By 2023, 50% of CLM implementations will fail to deliver expected benefits, Gartner had predicted back in 2019. And as we inch closer to 2023, the frustration with CLM does seem to be increasing even though the technology itself is evolving at a lightning-fast pace.
One key reason for the growing CLM pain is companies rushing to chase advanced AI use cases when they haven’t even addressed their critical business risks due to inefficient contracting. A company may store contracts on local hard drives and struggle to stay compliant with sell-side contractual obligations due to the sheer volume. In this scenario, it is prudent to focus on digitizing the lifecycle or at least the post-signature management of just a few contract types that can mitigate the risk, instead of building advanced drafting capabilities powered by AI.
In the pursuit of chasing CLM perfection, contracting leaders often forget the importance of quick wins that prepare them for their ambitious long-term goals while also reinstating the confidence of leadership and other stakeholders that the implementation is moving in the right direction.
Introducing Impact First methodology
With the understanding that a generic approach can not work for a function as complex as contracting, we have embraced the ‘Impact First’ methodology at smartContract, which gives our clients the flexibility to phase out their CLM implementation path in a way that complements their process maturity.
It means that we will work with our customers in consequent, small cycles to solve the most pressing challenges or start strategic initiatives that build CLM maturity while following a provisional roadmap for advanced use cases. This enables us to quickly solve critical challenges while building the foundation to align contracting processes with broader business objectives. For example, when COVID-19 led to a boom in IT services, the legal department of one industry giant got overwhelmed with contract requests. This was at the time when legal’s ability to engage and support was already exacerbated by an abrupt switch to remote working. In a few weeks, it became clear that contracting needed to be more streamlined and CLM was the obvious solution. The most pressing need was to digitize sell-side contracting, in particular, the process to execute MSA. Even though it is one of the most complex agreements signed by the company, smartContract was fully prepared with the technology and experience to support them. We were able to go live with the MSA within a couple of months and the average cycle time was reduced to just 1 week from 4+ weeks within just 6 months.
Consequently, we migrated all sell-side contracts to our full-scale contract repository with an ML-powered search engine that quickly gets a user to the information they need. Over the next quarter, the roadmap included automating high-volume, low-risk contracts like NDAs that engaged stakeholders from across the organization. Although these sprints led to some bumps along the path, the lessons learned enabled the IT services giant to digitize new contract types in a matter of few days. The company is now preparing for an ambitious use case that will enable cross-functional collaboration and insights with purposeful integrations.
Why Impact First works
Any major digital transformation project, by nature, will inherently be susceptible to change and decisions need to be quick to maintain momentum. Impact First enables this by lowering the risks associated with implementing a Contract Lifecycle Management (CLM) solution. Stakeholders are more comfortable with smaller initiatives to improve day-to-day processes that they understand.
Impact First also allows for continuous improvements to be made by building upon new digital capabilities, establishing backbones, and increasing the intelligence of the contracting function. Adjustments can be suggested and measured based on the benefits to the broader user base.
Under our Impact First methodology, the smartContract CLM solution is adapted to your organization’s specific needs by gradually implementing changes to address critical contracting challenges. This approach also builds up capabilities for long-term goals, aligning contracting with overall business objectives.
This article is a part of smartContract’s Practical Contracting 2023 series wherein each chapter will focus on the most prominent challenges with CLM solutions today and how we’ve been able to overcome them for our clients. Watch this space for upcoming articles or drop an email to email@example.com with the subject “PC23” to be notified.