My first exposure to the concept of Contract Lifecycle Management (CLM) was when I started to work straight out of law school. I was involved in a due diligence and I received an email from a partner telling me to collate another set of contracts (of which there were thousands) in time for the next morning. I meant to forward the email to my fellow grads telling them what an !@#$%^& the partner was. Unfortunately, I hit “Reply” instead.
Times have changed, and these days CLM is just as likely to refer to Contract Lifecycle Management software (or simply Contract Management software). But what is Contract Lifecycle Management? While there’s no single definition, it encompasses an organization’s entire contracting process, including:
Interestingly, according to the IACCM's Contract Management Software: Market Sizing And Status Report, “[a]doption of contract management software has been slow, even though studies have consistently reported the benefits achieved by those companies and organizations that have implemented.”
The reason? A lack of defined processes. In most organizations “contract management remains one of the last undefined areas of activity… As a result, successful contract management software projects require a commitment to process definition which raises tough political questions regarding ownership, authority and accountability.”
So, where does that leave us? Basically, when done properly, automating the contracting process provides great business benefits in the form of better control, workload reduction, risk management and cost/revenue improvements. However, it needs a powerful executive sponsor to make it work.