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It can be hard to know where to start when you’re shopping for a contract lifecycle management (CLM) system. There are more than 90 CLM systems listed in review sites like G2. Some are built specifically with the Legal department in mind, while others are designed with the procurement or sales teams in mind.
What separates the good CLM systems from the bad?
So, what makes a great CLM? Ultimate answer is that great CLM systems help a legal team meet its return on investment (ROI) and efficiency goals. A great CLM creates tangible benefits for the organization. It helps your team do the following:
- Improve your contractual efficiency
- Reduce risk and enhance compliance
- Gain greater visibility into your contractual portfolio
- Control the pace of change
Improve your contractual efficiency
A great CLM system will help you work efficiently through all stages of the contract lifecycle. About 80 percent of a lawyer’s contract work happens in the pre-signature phases, so this is a critical part of the lifecycle to look for efficiencies. The steps in this phase include the following:
- Initiation: The business identifies the need for a contract, either internally or on third-party paper.
- Review/negotiation: A back-and-forth step where your company and the other party draft collaboratively to get clauses aligned.
- Approval: A complex step when a lot of concessions were required.
- Signature: Collecting signatures from all signors, usually electronically. Fully 90% of Legal teams have an electronic signature tool.
When you’re calculating the ROI of a potential CLM solution, consider how much efficiency it can bring you in these very taxing stages of your team’s work. There are significant differences between them, and you want to choose a tool that helps your team work as efficiently and intuitively as possible. The technology behind the tool is an important consideration. Generative artificial intelligence (gen AI) can help simplify and inform drafting processes, automate document review, and data extraction, and analyze contracts to identify and flag potential errors, risks, or nonoptimal terms.
Reduce risk and enhance compliance
The contract remains a living document throughout its term. The legal team and the business need to store the documents in a designated contract repository and manage to the terms. This includes reporting on the contract content and status, managing and monitoring its performance, tracking key milestones, ensuring compliance with terms and conditions, and handling changes or amendments.
Your CLM system should make it easy to stay on top of all these responsibilities so that you can effectively reduce the risk of noncompliance for your company. If you miss one of your obligations, you could pay penalties or alienate a customer or partner. If the other party falls short on the terms, you could miss the opportunity for revenue or savings.
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Why CLM?
Unlocking the power of contract lifecycle management for your legal team |
Gain greater visibility into your contractual portfolio
As each contract term ends, you and your colleagues will decide on renewal, termination, or renegotiation. Your CLM system should help you make these decisions easily, as you have visibility into the performance of the deal and how it compares to terms you’ve secured more recently.
The CLM system should take you beyond individual contracts, however, and help you understand your whole portfolio. Some systems use AI to analyze large volumes of contracts quickly. AI can translate your portfolio into analytics and insights to help you gain visibility into patterns and trends in your contracts.
If analytics are important to your department and your business, be sure to prioritize this in your evaluation of CLM systems.
Control the pace of change
Your decision about a CLM system is not just about the technology or the user interface. You should also consider how you’ll work with the provider and how much you can stage and control the pace of change.
It may be tempting to dive in with all the bells and whistles of your CLM solution all at once but consider taking it slowly. Once the team and the business have adopted the first features and workflow changes, you can keep building. Decide which features to implement once the immediate needs have been met, and then decide which features fit into your longer-term goals and vision.
Choose a system that lets you make agile, iterative improvements to the way your team works. This is a better way to form new habits and ensure successful implementation and adoption. Work with a vendor that has the features needed to truly meet your CLM needs to maximize adoption and value you get from a new technology solution.
A truly great CLM solution will help you create the ROI your stakeholders expect and that your team needs to deliver the very best service and partnership to the business. It will help you improve your contractual efficiency, reduce your risk, enhance your compliance, and give you greater visibility into your contractual portfolio. And it will allow you to move at your own pace to effectively elevate your people, process, and technology together.
Thomson Reuters offers an end-to-end CLM solution that enables law departments to gain full visibility across contract assets, produce tailored documents faster, and proactively manage risk and obligations with simplified workflows.
