Here is a statement that may not be too surprising at this point: The implementation of Contract Lifecycle Management (CLM) software by in-house legal departments has risen exponentially over the course of the past 15 years.
Statistics support this claim. For instance, the most recent HBR Consulting Law Department Survey reveals that 65 percent of legal departments have fully implemented CLM systems like CounselLink® CLM. Also, market research firm IMARC Group estimates the total CLM market will reach $3 billion by 2027.
Yet as the pace of business continues to accelerate with COVID-19’s devastation behind us, and law departments strive to complete more work in-house with inflation in front of us, how you use CLM is more important than ever. Smart, deliberate implementation and adoption of CLM helps decrease your company’s exposure to risk. It may also increase your company’s bottom line through better process design, standardization, and negotiation.
Thus, it takes planning before you can buy CLM software, and before you can implement it. Now is not a time to grab the latest, hottest technology off the shelf because you need what you need and you need it now.
If you buy pants from a retail store and they don’t fit, then you can exchange them without much of a snag. Exchanging a six-figure CLM system rolled out after months of implementation work and user-testing? Not so much.
Haste may also cause missed opportunities for innovation and digital transformation. There is a good chance that executives and other professionals in your company do not fully understand what they have in CLM. Gartner expects that law departments will realize only 30 percent of their CLM systems’ full value by 2025.
“A common mistake [legal departments make] is to pursue a legal technology roadmap without sufficient regard for business or end-user needs,” writes author Rob van der Meulen in a February 2022 blog article published by Gartner.
Adds van der Muelen: “Corporate legal leaders who fail to plan sufficiently for their technology investments risk wasting money on ill-fitting and poorly adopted systems. Technology marketing hype breeds lofty expectations and ambitious timelines that can rarely be achieved.”
This is why you must embrace a new discipline we called Contract Management Planning.
What Is Contract Management Planning?
Contract Management Planning, or CMP, is a dynamic, multidisciplinary, team-driven framework that empowers you to make your organization’s contracting processes as logical, as transparent, and as efficient as possible.
CMP includes CLM technology as a component. It is not a synonym for CLM as traditionally used.
Rather, CLM is an essential strategic element of CMP. View CMP as a business-driven discipline in which the organization’s stakeholders learn from each other to determine how technology is implemented most strategically.
To further distinguish CMP: CLM focuses on the features, benefits, and resultant value of technology in improving the quality of contracts. CMP travels a few steps further than CLM. CMP takes those CLM concepts and elevates them to a more holistic level to help you understand how contractual processes are now handled and how they may be performed more effectively. It also helps you understand it all at a more granularly level.
When you use CMP, you’re able to understand people and organizational touchpoints involved in birthing an executed contract with just as much focus as you understand the technology. CMP helps you better analyze the how and why of what’s happening, and also the how and why of achieving better business outcomes moving forward.
CMP is also as much about culture as it is about productivity. In a CMP paradigm, contracting is the work of every stakeholder within the organization. The responsibility extends well beyond legal, procurement, or any other department. The continuous improvement CMP strives for can be realized and enjoyed globally.
Ultimately, here is the key: Most of the analysis, strategies, and tactics you perform as part of CMP occur well before you ever transmit an RFP to prospective CLM vendors. It turns you into a more confident shopper and buyer of CLM technology.