Why CLM implementations fail?
Implementing a Contract Lifecycle Management system is complicated and prone to failure. Learn more about key behaviours and mindsets you need to embrace to make your CLM solution successful and how it can it can increase the added value created by the Legal Department for the business.
Events of 2020 have accelerated the speed in which our ways of working have changed. At the same time, the frequency and complexity of regulatory and economic change has also kept contractual rights and obligations coming. This has challenged businesses not only to keep up, but also maintain commercial relationships through a period of economic recovery. As businesses assess their next move, the role of technology proves pivotal. Contract Lifecycle Management (CLM) technology in particular has the potential to generate significant cost benefits but why are successful implementation stories slow?
Before answering, let me pose this restaurant scenario to you. When it came to ordering, would you simply order “food”, or bypass the waiter altogether and help yourself to “food” directly from the kitchen? Of course not. The benefit of certain establishments is that they have unique menus, excellent chefs, informed waiters, sommeliers, and staff to help with decision making. In all likelihood, you’d probably also research ahead and pick the establishment that matched most closely to the taste and dietary requirements of your party. You wouldn’t take non-meat eaters to a steakhouse, no matter the quality.
So why do companies treat CLM selection and implementation like just ordering “food”?
The CLM market is complex with over 200 different providers and more traditional technologies such as your supplier or ERP tools jumping into this space. Are you looking for a contract authoring tool? Is this a tool for lawyers or both lawyers and the business? Are you worried about the post-signature revenue leakage and commercial management issues? Is there regional or global need? If you don’t ask these questions ahead of time, there is a significant risk that you’ll end up with “food”.
Don’t go alone
Procurement organisations and IT departments are fantastic partners for doing 90% of what a company needs to buy, install or manage. Traditionally these organisations have a wealth of experience buying ERP, long-standing and defined products and services. CLM is a bit newer and historic data, benchmarking and experienced skillsets are not common yet. To put it more clearly, just because you cook really well at home, that doesn’t make you a chef. We all accept this, so this is why we don’t head directly to the kitchen when we enter a restaurant. We accept that there are experts and informed individuals who help pick the right dish, wine pairing and dessert. But you see again and again that companies try and install a tech themselves or treat CLM like “any other tool”.
It’s not just the tech
As I mentioned, CLM has moved up the priority list in the last 12 months and there seems to be no stopping it. CLM technology has never been better and the use cases and innovations are piling up. But the real business case victories actually come from when an organisation simplifies its contracts and contract process, connects the legal function to the business, gets the right type of resourcing around it and then puts the technology in as an enabler. The experience of dining out with friends is the totality of the people, the food, the service and the restaurant itself. There is value in every piece of that, but put together it creates something of value for everyone. Same holds true for CLM technology. It’s not more fun to eat alone.
CLM technology is here as the next enterprise system that every company needs along with their CRM, ERP and procurement or supply chain tools. The value is immense but the pitfalls are real. As we all have seen, the world and business recovery needs to limit the latter and achieve the former a little bit faster.
About the authors: