CLM in Transition: Evaluating Technology, Vendors, and Long-Term Fit with Matt Patel

Made with speech-to-text software, so a few words may be off.

0:00You're listening to the Contract Heroes Podcast, your one-stop shop for all things contract management. And now here are your hosts, Marc and Pepe. Hi, Matt. Well, welcome to the podcast. It's, God, it's, it's been a number of years that we've been talking about having you on the show, so I'm, I'm glad we could finally make this happen. Unfortunately, not in person, but still always good to see you virtually. So thanks for joining us. Pleasure being here, and yes, we've tried to do this in person at every event, but then events are busy, a lot of people, and we have other priorities. Glad we're doing this offline from the comforts of our home and offices. Yeah, absolutely. And hey, b- you know, before Pepe gives us a little bit more information on what we're gonna be chatting about today, why don't you share with our listeners just a, a bit about your, your background and how you founded Malbek, you know, things of that nature. Feel free to, to give them a little bit of an understanding of where you're coming from. So my background has always been enterprise software professional.

1:04I'm not legal ops or an attorney, but it happened to be that I worked at big five consulting firms, Deloitte and all. And then back in 2006, I ended up joining a company that had a contracting and revenue management solution. So that was my first exposure into a CLM product. And for those of you who have been around the CLM block for a couple of decades now know that back in those days is when many of the first generation of CLMs were built, including the company that I worked at. And these were all on-prem, IT oriented, very technical customizable solutions, and that's all it was back then. Cost of ownership was high, time to implement was high, and I struggled with our own product from my customers that I was personally implementing for. I spent 10 years, implemented a lot of large global organizations with our CLM product. And when that company got acquired was a perfect opportunity for myself and a couple of other execs to start Malbek.

2:04And oftentimes I get asked about our name. Yes, if you guessed it, we were having a good bottle of Argentinian Malbek when we decided to venture into our own CLM journey. And our vision was, you know, take what we've learned over the 10 years, build an enterprise CLM solution, not just for legal, but for procurement, sales, finance, IT services, everyone in the company to benefit from it. So AI integrations, configurability was all table stakes for us from the very beginning. And that's how the journey started almost, what, eight and a half years ago, and best decision ever made, so here we are. And you've been doing fantastic job, Matt. We see each other at every event we go, and it's really cool to see and finally have you on the podcast. So let's fast forward, right, from those 10 years back in the day when CLM was still new, people were, like, struggling, what were, like, the core features that companies would like to have implemented to 2025, where now we have hundreds if not maybe a thousand of different vendors, right?

3:09Which makes, like, really complicated, especially for companies that are still running their RFPs, trying to see what's out in the market. And, or for early adopters, and maybe they already have a CLM implemented in their either on premises or on the cloud, whatever, and but maybe they just didn't get what they were expecting to. Mm-hmm. Right? So let's talk about that, Matt. Like, what have you seen in your experience, like what are, like, the main reasons on why companies are not renewing with their current CLM vendor? Uh, so there's not a one reason. There's multiple reasons why that happens, and I don't think it's ever one fault of one side or the other. I think it, it's best if everyone understands where the challenges are, accepts them, and moves forward to solve them, then only you will succeed. So the older or the first generation of CLM products, many companies are still on it. It would, you know, be very mature, very stable by now, hopefully, but likely very customized.

4:18So the cost of ownership on those original products, if you're still using them, is pretty high. Maintenance is high. Upgrades are challenging. They're not automatic. They might not even be pure multi-tenant cloud SaaS solutions. So that is one area where I've seen customers replacing some of those older products. In fact, many of them are acquired, right? So the companies that I used to compete with 20 years ago when I got in this space, 80 or 90% of them don't exist anymore. They are acquired, and the larger company or the bigger platform oftentimes don't prioritize CLM because it's just one more tool across their platform. So you might be struggling with that issue, where now you're working with a, another vendor and a bigger company where CLM is not a pure focus for them. So it may be cost of ownership, it may be that the company that you selected a few years ago got acquired, and now you're not getting the same level of service or support.

5:19And there are other reasons too why you might not renew. I- I'll, I'll answer that next, but that's real- the reality is if you've chosen a product from many years ago, you might just be looking at replacing with the next generation of CLM solutions. And the other confusion in the market is this whole notion of there are so many CLMs. I will not name the ones, but in my opinion, there's only seven. Seven true enterprise CLM solutions in the market. Not 50, not 100, not 1,000. You can look at it the same way for any technology. Look at AI contract review tools. You can say the same about that, right? There are so many. You can look at AI data extraction tools. There are so many So there's always going to be many products that kind of do what you're wanting to do, but there's only a few that are built for end-to-end use cases, whether it's CLM, extraction, red line negotiation, guidance, playbooks, whatever it might be. So when it comes to true enterprise CLMs that have comprehensive functionality, integrations, AI, everything built in, there's less than 10.

