Where CLM Investments Actually Pay Off—and Where Most Approaches Fall Short

It doesn’t take much for the excitement of a new, expensive technology solution to fade, fast. 

You’ve probably seen it before: 

• “This doesn’t do what it’s supposed to.” 
• “I can’t figure out how to use it.”
• “It was easier to just do it before.”

These complaints are very real from your team. But they’re not necessarily a technology problem. They’re a process problem. A CLM—or any new piece of technology, for that matter—can’t fix a broken system. What’s happening is that you’re not making the most of what a CLM can really do.

That’s why we sat down with Trayce Marcelle, Managing Director at Morae, to talk through where organizations can best maximize their CLM investment—and where they often trip up. 

“Over the past decade, I’ve done many remediations of previously implemented solutions, and the story is always the same,” she says. “More often than not, people are dissatisfied with the tool because “it isn’t doing what it was supposed to do” when in fact, it is doing exactly what they told it to do, and that is because they missed the bigger picture. When configuring a CLM solution, you have to focus on the problems you are trying to solve so the process can drive the technology. In these cases, it has been the other way around so they’re not using their CLM to its fullest potential.”

Missed connections: Where enterprises undervalue CLM

Marcelle recalls a client who asked her to drop everything and help them fix a CLM system that wasn’t doing what it was supposed to. “They said ‘it doesn’t even integrate with Outlook,’” laughs Marcelle. “And of course it does! But because they didn’t define exactly what that integration should look like, to them, it wasn’t working the way they wanted it to. Because integrating with Outlook could mean sending an email, but it can also mean calendaring or task management and even connecting to trigger automation, so when they configured the implementation, they missed identifying the features they really needed so they were not addressed. The focus on the features instead of the use case narrowed the view of what it could do and limited what it did do in practical application”.

So much of the value a CLM brings to an organization is how it brings multiple systems together. That’s because contracting is a part of every single business interaction, whether it’s sales closing a deal or procurement negotiating terms with a supplier. “An entire organization is governed by a contract in some way,” says Marcelle. “If you don’t have a firm understanding of what you’re obligated to as an organization that ties all of this together, you’re going to reduce the value you could get from your CLM (and increase the risk to your organization).”

Marcelle recommends prioritizing the most important aspects of your contracting process first, and going from there. Ask yourself:

• What are the business problems you are trying to solve? 
• What are the highest risks to your organization contractually? 
• What do you expect contracting to “look like” in 3 – 5 years?
• What is obligated to report on based on compliance or business policy?

“These are the things that can change the way an organization is perceived,” explains Marcelle. “Tucked away in a contract that lives on a hard drive are considerations for cost and risk. It could be as simple as a contract that gets auto-renewed every year, and it’s a contract with unfavorable terms supplying a service you no longer need. That’s just wasted spend.”

Marcelle recalls working with a company that originally wanted to build their own CLM; they didn’t believe there was a solution that could meet their needs. Specifically, they put a significant focus on signature policy adherence to the degree it affected their revenue recognition policies.  During routine quarterly audits they targeted a review of executed contracts and would reduce their global revenue by a good margin if they found a lack of alignment across that tranche. Says Marcelle, “By implementing a CLM that automated and governed the signature process, this was no longer a concern which totally changed the game for them.”

Why the build vs. buy dynamic breaks down with CLMs

This mismatch between performance and intention starts with the original implementation decision: build, buy, or hybrid.

Too many organizations, says Marcelle, focus on short-term savings only to realize they’ve lost the flexibility or functionality they needed to scale their contracting abilities as they grow. There’s so much pressure to get something out the door that they end up missing the point. (Sounds familiar? It happens all the time, she says. Managing to a schedule instead of success is slowly creeping up on lack of preparedness as the number one reason for failure.)

Option 1: Building keeps you stuck in one version of what a CLM can be

Building a custom solution can be appropriate in some circumstances, but organizations should carefully consider the ongoing investment required to maintain, enhance, and scale it over time. For many teams, a purpose-built CLM platform may provide a faster path to long-term value.“When you build a tool, there’s either a team of people tirelessly working to keep it relevant or sitting around watching it become stale,” she explains. “When purchasing a tool, you focus on features and roadmap.Why would you spend time and resources without consideration for that? How are you going to keep up with advancements in technology? Or business changes and growth? You will spend time and resources to build something that needs far more care and feeding then you would expect.  Then in two years when you realize, no matter what you do, you are still not resolving the business problems you identified (and now they have gotten larger) so you have to have the conversation and request budget again.  You are not likely to get it.”

Marcelle goes on to discuss the key consideration AI by acknowledging “Sure, you can use some legal assistant or disparate AI solution as an overlay to your custom solution, but that only solves part of the problem.  Instead of a native integration that is part of the process, you have information separate and apart from your workflow which you have to manage. Take it a step farther and consider that each action is an individual result that doesn’t become data for future growth and machine learning.  It solves the problem for the moment but that problem will surface again and you must start all over again.”

