In today’s complex and competitive global economy, it is not easy to maintain the alignment between the fast-changing goals and priorities of the business, and the commercial and contracting policies and processes. Contract Lifecycle Management is discussed in detail and the need to adopt this technology has been highlighted time and again. The maximum benefits that can be reaped from Contract Lifecycle Management technology depend on how well it is being utilized. To measure the progress any enterprise has made in this technology, we have a model called the Contract Lifecycle Management Maturity Model.
The CLM Maturity Model is a journey to understand at what stage does the contract management strategy of any company lie, to understand the requirements needed to drive additional value:
- Improved relationships with trading partners.
- Better margins from improved revenue or savings.
- Improved brand image from the integrity of organizational commitments.
A recent ACC report, ‘2020 Legal Operations Maturity Benchmarking, stated that most companies are in the nascent-to-intermediate stage of maturity in traditional legal areas like compliance. It mentioned that those in innovation and e-discovery are still at the very early stages. This reinforces the fact that most companies are not fully realizing their contract management processes’ value and the business advantage that CLM has to offer.
How matured are your contract management processes?
To identify where an enterprise lies in the Contract Lifecycle Management Maturity, Ultria has listed out the different levels to help an enterprise describe and identify their CLM maturity level.
- MANUAL PROCESSES – In the first stage of Ultria’s CLM Maturity Model, rudimentary contract management processes are employed, like usage of paper files and shared drives to store contracts. There is no automation of any kind. This stage has a slower time to value and offers mediocre ROI.
- CENTRAL REPOSITORY – If the contracts are stored in a central repository with access control functions, then the enterprise is said to be in the second stage of CLM Maturity. It should be noted that the contract drafting techniques are still manual with limited version control facilities.
- AUTOMATED DRAFTING – The third stage in the CLM Maturity Model can be described as one where the workflows throughout the contract authoring process can be configured for approval. The contract creation process becomes collaborative as multiple contributors can contribute towards the drafting of the contracts simultaneously. The contract creation process becomes faster with the help of automation and utilization of pre-approved templates and clauses stored in a clause library which ensures uniformity throughout similar contracts. At this level of maturity, the system is capable of AI-based parsing & metadata extraction.
- PERFORMANCE MANAGEMENT – The fourth stage of CLM Maturity is achieved when the implementation of contract lifecycle management software extends after the contracts have been signed. True contract analytics and risk management processes can be implemented. Alerts can be built ahead of time with agreed triggers. If the CLM software takes care of tracking contract KPIs in real-time, provides smart clauses linked to external triggers, automated alerts, and notifications, then the company is said to be in this stage of CLM Maturity.
- INTEGRATED PROCESSES – The fifth and final stage of CLM Maturity is achieved when the contract management software is tightly integrated with other systems, enabling two-way data exchange between systems in real-time. Not many organizations make it to this level; however, it’s one of the easiest to sustain because of all the previous groundwork has been done. Once maintained, the benefits are exponential.
Benefits of Attaining Maximum Contract Lifecycle Management Maturity
The maturity of an enterprise’s CLM strategy determines the extent to which their contracts are effectively processed, managed, and leveraged. Greater maturity means lower risk, reduced costs, faster business cycles, and greater return on investment. Some of the concrete benefits that companies experience on attaining higher level of CLM Maturity are –
- Decreased Contract Cycle Times –Faster contract cycles lead to faster, more efficient business cycles and quicker revenue recognition. Eliminating manual contract generation and approvals save time and ensure accuracy. Up-to-date templates, automated workflows, redlining, and e-Signature reduce the time it takes to create contracts, share, edit, and sign.
- Better performance – Enterprises are expected to constantly improve and adapt to changing technology. Greater CLM maturity helps to identify and remedy pain points or gaps in the contracting process to provide the best service to the customers.
- Increased Collaborations – Contract management software implements online contract redlining, real-time status tracking, and contract visibility in a collaborative digital environment. This minimizes the back and forth of emails and revisions and hunting down who has approved and who needs to approve next.
- Improved Visibility – Real-time tracking and notifications on customer engagement, including contract views and edits, approvals and signatures. Visibility into contract progress enables your sales reps to respond faster to buyers and move deals forward. The over-all visibility and collaboration across various teams in an enterprise become increasingly efficient.
Ultria’s AI-Powered Contract Management Software, a SaaS software is used by some of the world’s largest companies to help manage contracts at scale, through leading-edge technologies like Artificial Intelligence and Machine Learning, and help them reap maximum benefits through this technology.