Integrated contract management (CLM) turns commercial documents into leverageable assets.
In planning a webinar with PayStream Advisors, From Isolated to Integrated—Removing Silos in Contract Management, their research survey revealed a lot. Most obvious (and egregious) is the continued divide between organizations that are getting maximum value out of contracts with a CLM solution, and those that can’t get out of the file cabinet. Leveraging contracts means more than just extracting value; it’s also how to mitigate the risks they potentially represent. And that’s invaluable.
Much has been written on this site concerning the advantages of integrating contract management across functions and departments in an enterprise. Minimizing third-party risk, identifying procurement savings, speeding up sales cycles, maximizing process efficiencies and many others are all documented outcomes.
So why is there still so much reluctance to move away from the CLM isolationist approach? “That’s the way we’ve always done it” and “If it’s not broken, don’t fix it” are two of the most common excuses. The deeper reasons are likely fodder for behavioral psychologists, but the advantages of adopting full integration are too compelling to ignore.
1. Maximizing contract value with a holistic approach.
During a series of Determine demo webinars about CLM, attendees were asked how they currently manage contracts. The responses were overwhelmingly word docs, spreadsheets, email and Sharepoint. Certainly, all will get the job done. Sort of. But without the accessibility and requisite visibility into the contract data – or at minimum, a contract repository – there is no real way to use the contracts to further a company’s goals. They exist simply as a snapshot of terms and conditions at a point in time.
As Determine VP of Sales Sean Delaney mentioned in a webinar with IACCM, that data disaggregation represents knowledge gaps where risk accumulates and opportunity evaporates. By contrast, a holistic approach uses a single source of verified data interconnecting all solutions in a company – supplier management, P2P, sourcing, analytics, etc. That leaves no question about whether data is consistent from one contract to the next, or one office / department / geography to the next either. That enables people to look beyond the mere legal aspect of contracts and start identifying their potential to drive business results.
2. Maximizing contract value by thinking beyond compliance.
Contracts will always exist to protect companies and their interests. That’s a given, and why compliance is critical. (It’s also why an ad hoc approach to contract management and solution integration enterprise-wide is subversive to achieving that compliance.)
But contracts are evolving in structure and intent beyond GRC to also become more instrumental in disparate areas like relationship building, establishing and meeting sustainability objectives, social initiatives and more. Those are ambitious efforts, and relying on a manual, disjointed (and in certain respects, centrally controlled) contracting process inhibits their success.
As Tim Cummins, President and CEO of IACCM (International Association for Contract & Commercial Management) put it in an OutLoud podcast interview, “Our archaic and medieval methods of constructing and drafting contracts are really a massive degradation to the potential for better trust, better communication.” Ouch. Thinking beyond just compliance means the future of contracts needs to be more agile and versatile, with integrated technology solutions taking a lead role in driving processes. It won’t happen on a spreadsheet.
3. Maximizing contract value through shared success.
According to PayStream Advisors, the pressure to reduce contract management and process costs far outweighs the pressure to gain more visibility into contract status, terms, milestones, etc. That smacks of shortsightedness on the one hand, and simple misunderstanding on the other. Truth is, there is no one single reason to adopt and more integrated, flexible and scalable contract lifecycle management solution or approach. There is something in it for everyone, internal and external.
“Lack of budget” is often held up as a stumbling block (which is ironic, considering the mandate to reduce contract costs), but that’s where the focus on shared success comes in. While legal or procurement or finance or sales alone may not have the budget to absorb a more robust CLM implementation, in our experience combining budgets is what will move the project forward.
All stakeholders need to be brought on board early in the planning or exploratory process. Rather than talk any department out of their focus on self-interest, it is important to point out all the ways a fully integrated contract solution will not only advance those self-interests, but the broader organizational goals in the process. The old maxim, that you can’t be all things to all people, does not apply to integrated contract management. There is something for everyone, and recognizing that potential for shared success is what will ultimately lead to unlocking contract value.
Learn more about maximizing contract value in our webinar with PayStream Advisors and valued Determine customer Watermark Retirement Communities, From Isolated to Integrated—Removing Silos in Contract Management. And schedule a hands-on, personalized demonstration of how contract management on the Determine Cloud Platform can help you achieve your organizational goals.