6:25And let's think about, I mean, for sure, if there's a, like, complex implementation, there's always that we can improve, right? There are some times that maybe there's, like, a little bug, but that, that might be fixed, like, really fast. But, like, what would you say is a, like, couple or maybe just, like, the top three red flags that you would say are, like, the most important to watch for when their current CLM is meeting their needs? So if you have a CLM in place and it's been around for a few years, you know what you have at least. I often think of CLM as a marriage. It's a you know the relationship with the vendor, you know the product, you know its quirks, you know how it's working or n- how it's not working. So part of it is comfort level. You just wanna stay with it and don't bother with change. Change is hard. There's risk to change.

7:17But if you start to analyze a few things, then you might be able to decide whether it's time to look at what's out there and replacing the CLM that you have. First is adoption metrics. If you have 100 licenses of CLM and only 20 users are logging in at least once a day or once a week, and other 80 are logging in once a month or maybe never, and that's an easy report to run, right? You can get that from your tool or talk to your customer success manager, and they should be able to give you that information at, in a quick minute. That's the first sign that, okay, you're not utilizing the investment in your CLM enough. Second is people are doing work outside the tool. If you're just negotiating and doing everything via email and Word, and at the end putting the signed document back in, in your CLM, well, that does-- even though you're logging in once a day, you're still not using the solution, right? It's like buying a sports car, but you're just going to the grocery shop at 20 miles an hour. That's not worth it then. Buy a regular cheaper car.

8:18So I think adoption and actual usage of the functionality of the product is the first indicator whether the tool is working for you or it's time to look for something else. And why is it not working? Why is there a user adoption issue? Is it because the user experience is cumbersome? Is it because it's slow? Is it because there's no functionality innovation? If it's a technology that was built a long time ago, are they able to innovate and add new features with the changing world of modern technology and AI? And last thing is platform and technology architecture changes. Sometimes I've seen customers move from, like, a, an SAP to an Oracle or a Salesforce to an Oracle or Oracle to Salesforce, a major platform change within their sales or procurement organization. And what you bought five or 10 years ago to work with Salesforce or Ariba or ServiceNow or Jira, whatever tool you're tightly integrated with for sales or procurement, if you change their platform, is the CLM still going to work the same? Is it now going to be difficult because some of the CLMs might have partnered really well with one ERP or CRM versus the other.

9:33So that might be another reason to decide if it's time to change because your IT has changed the overall platform of your organization. Yeah, and I, I think when we talk about, right, this group of a handful of true end-to-end platform CLM tools, right? If you've selected one of those and are, for, for the most part, right, and are looking to move away from it, you know, I think you really need to make sure internally that you've done all that you can to try to make that platform work for you. Because, you know, when you're moving away from a, a system like one of these, like you said, right? I mean, do we-- do you wanna go through that, that entire process again, the user adoption, the, the implementation, right? And if you do decide that, I think you really need to make sure that everybody's bought in, and that the way that you implement that tool the second time around probably needs to be looked at differently than the way you did it the first time. Exactly, and that's what I've always seen. Like, it's not always a technology fault. Sometimes internally your process or expectations are so far off that no matter which CLM you use, you're gonna struggle.

10:40Contract management software is the platform. It's allowing you to streamline your contracting processes. But it is a system, and it's not as easy as Microsoft Word and Outlook email or Gmail. Nothing is gonna be as easy. You can draft something, copy/paste, and send it out within a second, and CLM, it'll take you a few more minutes. But when you have a versioning issue, when there's an audit, there's reporting, searching, managing obligations, amendments, that's where that manual process of email and Word is not gonna scale. So the investment in CLM is not to make that initial contract draft quicker. That's part of the functionality. The benefit is really the longer term. How do you make sure that downstream effect of risk compliance, audit, diligence, you know, if you're growing by M&A, how is the platform going to support you? So if you're looking to move away, not only compare the s- system functionality usage and innovation that the vendor is providing you, but also internally, are you still working like you were 20 years ago?

11:52With modern times, with AI and generative AI, people also have to change the way they do contracts. Why are you sticking to your same position when data is showing you that you're allowing changes to it and negotiating it 7 out of 10 times and agreeing to a different term anyways? Might as well change your, your default clauses, provide some alternate clauses in the library or update your playbook so that you're not always just negotiating the same clauses and agreeing to it. So if you don't change that, then you're gonna blame the CLM that, "Oh, it's always flagging me, and I always have to change it in the CLM." Well, take a look at the data, right? Is it a process issue or is it a technology issue? But there's always that risk. You know what you have, you know what you're gotten into and, and what's working, what's not, as I was saying earlier. But don't think about just the next six months to one year when the renewal's coming up. Where's your company headed? Are there mergers and acquisitions happening to grow? Are you increasing staff?

12:52Are you expanding into other geographies? Are your contracting volumes going to change in the next three to five years? And if that's the case, is your current CLM going to keep up with your change? Because at the end of the day, in a board meeting, if the CEO says, "We gotta grow at 60% every year," and legal says, "Well, I can't keep up with that contracting growth," that's not gonna fly. So that's something to consider when you're looking at current platform versus possibly changing to something new that will take you to the next one or two decades. Right. And following up with the red flags, and now that you mentioned that there's some issues that might not be technology, some issues that might be the, the technology. I mean, we as consultants and, you know, Matt, as vendor, like, it's easy for you to know, right, when there's a technology issue and when there's li- like a process issue. But let's step in our customer's shoes.

