Setting sail on your CLM journey: Insights, basics, and what’s next 

You’ve heard about Contract Lifecycle Management (CLM) from all your colleagues, whether they’re from within your industry or profession. It seems to be all the rage. You know it has to do with improving how your contracts run through the business, but is that it? Here’s a primer on all you need to know before you set sail on your CLM journey. 

How did CLM become such a big thing?  

In the beginning, there was light. Wait, that’s a little too far back. Let’s start in the 20^th century with the digital revolution. Everything that used to be kept in a file cabinet could now be stored on a computer. What a saving of space! And, with the new-found way to store data came the hunger for yet more data.  The analytics! The insights! However, a problem emerged as the need for digital storage grew: Organization. CLM platforms were born out of that organizational challenge, starting out as basic repositories of documents where contract dates could be tracked. Automation soon took hold where the workflow of contracts could be tracked, including who had them, reviewed them, and even who had signed them and who had not. The efficiencies and impact on business were beginning to be realized.  

More recently, a shift has occurred, and the focus is now beyond automation and more about data utilization. Essentially, it’s more about the data that is inside the contract than it is about the contract itself. 

Why is CLM software important?  

Any business is made up of contracts. Contracts are essential to get a business up and running, to secure a loan, or to stipulate locations, vendors, and equipment. Contracts are also essential to keep the business running and growing; they employ your workforce, update your processes or operations, and even acquire new customers. It’s with these legally binding agreements that complexity is introduced and creates the essential need for a CLM.  

What are the basic components? 

There are several different, clearly defined functions within a CLM platform that will take you on the journey from beginner to expert in utilizing a CLM 

Let’s start at the beginning. Any CLM solution worth its salt needs to contain some bare minimum capabilities, such as housing and search capabilities for contracts. You then move into streamlining the contract workflow which introduces some complexity, but you probably need more than one defined workflow. Next comes flexibility and scalability that work for your unique business processes, not what the vendor hands you out of the box. When selecting a CLM platform, remember to consider not only today’s problems, but also future contracting needs that you might not see today. Make sure that your CLM platform of choice can flex with you into the future.  

And with the future comes Artificial Intelligence (AI). Within a robust CLM platform, AI can serve as a force multiplier. Use AI to quickly ingest and extract pertinent data, automate your workflow, and even suggest language compromises between you and third-party paper.  

Finally, sharing contract data throughout your organization optimizes and maximizes a CLM system’s capabilities. Sharing data through integrations of the applications that your different departments use every day makes it easier for everyone to see the same data but within their known work methods. Integrations not only easily empower each department, but they also get everyone referring to the same data points as decisions are made.  

A good way to understand which CLM components are best for your business, where you are in the process, and where you could be, is to understand the competitive advantages that contracting can bring to your organization.   

What is the future of CLM? 

Yes, AI is upon us and feels very futuristic, but that’s not the only thing people are talking about regarding the future of CLM. While CLM solutions are proving to be a smart technology investment for organizations with quantifiable returns, it also hasn’t finished with its evolution – not by a long shot.  

That’s not to say that AI isn’t changing and growing the CLM landscape almost daily. Generative AI is becoming more helpful in creating win/win contracts and there is much more in store for AI as it continuously develops. 

As mentioned at the beginning of this blog, the power of CLM software lies in the workflow, yes, but it’s becoming more about the content of the contracts, or the data. As MGI states, “…the CLM software market is approaching a seminal point in its development where a Data-1^st approach to contract management holds the promise of a nonlinear gain in operational fidelity, dramatically improved alignment between business performance and its legal frameworks, improved operational velocity, productivity, efficiency, and efficacy.”

Where do I start with CLM software? 

You need to do your homework to understand what it is you’re trying to solve. There is always one omnipresent problem but solving that problem will likely uncover a dozen other issues. Listen to your colleagues, industry analysts, and information gleaned from proven demonstrations that will solve not only the problem you’re facing today, but also contracting issues you will face in the future. The only way to ensure this is to continue educating yourself and take that first step in the journey towards CLM. 

Learn more about starting your CLM journey today.