Tech Bytes 4: Intelligent CLM systems

Debunking the ‘lawyer lag’ myth in contract life cycle management

Myth:
The issue of "lawyer lag" often arises in CLM discussions as a reason that the contract life cycle isn't fast or efficient. Legal departments are sometimes described as "the sales prevention department" because other stakeholders view them as a bottleneck. But the opposite is often true.

Reality:
Based on our experience, legal departments are rarely the bottleneck. Instead, delays elsewhere can create a tension that peaks towards the end of the lifecycle when legal is usually engaged for review.

The question remains:
How can speed and efficiency gains be achieved throughout the contract life cycle without sacrificing financial governance and legal risk management?

¹ Deloitte analysis across multiple client engagements.
² International Association for Contract & Commercial Management, IACCM Benchmark Report 2012, September 2012, p. 36.

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CLM systems automation is the answer—isn’t it?

Sixty-five percent of companies surveyed across industries use some form of contract management solution—either an off-the-shelf application or a homegrown variation.³

Yet recent data suggests that the CLM system capabilities that could improve CLM performance are some of the least used features.

³ Corporate Legal Operations Consortium, 2019 State of the Industry Survey, July 2019.

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How can organizations transform their current contract life cycle management approach into Intelligent CLM?

Organizations can sometimes focus on CLM system features—the shiny objects—without a clear understanding of the issues that need resolution. Information technology (IT) professionals have a saying for this: Automating a bad process doesn’t improve anything. Here are three ways organizations can transform their current CLM approach into Intelligent CLM:

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1. Clearly define the problem(s)

A leading practice for effective CLM system implementations is to clearly define up front the problem(s) creating underperformance and stakeholder discontent. Even organizations with an existing CLM system can benefit from revisiting problem definition periodically for continuous improvement purposes.

Engage stakeholders to drive adoption
Assemble a team representing the major stakeholders across the organization and develop a CLM strategy (or revisit the existing one) so it aligns with the larger corporate strategy and the needs of the various stakeholder groups.

2. Identify where technology can enable or improve CLM systems performance

3. Implement CLM systems with purpose

With a strategy defined and the CLM system selected (or the issues within the existing system identified), organizations can take a “big bang” approach in which the end-to-end solution is tackled all at once. Or they can take a more measured approach that seeks quick wins, which demonstrate the viability of the approach and its planned outcomes, then builds on that momentum in manageable stages.

Think big
Build the strategy and business case for an enterprise approach to CLM. Engage stakeholders from across the enterprise. Emphasize the realistic possibilities for CLM improvements.

Start small
Focus on the low-risk, high-volume, routine contracts such as nondisclosure agreements and pursue stakeholder buy-in to deliver quick wins. Use those successes to drive stakeholder engagement and organically expand the initiative internally while building a core of “champions.”

Scale fast
Build on the early wins by developing standard playbooks, guidelines, and processes for other contract types and business units. Incrementally build toward the enterprise goals established in the strategy. Continually seek new opportunities for improvement as the CLM sophistication grows.

How can Intelligent CLM help your organization?

Create a virtuous cycle instead of an iron triangle

Organizations can have it all with contract life cycle management—speed and efficiency, pricing and revenue governance, and risk management controls. You don’t have to settle for less.

Legal should lead the way

Isn’t it time for legal departments to stop being unfairly tagged with the blame in enterprise contract squabbles? Instead, take the lead by bringing together stakeholders and giving them a clear line of sight into the stages of CLM and interdependencies between them. Then show them the vision of what intelligent CLM can be—a technology-enabled process with improved data integrity, better tracking of contracts, and consistency across the enterprise. Now isn’t that a win-win for everyone involved?

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