Need for buying contract lifecycle management software
Amidst growing business models, mergers and acquisitions, new regulations, macroeconomic conditions, change and uncertainty have become the new normal. Companies must stay ahead of the competition to thrive in challenging times. When it comes to contracting, most of is it still stuck in word docs and calls for digital transformation.
Many legal teams are now considering technologies such as contract lifecycle management software to boost confidence and analyze data better. Broader contract digitization and technological capabilities enable these teams to focus more on strategic initiatives over manual tasks. In addition, with AI technology allowing better risk identification and mitigation, legal teams are able to do more with less.
How to get started with buying contract lifecycle management software
As per a report by Forbes, 84% of digital transformation projects fail. Digital transformation projects come with plenty of technical know-how and the market is full of vendors advocating buzzwords and jargon. That’s why buying enterprise software such contract management software requires proper guidance and understanding of technology.
Here’s a checklist on key points that you must consider before buying:
- What is the strategic vision for the legal team? Determine the goal that you’re willing to achieve with contract management software. It could be to control costs, mitigate risk or free up bandwidth.
- What problems do you want to solve? Understand the current challenges in your existing process, such as missing renewal dates/obligations, exposing contracts to risky clauses or too much manual effort being spent on contract authoring.
- What can you do with technology which you’re unable to do now? This could be added functionalities with the help of Artificial Intelligence and automation.
2. Business requirements:
- Determine your core business requirements and document them
- Define each requirement in details so that you are able to allocate time and resources for the project correctly
- This will help you differentiate the must-have vs. the good-to-have features
3. Stakeholder buy-in:
- Identify the teams and individuals affected by the projects. This will include end-users such as legal teams, procurement and sales teams, executives, legal heads and IT resources
This should include
- The total cost of ownership for the solution, which includes subscription costs, license costs
- Implementation and training costs
- IT resources
- Cost to the company for dedicating project resources
How to select a vendor for contract lifecycle management software:
Once the business requirements have been finalized, the next step is to zero in on a vendor. The steps for selecting a vendor are:
1. Cast a wide net:
- Research the available vendors in the market by browsing through vendor listing sites such as G2 or attend legal-focused conferences such as Horizon, ACC and WCC.
- Reach out to existing customers to capture their feedback
2. Screen the vendors:
- Screen the vendors by referring to analyst reports such as Forrester Wave or checking out product reviews on Gartner Peer Insights
- Browse vendor websites to access datasheets and client testimonials
3. Schedule a demo:
- A product demo helps in evaluating the capabilities of the product and the vendor .
- Gather information on the latest technology, product roadmap and market trends. Before the call keep the following information handy:
- Tech landscape
iii. Priorities including must-haves and good-to-haves
- Planned Budget
Once you have evaluated the vendors, it’s time to roll out RFP (Request for Proposal)
Preparing RFP for evaluating CLM software
A request for proposal (RFP) is a business document that an organization, usually a large enterprise, raises to elicit a response – a formal bid – from potential vendors for a desired IT solution. The RFP specifies what the client is looking for and highlights the evaluation criteria for assessing a vendor’s proposal.
The different steps in preparing an RFP are:
- Draft a well-structured questionnaire which aligns with your business requirements. The questions should be tailored according to your needs.
- Categorize the questions into different feature categories
- Include categories for pricing and customer support
- Provide all relevant data for the vendor and send it along with RFP to avoid frequent back-and-forth
- Mention the deadline
- Create the scorecard in Excel
- Assign weights to the features based on their priority
- Here’s a ready-to-use scoring template for comparing vendor RFPs
- Invite all stakeholders, such as end-users, executives and IT teams
- Tailor the demo for specific users
- Keep a recording of the demos
4. Final Selection:
This is the contracting and negotiation phase. In this stage, the vendor and client agree on terms and conditions and then the contract is rolled out.
FAQs about buying contract management software
Q: How much does CLM software cost?
