CLM for procurement: A 2024 industry snapshot 

In today’s fast-paced business environment, organizations are constantly seeking ways to optimize their processes and improve efficiency. One critical area that often requires attention is procurement, a business area where contract management plays a vital role.  

With this emphasis on streamlining contracting processes, it’s no surprise that there’s a topic buzzing in the procurement world: Contract Lifecycle Management (CLM) solutions.  

Agiloft surveyed procurement professionals from all over the world and across various industries to find out the CLM features procurement experts find beneficial, explore their data sharing preferences, and understand the advantages they anticipate from integrating artificial intelligence (AI) into their contract management. 

Why procurement needs CLM

Because CLM is often erroneously thought to help only legal departments, procurement professionals used to have a difficult time building a business case for implementing a CLM, said Leila Orandi, Senior Director of Procurement and Supplier Management at Common Securitization Solutions. But that’s not the case anymore. 

“Over time I saw the trend changing,” Orandi said in a recent Agiloft webinar. “In the past 10 years, companies now see the value of this, and the reason goes around what benefits you get out of this system and the ease of it. Companies that are heavily audited take advantage of this more and more.” 

So, what’s the hype with CLM for procurement? 

According to our survey, 80% of procurement professionals without access to a CLM are thinking about getting one, and nearly half say it’ll happen within a year. And with good reason; a lot of procurement professionals have noticed some pesky inefficiencies in the workflow that are dragging the contracting process down.   

“That moment where I watched my organization, my team members suffering through the process and not being efficient was the moment where I realized that I need to make the change,” Orandi said. “You typically get a tool, a system to ease the process, simplify, speed it up, do something positive for you, versus being a bottleneck, and delaying things.” 

Procurement professionals who responded to our survey want access to a number of CLM functionalities, like: 

• Tracking contract payments, invoices, renewals, and cancellations – because who likes losing money on missed auto-renewals? 
• Enforcing purchasing procedures – because clear rules make everything run smoother. 
• Utilizing a clause library for easy contract creation – because reinventing the wheel for every contract is so last century. 

The above capabilities aren’t just nice-to-haves; they’re must-haves for any CLM system worth its salt. Yet, 56% of the time, these critical features aren’t used because the CLM system doesn’t even have them.  

The smoother the contracting processes, the quicker your team can speed up business, enhance compliance, or stack up the savings.  

“One of the biggest things that I see as phenomenal is the workflow,” Orandi said. “The workflow helps that automation of the workflow, it helps a lot with getting what we need… So that was the biggest impact that I saw, and it continues to be helping us with eliminating all of those audit items and the issues to remediate.” 

An important note: If you’re in the market for a CLM, do your homework before diving in. Define your processes, identify and involve your key stakeholders, and make sure your selected software provider is the real deal – not just a pretty interface with half-baked features. 

Flowing contract data across the enterprise  

When legal and procurement departments join forces, magic happens.  

Even when legal takes the lead on buying a CLM, procurement often gets admin rights 66% of the time. And when procurement leads the charge in purchasing, contract data is shared with other departments 75% of the time, unlocking enhanced decision-making and strategy across the enterprise.  

By establishing contract data as the cornerstone of truth and ensuring it’s shared efficiently across the company, procurement professionals can achieve greater business success than ever imagined and then pass that success on to the rest of the organization. 

How AI will affect CLM for procurement 

An even bigger buzz word than CLM in the procurement – and business – world? AI. 

AI has the potential to revolutionize the way we work. It can find that needle-in-a-haystack contract or mass-update your contracts with the single click of a button.  

Despite the hype surrounding the future of AI, particularly generative AI, most procurement pros aren’t riding the AI wave yet: 34% of survey respondents say they aren’t using AI because it’s not available, while 57% just aren’t interested in using it, even when it’s there for the taking.

“I have seen so [many] benefits into leveraging the AI functionality that the system has, let alone the redlining, understanding the provisions that you’ve agreed to or disagreed to, the background, the history of it,” Orandi said. “They all now exist in these tools and they’re auditable, traceable, and fantastic.” 

Conclusion

In conclusion, procurement and legal departments (and many other departments across the enterprise) recognize the advantages of implementing a CLM system.  

Regardless of which department leads the acquisition, each can leverage the CLM solution to fulfill their specific requirements effectively. It’s all about finding a system that caters to all departments’ needs and effectively spreads the wealth of contract data across the organization. 
 
Integrating this valuable contract data with the unique systems of various departments across the organization is key to a forward-thinking approach to organizational data management. Because, at the end of the day, it’s not just about managing contracts – it’s about driving business success to new heights. 

Learn more about our survey results and the benefits of leveraging a CLM for procurement. Download our report here.