Tell us a little about yourself and your background. What experience do you have working with legal teams?
I’ve been with Contract Logix since the company was founded in 2006. I worked on the initial product concept and vision, and I’ve seen the contract lifecycle management (CLM) space develop from on-prem to Software as a Service (Saas) during that time. We work extensively with legal and procurement teams (among others) in highly-regulated industries to help mitigate financial and legal risks and improve their CLM processes.
What does Contract Logix do? How do you stand out in the noisy CLM space?
Contract Logix is one of the longest-tenured contract management software companies in the industry, and we specialize ONLY in CLM. For almost two decades, our platform has helped in-house legal, legal operations, IT, procurement, finance, and sales professionals across dozens of industries digitally transform the way they manage the pre-award and post-award phases of buy-side and sell-side contracting. Our belief is that everyone has risk hidden in their contracts, and our goal is to help our customers uncover and mitigate that risk. This could be everything from missed obligations to supply chain disruptions to proving compliance, and more. We know that you can’t entirely eliminate risk, but we help our customers get visibility into where their risks are, so they have the data they need to mitigate them. And as specialists, we work closely with tens of thousands of users. We have a great product, and a team of CLM experts with the implementation and change management expertise necessary to help our customers be successful.
What are some of the fatal flaws that hold back organizations from fully realizing the benefits of contract management software?
As I mentioned above and to our customers often, I’ve been in the CLM space a long time, and we at Contract Logix are thrilled to see how many organizations are starting to understand the value of effective and efficient contract management. There’s a lot of buzz in this space right now. That’s exciting, but one of the major flaws we encounter is when an organization tries to do too much too soon. They get really energized by the idea of what they’ll be able to do in the future with CLM and forget about the problems that they are trying to solve *right now* with the technology.
The truth is that a large majority of organizations are NOT using CLM technology. We talk with a lot of prospects that come to us using spreadsheets and shared drives to track and store their contracts. This creates all sorts of problems like lacking real visibility into what’s happening overall with their contracts, and there’s a ton of risk to this approach. It can lead to errors, delays, and missed obligations, not to mention being inefficient and potentially non-compliant. These people know they are at risk, and they want to avoid the financial and legal consequences that come from those risks. So, they decide to implement technology like the Contract Logix platform or another CLM provider.
This is where organizations start making things way more complicated than they need to be. A n Gartner analysis found that 50% of first-time CLM deployments fail, and our belief is that this happens because businesses lose sight of the fact that at the end of the day, they need to mitigate risk. They get distracted by bells and whistles,
and forget to do the foundational work needed to ensure that their CLM program is successful.
While each organization is different, and part of what differentiates Contract Logix is that we take a boutique approach to our customers, in general, there are three basic steps all organizations can take to mitigate contract risk.
The first step is to make sure that all of your contract data is captured in a centralized place. This will be your single source of truth for all contracts and mitigates risk by being secure, accessible, and organized. Users can report on, search, and organize contract data by any relationship such as type, term, language, organization, contact, and more.
Next, step two, is where organizations activate that data. Are there easy problems you can solve once all the contracts are centralized? Automated alerts are a great way to mitigate risk, but we’ve seen industry stats that say only 55% of CLM users do this. In our opinion, that number should be 100%. Everyone has contract obligations and deadlines to meet, but many organizations don’t take advantage of this foundational CLM element. During this step, users can also create standardized templates for common contracts their organization uses, in addition to well-defined review and approval workflows that meet both internal business process rules and external compliance requirements.
Step three is analytics and advancement. This allows you to audit and evaluate the performance of all of your contracts, and continuously optimize and improve using advanced analytics, KPIs, and more sophisticated CLM features.
The problem is that we see a lot of organizations try to jump to step three without doing steps 1 and 2 first. Our recommendation is that you start with the basics and then mature and evolve your CLM. There’s no need to make it harder than it needs to be.
That’s some very pragmatic advice that seems to make a lot of sense. Any other considerations or misconceptions you can share with an audience considering contract management software?
Selecting the technology is only the beginning. Anyone can buy CLM software, but to make implementation truly successful, you need to consider change management, training, and user adoption. This requires planning and preparation, defining the business problem, and how you’ll define success. It also means getting really specific about all stakeholders’ roles in the process and how the software will be rolled out to end users. Working with a CLM provider that has expertise in implementation and change management can really help ease the transition.
Can you give an example of where or why you think organizations are getting technology implementations wrong?
We talked about the three steps for successful CLM (capture, activate, analyze) and how many organizations get distracted and jump ahead, running before they crawl and walk. AI is a great example of this. There are a lot of different use cases for AI at varying degrees of maturity. One area where we see a ton of potential for AI is helping our users get their data into the CLM software and quickly realize that capture phase. Whether they need to import contracts in bulk or one at a time, organizations can use AI-powered Data Extraction to free up time they might have spent manually entering contract information. We see a lot of folks get very excited about advanced AI analytics, but they have to do the foundational work first. If you haven’t captured all of your contract data correctly, the advanced analytics don’t mean anything – the data is going to be wrong.
If organizations follow these steps, can you share quantitative or qualitative examples of their return on investment?
When organizations follow the three steps, they not only identify risks in their contracts, but also in their business processes. There are some quick and easy wins. Centralizing and securing contracts and related documents in a secure and easily searchable cloud-based repository automatically frees up the time it would take to search for all that data manually. Using clause and template libraries means that all standardized and approved compliant legal language and formats are accessible to those who need them, freeing up even more time. Automated workflows can help identify any major bottlenecks, and as I mentioned before, automated alerts eliminate risky missed dates and obligations. In the simplest terms, avoiding just one contract renewal, or reducing hours spent on manual processes, can easily pay for the software.
Another great ROI of CLM software is that organizations now have easy access to contract-related metrics (contract dollar values, number and type of new contracts per month, number of requests for contracts, aggregate value of different contract types, vendor performance, etc.) giving them greater visibility into the overall health of the business and the insights needed to take action, if necessary.
Most businesses understand that they have risk, so they buy technology to address the problem. The risk of a failed CLM implementation can be heavy, but when you put the right foundation in place, you mitigate that risk. We’re passionate about helping our customers solve this problem and getting back to basics.
Published January 29, 2024.
