Contracting teams face a double-edged issue—contracting is a cost center for many organizations, yet implementing a contract lifecycle management (CLM) tool to improve the process can be challenging.
The 2021 EY Law Survey revealed that 57% of business leaders experience revenue interruption because of contracting issues. By their nature, contracts have multiple roles and pass through different stakeholders. If your contracting process is unorganized, you end up slowing down your organization.
The good news is that teams that implement a CLM drastically improve contracting. For example:
- Signifyd now reviews contracts 85 times faster,
- Qualia’s average contract time went from 20 days to less than five, and
- Rippling uploads legacy contracts 40-50% faster while getting 2-3 times more contract data than before.
As with any new software, you’ll need to do some prep work to get everyone on board. Gartner predicts that by 2024, 50% of first-time CLM implementations will fail to deliver expected benefits. The complexities of implementing a CLM can be enough to deter organizations from trying one for the first time or moving to a new one.
It is possible to successfully implement a CLM and revolutionize your contracting process, and this guide will outline how to decide it’s time to try and how to make it a success.
Signs you’re ready for a CLM
Getting approval and adoption of any software is challenging, particularly if multiple teams and departments use it. So it’s understandable if you want to ensure a CLM is your organization’s best bet.
Generally, there are two scenarios where you might consider a new CLM:
- Your team has never had a CLM and wants to centralize your contracts and speed up the contracting process
- You’ve outgrown your current CLM and you’re interested in a new one
Here are signs you might fall in one of those categories.
A first-time CLM can benefit you if:
- Your company is growing quickly. If your workload is scaling quickly and you need to manage more without hiring more help, a CLM can help you automate tasks to work more efficiently.
- There’s a due diligence event coming up. You need to be organized before an IPO or M&A. A central repository that lets you easily find information and contracts makes due diligence easier.
- Your teams are doing repetitive work. Simple manual tasks, even ones as small as accessing a template saved to your desktop, add up to hours of lost time and potential errors.
- You don’t have insight into agreements. Contracts can help you understand what works, what you can improve, and what you need to prioritize, as long as you have data visibility. Jason Steel, an Account Executive at Ironclad, shared, “If you can’t at a moment’s notice produce a report of where all inflight contracts are or surface details of your executed contracts, then you’re ready for CLM. It’s not just about saving time; it’s a sign that you don’t have eyes or control over some of your most critical business documents, which is a risk to the entire organization.”
- Your legal department is a cost center instead of a revenue driver. Legal teams can get a rep as being the place where deals go to stop. With a CLM, however, your team can empower decision-making across the board. For example, Ironclad uses Ironclad to understand how long it takes to turn a contract on our paper vs. third-party paper, plus how likely a deal is to close and when based on redline edits. That information is vital for sales forecasting and reporting to the CFO.
- The legal team is spending too much time on low-level tasks. Your legal team didn’t go through law school with the hopes of reviewing and processing identical NDAs every day. A CLM automates standard agreements to free up legal time to review impactful decisions and dedicate attention to satisfying work.
A newer CLM solution can benefit you if:
- You’ve reached the limit of available features. As your contract processes evolve, your tools might need to as well. Finding a new CLM will help if you feel restricted by your current features or account limits. For example, does your current CLM make it easy to collaborate internally and externally? Single click contract acceptance, compatibility with various document sources, and integrations with third-party apps all make it easier to work together.
- You can’t easily make changes to contracts. If you can’t update contract terms and approvals on your own, you have an opportunity to save a lot of back-and-forth time with a CLM with easy edits.
- There’s low adoption because the tool isn’t intuitive. Mary O’Carroll, Ironclad’s Chief Community Officer, believes that “the real value of the CLM is data. If there’s no adoption, there’s no data. Or there’s garbage data. A great repository is mute if nobody is using the thing.” It doesn’t matter how great the tool looks on paper if it’s difficult to use.
- There isn’t a robust repository that helps you learn and improve. Suppose your current CLM has strong adoption but is just a digital dumping ground. In that case, it could be time for a change. 78% of companies don’t systematically track contractual obligations, which can cause serious liabilities. A dynamic repository that lets you find answers quickly and receive alerts to stay on top of renewals and responsibilities is a game-changer.
How to prepare for a new CLM
Deploying any new software is a large task, but you can drastically improve your chances of success by doing the proper prep work and following the advice from experts and fellow contracting teams below.
Clean up your own house
Preparing your inputs is the first step to preparing for your new CLM. Tech won’t solve every problem, so you must be ready to use the tool to the best of your ability. To do this, you need to:
- Ensure you have a single approved template for contracts
- Review contracting processes so everyone is on the same page, and document it so you can quickly transfer it to an automated CLM workflow
- Look for document redundancies and clear out repetitive, obsolete, and trivial records
- Clean up your terminology and taxonomy to standardize data
- Determine what record types are business critical and what data is important to stakeholders
- Evaluate your data retention policy
Choose a starting goal
No matter the size of your ambitions, you should start your CLM implementation strategically small.
“Trying to do an end-to-end rollout managing every contract type and pleasing everyone at once is hard. Instead, focus on one group, roll something out there, please them, delight them, get them super happy, and then you can get to the next stage and the next group that you want to roll out to,” Mary O’Carroll shared.
You can consider three approaches: the low-hanging fruit, highest-impact contracts, or contract centralization. The first option prioritizes your most-used, simple agreement, like an NDA. Alternatively, you could follow the footsteps of the FabFitFun team, as Katie Young, the brand’s Legal Administrative Manager, shared:
“We jumped right in with the biggest, heaviest workload, which was our Master Purchase Agreement. We revamped the entire workflow and implemented Ironclad simultaneously.”
The shakeup worked, and FabFitFun reduced its negotiation of their Master Purchasing Agreements (MPA) from 98% to 1%.
The New York Times took a different approach by getting all of their contracts into a repository to act as a single source of truth. During their internal research leading up to implementing a CLM, Lyndsay Cain, Director of Legal Operations, said a primary pain point was that teams couldn’t find the contracts they needed to reference and were unsure of their obligations. Since the point mattered so much to the stakeholders who would use the CLM, they decided to prioritize it. As an added bonus, an attainable and approachable change like creating a repository was easier to swallow as a massive organization. Now, the legal team can easily search and analyze agreements.
Andrew Bartels, the Vice President and Principal Analyst at Forrester, shared in a webinar about the effect of CLM, “Contracts are the core of the relationship you have with customers and buyers. So that means they matter to legal, procurement, and sales. It’s also worth noting that other stakeholders are also interested, like CFOs.”
Identify all the stakeholders who will touch or benefit from the CLM. Write out who they are, their role, when they’ll interact with a contract, and how it will help them. Having a list of everyone involved before implementation gives you a sense of who you need to get on board.
Create a project plan
Once you’ve done the prep work for your CLM implementation, it’s time to get to work. Creating a checklist of action items, like stakeholders to onboard and legacy data to input, keeps you focused on high priority tasks.
To get everything done, you’ll need to set aside time. Mitch Louie from Ironclad’s customer success team works with teams to deploy a new CLM and offered a bit of advice:
Confirm you have allocated time and resources to learn the platform post kickoff. Our most successful customers allocate time to learn the platform early on, which enables them to launch faster and reduce time to value.
Allocating time also empowers customers to build new use cases for different teams, to further standardize their contracting process.”
Ready to take the next step?
If you’re ready to deploy a new CLM for your organization, schedule a custom demo today.
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Ironclad is not a law firm, and this post does not constitute or contain legal advice. To evaluate the accuracy, sufficiency, or reliability of the ideas and guidance reflected here, or the applicability of these materials to your business, you should consult with a licensed attorney. Use of and access to any of the resources contained within Ironclad’s site do not create an attorney-client relationship between the user and Ironclad.