According to HBR’s 2020 Law Department Survey, a contract lifecycle management (CLM) solution is one of the top technology solutions that law departments plan to implement in the next one to two years. If your organization is looking to add a CLM solution, consider this number: 32,700,000. That is the number of hits for the search term “contract lifecycle management software” on Google. And, while it took the search engine 0.52 seconds to deliver its responses, it would take you years to sift through those results to find the CLM that is right for your business. You may never be as speedy as Google, but you need some way to narrow down your choices.
Fortunately, we can help you pare down the list with a thoughtful, programmatic approach to evaluating your needs and determining how a CLM solution can match them. Here are four key areas that you should factor into your decision-making process.
1. Know Your Requirements
The first question to ask yourself is whether—and why—you need a CLM solution at all. Are you after the latest, shiniest, flashiest software for your legal team so you can keep up with the Joneses? Did you hear about someone else using a CLM platform and think your organization could benefit? Ask a variety of questions and be honest with yourself about your needs.
- How complex are your contract needs? If you have a variety of contracts, a CLM solution may help you tame the chaos and streamline the law department’s workload.
- How repetitive are your contracts? Are most of your agreements boilerplate? If so, a self-service model may be all you need to lighten your lawyers’ load. If not, consider whether you would benefit from a well-defined playbook including a clause library that allows business units to choose what terms they need and that improves contract consistency.
- What are your legal and compliance concerns? Do you work in a heavily regulated industry, such as healthcare or finance? If you must contend with risk-laden agreements, a CLM platform with more advanced features that can identify, assess, and empower you to react to those risks can be a game-changer.
- What are your existing contract processes and workflows? By mapping out your existing processes, you can identify what problems you want the CLM system to solve and what features are essential.
- What are your goals for managing your contracts? How will you measure your progress toward those goals?
Once you have your list of requirements, develop a set of use cases against which you can evaluate each vendor.
2. Know the Vendor
While CLM solution providers can tend to all blur together, it is critical to seek out key differentiators that will ensure you are indeed making an informed choice. Some vendors have risen in the marketplace because they excelled at one aspect of CLM, such as document generation, or catered historically to either a sell or buy-side perspective. Others focused more heavily on supporting the overall workflow management of the contract lifecycle, from the request for a contract through collaboration, execution, and renewals. The key criteria to look at here are the vendor’s maturity, stability, and specific areas of expertise.
- How stable is the business? When was the provider company started? Is the company actively acquiring other businesses, or has the vendor itself been acquired? Has it received private equity funding?
- Is CLM the vendor’s central offering or is it just one part of a larger software portfolio? Is the vendor’s CLM offering new or more mature?
- How many solutions does the vendor currently offer and support?
- Where is the company located? Where is its customer support team located? Will you encounter time-zone challenges when you need to reach customer support?
- Does the vendor have proven gravitas in the marketplace? Check out how the CLM system ranks according to reputable sources, including Forrester, Gartner, CLOC, and HBR’s annual surveys.
- Who are the vendor’s current clients? Does the vendor work with major national or global corporations, or is it strictly a regional player?
- Does the vendor have experience with businesses like yours? Check out the vendor’s core business model to determine whether it leans buy-side, sell-side, or both. Example: If the application has evolved within a CRM platform such as Salesforce, it is safe to assume they are well grounded as a sell-side solution.
3. Know the Product
Once you understand your requirements and have vetted the vendor, it is time to look under the hood of the software. Your requirements will dictate the features you need, but here are some of the major things to look for in your CLM solution of choice.
- What platform(s) does the CLM solution operate within? Is it built on top of Salesforce? Will it work with Office 365?
- Does the platform have a proven track record of being able to integrate with other enterprise solutions your requirements may demand (sourcing, billing, matter, and vendor management, etc.)?
- Does it offer full lifecycle management capabilities, from request through execution and obligation management?
- How flexible is the underlying data model and taxonomy? Will it work out of the box with the way you have organized your contracts and data? Will it require and allow for customization, if needed?
- What opportunities does it offer to streamline your contracting processes? Will it unlock the ability to automate processes? Can you create and open a request portal to customers and third parties—and can you do so securely?
- Will the system help you manage and proactively react to upcoming expiration and renewal dates?
- Does the CLM system dynamically generate template-based contracts? How robust are the centralized template management capabilities?
- Can you create a playbook with defined workflows that sweep in particular clauses? How smart and configurable are those workflows? For example, can the solution trigger approvals based on the contract’s subject matter, clauses, geographic scope, or contract values?
- Does it offer a comprehensive search capability? Can you search contract content, even on third-party paper? Is the search function intuitive and easy to manipulate?
- Is the overall user interface clear and understandable?
- Will the system scale as your contract workload grows?
- Does the platform offer artificial intelligence capabilities? If so, is the technology proprietary? Which aspects of the CLM process does the AI address?
- Classification (type of agreement)
- Objective metadata extraction (identification and extraction of core taxonomy data points)
- Collaboration and negotiation (review reconciliation and redlining)
- Subjective analysis (risk assessment, proactive obligation management)
- Have you seen a product roadmap? What features are available today, as compared to features in development or planned for the future?
4. Know the Costs
Understanding the costs of the CLM system upfront prevents sticker shock after selection. Costs typically fall in three categories: implementation, transactional, and intrinsic.
- Are you able to use the product off the shelf, or do you require extensive customization? Are there any “quick start” options available?
- How long does an implementation for a client like you typically take?
- Who will actually implement the CLM: the vendor or a third-party partner? What does the vendor’s partner ecosystem look like? Does the vendor require its technical teams to be involved at all times or does it entrust partner/client technical resources to assume those roles?
- Do you have a legacy system or repositories with data to migrate? If so:
- What is your data volume?
- What is your strategy to assess and review the legacy data? Does that strategy include scanning contracts via optical character reader to ensure searchability, extracting key information, identifying “families” of contracts, etc.?
- Can the vendor help (leveraging AI tools or services), or will you require a third party to assist with that effort?
- Who will ultimately be responsible for transforming and loading this legacy data into the final solution?
- How much do you expect your data to grow over the next year? Five years? Based upon this growth, will there be additional costs from the vendor as your volume increases?
- What is the vendor’s licensing model? Do costs differ by role or number of users?
- Does the vendor offer discounts for contract length?
- What support does the vendor offer, both during and post-implementation, and what costs are involved with each support option?
- Does the vendor offer training and certification? Are there online, self-service training sources or other supporting materials readily available? Does the vendor provide collaboration activities or sponsored events that end users may attend?
Finding the CLM Solution That Best Suits Your Needs
These considerations will help you make the best decision for your organization. Keep them in mind as you put together an RFx and interview vendors, and use them to measure and score each potential solution against your requirements-based use cases. Be diligent and demand transparency from your potential vendor as to “who they are” and “how they go about their business.”
At the end of the day, finding the right CLM solution that satisfies your needs and expectations should help accelerate your contract cycles, address gaps in your existing contracting processes, reduce risk, and ultimately recoup lost time and revenue.
To learn more about how to apply a rigorous process to assess potential CLM vendors and find the optimal CLM for your law department, please get in touch.