past with launching something too quickly, causing customer complaints, or if they seem to be consistently behind the times.
A couple of technologies that any software you consider should have implemented by 2025 are automation and AI. While they will never fully replace human experts, they can make work easier for human experts, allowing them to spend their time as effectively as possible.
Automation
One of the biggest benefits of using a CLM instead of manual processes is being able to automate the most monotonous steps in the process. From automatically notifying all stakeholders of edits to the contract in the negotiation stages to sending scheduled reminders to people who have documents to sign, these automations each free up a few minutes that add up over the course of a workweek.
Review what automation options are available in each CLM you’re considering. Are they really only removing the “print and sign” step from the process with digital documents, or do they have unique and creative automation solutions that can take more tasks off your plate? How customizable are the automations?
Artificial Intelligence
While AI has been a buzzword for the last two years or so, it’s been around for much longer and is becoming more effective by the day. AI-powered algorithms can take a variety of tasks off your legal team’s plate, including:
- Intelligent contract authoring based on pre-built templates.
- Contract risk assessment scoring.
- Predictive analytics.
Even if you don’t plan to use AI to its full potential, it’s a good idea to review what AI tools are available in each CLM you consider. That way, if your team gets busier or as you become more comfortable with AI, you will know what your options are and how you can integrate them into your existing workflow.
5. Your Software Budget
There are a wide variety of CLM options available at various price points, but often, you get what you pay for. Make sure you and your finance team are on the same page about what your budget is for a CLM and any associated costs, such as implementation help or additional subscriptions, before you start looking. Otherwise, you may fall in love with a CLM Ferrari on a Ford budget.
If you have a large price range that the team is open to, it may be a good idea to include a few options at each price point in your research so you can show them exactly what those additional costs would be paying for. While they can all provide value to your business, only you can decide if that value is worth the cost at this particular time.
Choosing a CLM with Koho Consulting
If you’re ready to get started with a CLM or make a change from your current software, Koho Consulting is here to help. Our team of experts can help you evaluate all of the best solutions on the market and discover which is the best fit for your unique needs. We can also help you with a plan to start using a CLM, the implementation process, and CLM system maintenance, so you are supported at every stage of your journey. To learn more about how we can help you make the most of your CLM, chat with us today.
