Research firm Gartner predicts that by 2025, legal departments will dramatically increase their spend on legal technology. The firm also noted that by 2024, legal departments will automate half of the legal work associated with key business transactions, but that these same departments will capture only 30 percent of the potential benefit of their contract lifecycle management (CLM) investments by 2025. In earlier blogs, I’ve outlined tips for a successful CLM rollout, but as legal teams start to make their 2022 budget requests, now is the time to review what systems may be in place and make the case for a modern, data-centric CLM solution that offers a fast time-to-value and return on investment.
The benefits of a data-driven CLM system include mitigating risk, increasing compliance, and finalizing business faster, along with addressing a key number of issues including:
1. Visibility and Security - Organizations can’t manage what they can’t track or see. The best CLM systems include a digital and centralized cloud-based repository to store, manage, search and secure all contracts and contract data. Teams can regulate access to sensitive contract information with roles-based and features-based permissions, encryption, multi-factor authentication, and single sign-on and because all the contracts and data is centralized, users with the right permissions can access it from any device. Advanced analytics capabilities allow users to find, sort, filter and report on all types of contracts, language, terms and virtually any other datapoint. Then, generate reports and leverage dashboards to track KPIs, deliver actionable insights and improve performance.
2. Manage Spend and Resources - The best CLM platforms allow organizations to utilize data that they already have and speed up business processes. This can be done by building out clause and template libraries of negotiation-ready contracts with standardized and approved legal language and formats that are centralized and accessible by those who need them. Teams can also automate workflows throughout the CLM process, allowing users to easily and quickly route contracts, tasks, requests and reminders to the right people every time. This eliminates the risk and inefficiency of routing contracts at various stages manually and via email. Contract reporting also helps guide decision making around spend and gives leaders the opportunity to investigate and solve issues that get identified.
3. Reduce Risk - Unstructured data in contract management is not only tedious to manage, but also risky. Overlooked penalties, missed obligations, lost revenue, lost savings, lost contracts, unexpected renewals and expirations, and hidden clauses can leave a business open to unknown damages. The best CLM systems greatly improve compliance and speed with automated alerts for important contract dates and milestones, cloud-based clause and template libraries, as well as regulatory audit trails.
2022 budgets should include solutions like CLM that help businesses get additional value out of the vast amount of data in contracts that already exist, as well as make data-driven decisions that improve and optimize business processes. After all, the need for digital transformation (DX) continues to accelerate across all industries and company sizes. It’s a trend that isn’t going away anytime soon and a modern CLM platform can play a foundational role in every business’s DX strategy.
Published October 27, 2021.