By Andy Wishart, CLM Futurist & Agiloft’s Chief Product Officer.
In this article Andy unveils the four critical steps the enterprise must take to pivot from efficiency to resiliency with CLM in an increasingly dynamic global business environment.
In our new webinar ‘Contract Lifecycle Management: Making the Transition from Operational Efficiency to Strategic Value,’ guest speaker and Senior Forrester Analyst, Alla Valente, and I set out four critical steps that enterprise organizations must take to ensure their CLM provides strategic value. Going well beyond transforming contract performance, these steps outline how to enhance business decisions and improve customer experience, enabling their business to not just survive, but thrive in today’s challenging market headwinds.
First things first, only 10% of the information that is included in your contracts is focused on what’s being promised, delivered, etc. – the other 90 percent is a potential goldmine of business-critical intelligence, which is dedicated to what happens when things don’t go as planned. Given where we are in 2022, moving from one global crisis to another, ‘things not going to plan’ has become the new normal. What many in the enterprise have failed to grasp is that much of the language included in their contracts is devoted to mitigating risk. So, it makes a lot of sense to tap into that information.
Effective contract management has become critical, because when things don’t run smoothly, we all need that guidance and protection. The enterprise needs to understand what the next steps and their options are, to be able to identify and hedge any downside. CLM is uniquely placed to offer the insights the modern, agile enterprise needs. Here are my four critical steps the enterprise needs to take to ensure they can pivot from efficiency to resilience with CLM:
- Create the foundation. Digitize your contracts. Digitizing your contracts and managing them within a fit-for-purpose CLM means you have a unified solution to manage contract sustainability, consistency, completeness, searchability, ownership, and risk management—in one place. This approach gives your legal team a line of sight to risk and business obligations, which, in turn, helps every department make better, more nimble business decisions and negotiate from an informed position. For example, if your aim is to gain a real-time view on contractual risk at a contract portfolio level, your CLM can help. If you need to identify revenue opportunities from the data in your sell-side contracts, your CLM can help. Whatever the use case, you need a flexible CLM system that allows you to make these adjustments quickly.
- Unlock the limitless strategic value of your CLM with simple, connected experiences. Successful CLM implementations connect the multiple stakeholders across your organization who initiate or interact with your contracting process. From your legal team, who perform the work on individual contracts, to your sales teams, who own the relationship with the customer on the sell-side, or your procurement team, who own the relationship with the supplier. Ensuring your CLM provides simple, connected experiences in the tools these teams use daily is key. The data from your CLM must also flow to the downstream operational and transactional systems that these teams are using to do their jobs. Achieving these connections has historically been difficult, but advances in no-code, drag-and-drop integration platforms means that platforms, like Agiloft, can now provide the connectors to 100’s of these systems and enable the seamless flow of data across business functions.
- Analyse your contracts to extract deep, strategic insights. Ensure your CLM provides the tools your teams need to make sense of their contract data – from data visualizations, data extraction, and semantic search, to tracking the performance of a contract during its active life. Your CLM’s artificial intelligence capabilities will underpin your ability to get deep contract insights from your unstructured contract data that will ultimately inform business strategy. Transforming the unstructured world of contract language into structured digital assets is central to your ability to transition toward achieving more strategic outcomes from your CLM.
- Transform contract performance, enhance business decisions, and improve customer experiences. 90% of the information included in your contracts is an untapped risk management goldmine. Once your CLM has turned your unstructured agreements into accessible digital assets, which represent the DNA of your organization’s relationships, you can monitor the performance of those relationships at a meta level, giving you “Tweet Shift” agility and nimbleness. For example, if your CLM connects to your ERP and determines that a supplier has not delivered goods by a certain date, your CLM can alert you so you can course correct. Your CLM can also flag early signals of a future risk on contractual performance. Leading CLM solutions can also automate compliance and allow proactive remediation of any non-compliant contracts by connecting to trusted sources of legislative or regulatory intelligence and then flagging any changes on the horizon.
Forrester’s Alla Valente comments: ‘Contracts are how you manage the ecosystem of business, they are the connective tissue of your company with your ecosystem of vendors, suppliers, partners, and customers, with whom you do business. Those that truly harness the information hidden in their contracts to manage risk and move to that maturity phase of using their CLM system, are the ones that will lead the market by demonstrating their agility and ability to protect their organization.’
The criticality for companies to manage risk in the face of geopolitical, regulatory, or economic swings has never been more acute. Tapping into the limitless intelligence of contracts can help businesses understand who is responsible, who is liable, who is going to do what and at what cost, and that having that information at your fingertips is the greatest power of a CLM. Having a single solution to manage every obligation at your fingertips – to be able to get out of a country or shut down a facility with Tweet Shift agility – is the true strategic value of CLM, beyond just managing the operational efficiency of processing contracts.
The enterprise needs to move beyond the foundational stage of digitizing contracts and automating their contract management processes, to connecting the data that is hidden in their contracts to key people and processes across an organization. Once in the right systems and processes, that contract data can be transformed into business-critical intelligence that ultimately delivers more strategic value, ensuring contract data is acted upon and delivers the intelligence to optimize wider business outcomes.
To learn more about the upcoming Agiloft Summit: The Premier Contract Management Customer Event of 2023, click here.
And, to see how Agiloft can help transform your contract management process and save an average of 9.2% of revenue a year, click here.
[ Artificial Lawyer is proud to bring you this sponsored thought leadership article by Agiloft. ]