A: The pricing of an Enterprise CLM software depends on the modules that are being used by the users. Individual modules provide function specific roles and responsibilities for every type of user. An organization has the freedom to choose a mix of different types of users for each of the modules as per their requirement. Based on usage, there are high-level two types of users: Power user and Business user:
Power user can initiate contracts, review or approve contracts, manage templates or clauses, update and edit contacts, edit meta data, review & negotiate contracts, compare revisions, search existing contracts in the repository, track compliance of contracts with purchasing data as well run reports on existing contract data
Business/View only user can search and view contracts, as well as approve and sign contracts in the authoring process. They cannot update contracts or edit meta-data, and they cannot be part of the negotiations process where modifying or updating contracts is required.
Contract modules are offered in three forms:
- Contract Authoring only
- Contract Repository only
- Complete Contract Module for Authoring & Repository
The pricing parameter is based on the number of power users who’ll be using the solution. The pricing parameter can also be based on:
- No. of new contracts created on an annual basis
- No. of Historical Contracts
Q: What should I look for in a CLM?
A: An enterprise CLM software should provide the following values/business benefits:
- Risk Reduction/Mitigation: Enforcing and operating on the latest terms, conditions, controls and policies improves overall contract compliance. The net effect is that supply chain risks are reduced and buys as a whole become less costly and more valuable. A contact management system enables much greater effectiveness in supplier onboarding with the right validation and certification tools.
- Financial Optimization: A contract management system helps to reduce legal fees and eliminate unplanned renewals of unwanted services. Additionally, spend visibility is another high-value benefit.
- Increased Visibility and Analytics: Reduce errors and oversights within the contract, analyzing progress in the contract process, and analyzing spending and cost allocations becomes a lot easier.
- Process Efficiency: Streamlining the contract creation, authoring, and negotiation process and reducing risk by ensuring compliance with legal guidelines. The ability to standardize contract language and processing is the easiest path to increased compliance and efficiency.
- Shorten Approval Times: Customizable automated workflows expedite the review process and increase efficiency. By creating a dynamic workflow to-do list, you can quickly scan all contracts to have a better idea of the current state of affairs at your company.
- Creating a More Transparent Environment: It can be difficult to identify at risk contracts or contracts that are about to fall out of compliance. A contract management system creates a more transparent and highly visible environment, where issues such as these can be reviewed at a glance. The more visible contracts are, the more likely they are to be appropriately managed.
Q: Why do organizations need contract lifecycle management software?
A: Contracts are the building blocks of any commercial transaction and hence valuable strategic assets for any organization. Efficient contract management ensures that you drive better negotiations, close contracts sooner, optimize your contract closure times and spends, and support higher staff productivity. Zycus iContract CLM empowers you to manage contracts better through collaborative features that enable search, authorship and administration
Q: What features should I look for in a contract lifecycle management software?
A: The features you should look for in a contract lifecycle management software are:
- Spend-to-Contract Matching:
Helps link spend data to contracts to track contract utilization, identify and reduce maverick spend, and optimize contract performance.
- MS Word Integration:
Import/Export contracts, clauses or templates in word format; Microsoft Word Plugin for offline contract authoring, allows syncing back into CLM.
- Easy Searching:
Powerful Google-like keyword and free-text search, which can also search through contract attachments. We’ve recently added Siri-like search capabilities: For example, you could ask the system, “Show me all contracts with expiry in December 2022”, and it would pull out a custom report for you.
- Integration with extended S2P Suite:
The CLM should stay tightly integrated with the rest of the suite, for example: an awarded bid in sourcing tool can be flipped into a contract, importing all the pricing and non-pricing information. Similarly, when integrated with a P2P solution, it should allow Non-PO invoices to be linked to the contract, create catalogs from existing contracts and even purchase items directly from the contracts.
- Artificial Intelligence:
Artificial Intelligence applications such as Machine Learning, RPA (Robot Processing Automation) and NLP (Natural Language Processing) give Contract & Legal professionals clear visibility into the metadata and risk factors in the contracts and helps with streamlined data, compliance checks and risk identification.
Q: How do I choose the right contract lifecycle management software for my organization?
A: To choose the right contract lifecycle management software for your organization:
- Understand your business requirements
- Prepare an RFP (Request for Proposal) questionnaire that aligns with your business requirements
- Roll out the RFP to your shortlisted vendors
- Score the vendors based on their ability to meet the requirements
- Conduct demo with the vendors with the highest scores
Schedule a demo to learn more about Zycus iContract software for enterprises.