13:50When would you say it's a problem on the technology and when it's a problem, we're lifting all the requirements? You know, like how we like to call, like, like the phase zero, right? Because there's a lot of time that maybe the customers or the product manager didn't put that much attention into the specifics of the implementation. Might be something about the permissions. But in your opinion, how would you say is the easiest way for a company that, that already has CLM to know that's a problem with the processes and not about the technology? So whenever the organization or the CLM admin or a business user has a requirement, and if the CLM vendor pushes back and says no, oftentimes it's heard as if, oh, just because the vendor doesn't have that feature, they're saying no. But what I need is what I need. They have to have it.

14:49What I would say is sometimes when they say no, especially if the tool has been around for a while, if they don't have that functionality yet, there's probably a reason for it. And no doesn't mean a bad thing. In fact, appreciate the no, because at least they're being honest, transparent, and giving you a reason why not every feature that every organization is asking for is going into the platform. Because here's what happens, coming from an older CLM company that I worked at. We used to say yes to everything. We added features after features after features. Eventually, it became this crazy big complex CLM that required... I mean, it's like implementing SAP or Oracle or something more complex than what it should be. You don't want 1,000 features in this solution where it becomes a nightmare for administration.

15:40So but the reality is, again, as I said, if the vendor says, "No, that's not on our roadmap, we're not gonna be adding that," appreciate that, think about it. And I would say, I mean, you guys work with multiple CLMs, right? So it doesn't have to be the vendor. That's where there is help for organizations to reach out to experts that have implemented different platforms, different industries, different customer sizes, and take their advice, because they're gonna be more neutral than, than the vendor, of course. And there's sometimes the vendor will say, "Sure, we... That makes sense. That's a good feature to have. Your requirement is valid. We don't have it, but depending on your implementation timeframe, we can prioritize and put that as part of the enhancements." But if the vendor is saying no, and if a service partner or a consultant is telling you, "No, that doesn't make sense," take that seriously. Go, feel free to talk to your GC or sales professionals or procurement professional to say, "Why do we need to do it the same way just because we've been doing it the same way for all these years," right?

16:42Push back a little bit and question that requirement so that you can understand if it's a technology issue or a process issue. Yeah, I think that's a, a great way to look at it, and something that you need to make sure you have that conversation internally a- and truly evaluate all of the options before, you know, jumping the gun and, and just thinking that moving to a, a different piece of technology is going to save, you know, all of your problems. So, so Matt, I, I think let's leave our listeners with maybe one tip. If they are looking to or starting to think that their current CLM isn't cutting it, where should they start? What, what should that kind of first part of the, of the process be? So first I would talk to the vendor itself, themselves, right? What is not working? Be transparent with them. Give them a list of challenges that you're facing, and what is their response? And if their response is lacking, let's say they're not even responding, I've seen a lot of organizations struggle with just support or responsiveness from the customer success team.

17:40Then you go out and start talking to forums. There are a lot of legal forums and platforms where there's a lot of organizations talking. Hear from each other. What have people tried? What have they succeeded with? Where, where have they failed? And also talk to, you know, folks like you for that matter, right? I'm not saying come and talk to me or my Malbek team or any vendor for that matter. Start with somebody more neutral to get their thoughts. And then take three to five demos from a very comprehensive, maybe mature, older platform, all the way to something absolutely new, recently built, so you have a landscape of what's possible out there. Try it out. The days are gone where you would just see demos and buy. Everyone wants to try the piece of software, right? Take three days, five days, get in there and, and mess around with the t- tool and, and understand what's possible.

18:31And then y- at least you'll have some idea where to go, because AI and generative AI are moving so fast that older platforms, older technologies just cannot keep up. And so you want to start looking at the future of your organization for the coming five, 10, 15 years, and who's gonna be the right CLM partner for you. No, I, I think that's a, a great piece of advice. Well, Matt, I... This has been a, a great conversation. We really appreciate you, you joining us. I think this will hopefully be the first of many, but thanks for, for coming on to talk shop. And you know, if folks wanna connect with you, if they wanna learn more about Malbek, where's the best place to do that? Well, I'm a active LinkedIn user, so always find me there. Malbek, of course, is a website. You can certainly ping the info button, and my team can reach out to me. I'm easy to find on LinkedIn, though, so absolutely happy to have a conversation with anyone considering or even thinking about CLM. Awesome, Matt. Well, we really appreciate you coming on, and thanks everybody for listening to another episode of Contract Heroes. This episode of the Contract Heroes is sponsored by Koho Consulting.

19:33Koho helps organizations of all shapes and sizes find, implement, and manage their chosen CLM tool. Whether your project is buy or sell side led, Koho can help you navigate the waters of the CLM space to make sure that you're getting a product that's going to fit like a glove years to come. If you'd like to learn more about Koho, visit their website at C-O-H-O consulting dot com.