You've found your dream home. But the work of moving in begins now—packing, shifting, setting up the new space. It's also a good opportunity to sort through your things and discard what you don't need. After all, such opportunities to start afresh don't come along very often.
Implementing a Contract Lifecycle Management (CLM) solution is a lot like moving into a dream home. There is excitement around a transformative event, and nervousness about whether all the moving parts will fall smoothly into place. The concern is valid—a 2019 report by research firm Gartner predicted that 50 percent of first-time CLM implementations will fail by 2024.
Just like you need to get all your ducks in a row before moving into a new home, an organisation needs to lay the ground before it starts using a CLM. From our experience, here are four insights on getting CLM- ready.
Build a business case for CLM
Before moving into your dream home, you take stock of the layout and then form ideas about how you want to use the space—one room for family activities, another space for entertaining guests, yet another as a reading nook. You may also decide that you want certain spaces to be flexible: put to one use in the day, for instance, and another after sunset.
Similarly, before transitioning to a CLM, you should start by answering basic questions like 'who, what, why, when, how'. You're more likely to get buy-in and budget approval when you have a clear roadmap from 'current state' to 'target state'. Here are some principles you can keep in mind:
- Define objectives: Work closely with your executive sponsors and stakeholders to set clear goals for the first six months and establish key performance indicators (KPIs) to stay on track.
- Map current processes: Map out the current contract management process, identify key business touchpoints, and envision how these processes will function in the new CLM environment.
- Develop a blueprint: Create a project plan that outlines activities, assigns roles, and clarifies who is in charge.
Organise data and touchpoints for migration
When you pack to move, you don't simply throw everything into unmarked cardboard boxes, do you? (Okay, we all have at some point...and regretted it). The ideal way to proceed is to sort through belongings, discard what you don't need, organise the rest and then pack them into neatly labelled boxes.
The kitchen utensils go into one box, books in another. You may even have purpose-built packing material for glass items. One of the trickiest parts is deciding what to leave behind and what to take with you. It's a long process, and it often takes more time than you've accounted for.
Well, the honest truth is that the phase before CLM automation could also be a bit like that—don't underestimate the time, budget and effort needed to sort, organise, label, and migrate contracts. Migrating data from legacy systems and locating all stored contracts can be tricky. To ensure that every legacy contract is accounted for, you might need to audit each account for missing documents after transferring contracts into the CLM.
In the course of a conversation we had last year, the General Counsel of a leading IT company stressed on the importance of budgeting for both the technology and the process reengineering it requires. Here are a few principles to keep in mind as you work through this stage:
- Simplify contracts: Before automating workflows, take the time to standardise and simplify your contracts. Develop contract playbooks and standards for smoother operations.
- Identify key processes: Identify the processes that need to be configured in the CLM and define the integration points. This ensures that the new system integrates smoothly with existing workflows.
- Create an inventory: Start by taking stock of your current contract management systems and documents. Next, move to the 'sorting' and 'labelling' process—organising contracts by client, vendor, or category.
- Develop migration principles: Establish contract family rules and data management principles. Decide how you want to migrate contracts—whether by type, revenue, or another factor that aligns with business needs.
Integrate users early and often
Settling into a new house takes time. Everyone who is going to live there needs to be part of the moving process to make it feel like home. If you don't account for the needs of, say, an elderly parent, it may be that they don't feel comfortable in the new place.
So it is with CLM implementation. Involve users at the CLM-readiness stage. Incorporate their input rather than simply present a new workflow. Clear communication and transparency can go a long way in overcoming adoption challenges.
Often, there isn't enough transparency about why the CLM was approved and how it will affect users' daily tasks. This lack of communication can lead to dissatisfaction when the system is launched. It's no surprise that 81 percent of respondents in the Law Department Operations Survey 2023, conducted by the Blickstein Group and Icertis, reported that their CLM maturity is at 3 or lower, on a scale of 1 to 5.
Here are a few principles to keep in mind to address the issue.
- Involve end users: Involve your end-users in process mapping and workflow changes from the start. Their input helps tailor the system to their needs and encourages early buy-in.
- Create onboarding plans: Onboard users through hands-on training sessions, and access to reference materials and instructional videos.
- Incentivise usage: Develop strategies to encourage user engagement with the system. Positive reinforcement goes a long way in promoting better usage.
Decide ROI metrics and prioritise data points
When you decide to buy or rent a new house, you often undertake a cost-benefit analysis. And then, once you've decided to make the move, there's lots of decisions to be made about timelines, hiring packers, and so on. The whole thing has to make financial sense in the long-term, otherwise it won't be worth the time and effort.
To stretch the analogy: simply put, a CLM system has to meet your business needs. That's why tracking ROI is crucial. You need to define the metrics and identify the data points required to measure those metrics.
Keep in mind that not every data point is important. We've seen companies attempt to capture up to 200 data points from contracts, only to find that most of them aren't useful. They then end up scaling back, which drives up implementation costs and makes data extraction and maintenance more expensive.
- Pre-evaluate metrics: Use your system to track important metrics like contract generation, closure processes, negotiation effectiveness (with the help of playbooks), and contract analytics. Decide in advance what your legal team wants to measure so you can report on contract performance to the Board and stakeholders.
- Prioritise key data points: Identify key data points that matter for your business needs to avoid wasting time and resources on unnecessary information.
And finally...enjoy the process!
Moving house is always stressful but when you look back, don't you feel like it was the best thing you could have done? It all comes together one evening, when the light is just right, and you're sitting on your cozy sofa, suddenly grateful for sticking through the chaos and uncertainty of moving.
Dare we say it, but you're likely to experience a similar feeling at some point after a successful CLM implementation. There'll be a moment when all leakages are plugged, when recognised revenue is available at a glance, and the sales team will be lauding you for simplifying their lives.
There's a greater likelihood of that moment arriving sooner if you're CLM-ready. Being CLM-ready means that your organisation has evaluated and prepared its people, processes, and technology. It may seem overwhelming, but with the right partners, you can transform what seems like an ad hoc activity into a smooth, strategic operation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