Option 2: Purchase with confidence

Prioritizing the decision to purchase a market leading solution is your best opportunity for success according to Marcelle but there is more to consider than just the technology purchase.  Without properly preparing for an implementation, you are just kicking the can down the road and that creates different problems. “Purchasing a tool for right now, without considering future state and growth is akin to purchasing a house just by seeing the outside of it.  It is a house, you can live in it. But when you go inside, there is one room, three stories high with no kitchen or bathrooms,” says Marcelle. “You will spend all of your time and money building out that house for the next year with really no actual place to live.” 

To make the most effective buying decision:

• Determine what success looks like ahead of time, where do you want to be in 3-5 years
• Identify the problems you are trying to solve, what are the actual business problems you are trying to solve
• Identify your priorities and know that you should not try to boil the ocean, be prepared to map out a plan to gradually transform the way you work

When you make the decision to purchase, Marcelle says it is key to take the technology out of the conversation. “I know it sounds counterintuitive but focusing on the technology relegates you to feature and functionality discussions. These modern CLM solutions are designed to be configured to support optimized business processes, if you don’t take advantage of that you are missing out on potential benefits on day one.”

Having been working with contracting for more years than she would like to admit, Marcelle emphasizes that you must focus on the process first, to get the best results.  Find a partner that brings together business process expertise, change management, and technology implementation experience. Successful CLM programs are as much about transformation and adoption as they are about technology.The latter leads you the wrong way down a one-way street.  You want the process to drive the technology which means configuring the solution to support your optimized business processes. This means you are not taking what it offers and figuring out how to make that work, the tool should be asking what you need, not telling you how to work.”

The right solution has guardrails in place to help you navigate the process, a true CLM can offer you that.

Option 3: Hybrid solutions can give you the best (and worst) of both

Marcelle believes the only hybrid solution that has merit is a CLM solution integrated with a core enterprise system such as a CRM, ERP, Procurement or Productivity tool. You want to use each tool for what it is intended and to allow users to stay in systems in which they are comfortable.  If you have the resources to do it, a hybrid solution can help you better configure a purchased tool so that it blends in with your existing processes more easily. By triggering a workflow from an external system, you preserve the integrity of centrally managed data and streamlines the process.  

“Where I see hybrid solutions most useful is in the connectivity piece,” she says. “For example, I’ll have a client say, ‘All my approvals are built in Salesforce,’ and that’s great, because every leading market tool integrates with it, so your team can continue to do that in the tool where they are comfortable. The goal is not change for the sake of change. It is efficiencies gained using good work done as a foundation and building on that where you can.”

What separates CLM investments that work from the ones that don’t

Here’s what Marcelle recommends to make sure you’re making the most out of your CLM investment:

1. Determine your key priorities first

More than anything else on this list, Marcelle recommends sitting down and understanding exactly what matters to you with a CLM, and what success looks like. Without the bigger picture, you’ll end up missing out on key features or functionality that your organization needs. To do this, interview your team and map out your existing process, the good, the bad, and the ugly.

“Clients often ask what I recommend, and honestly, the most important thing is understanding what your organization is trying to do with the tool and what’s important to you,” she says. “For example, a client may say that AI is the most important thing but not digging into what they want out of it is Patient Zero to a failed implementation. Instead of wanting to use AI, I often find they would like to streamline their processes and use technology to deploy playbooks, assign risk and create/negotiate contracts more effectively.  Sometimes that is AI and sometimes it is not. Discovering the underlying end result is how you establish a foundation for success.”

2. Understand your readiness level

Of course a good partner can help you get ready but it will save you significant time and money to have the following information before you embark on this journey:

• A good handle on your templates and critical contractual language
• An understanding of ideal future state of contracting so we can build something that will grow with you
• Defined reporting requirements so your build and resulting reporting capabilities are aligned with departmental and organizational goals.
• Use cases for integrating information from external systems that are directly or tangentially related to contracting
• Alignment internally on legacy contracts and how they will be considered in the implementation.  
• Documented business processes outlining how you work today,  

“It is a fact that ~50% of implementations fail due to lack of readiness,” Marcelle explains. “Without a vision of future state, you will build a foundation that could crumble from the weight built on top of it. Not only do you risk selecting a tool that will not work for you, if you do not intend to clearly define what you expect to get out of the system, you may as well not even start the process. You make a shopping list before Thanksgiving dinner because you know what you want to make but you have to define what is needed to execute that flawlessly.  You make a list then dig into each dish and what is needed to create that. This is the same concept.”

3. Give the project the resources it deserves

The biggest mistake Marcelle sees? “Driving to a date instead of driving to success,” she says. “You need to give the time and resources to understand what success looks like, what technology exists, and how your organization likes to work so it all comes together.”

The question is, would you rather do it right the first time, or have to do a remediation implementation that costs even more because you rushed it the first time and now your team hates it?

4. Invest in change management as part of your implementation plan

The final piece of advice from Marcelle is putting together a change management plan as part of your overall implementation. “Your end users are absolutely critical to the success of a CLM implementation,” she reminds. “They need to learn how to use the tool, of course, but it’s also making sure you’re thinking about what’s going to make everyone’s lives easier, not recreating how the process is done today. One of the first questions I ask is what is working so we can give the clients more of that, you have to develop champions early on and ensure they stay champions. Change Management is key to that.”

This includes considerations such as:

• Conducting workshops to gather requirements and feedback on the process from key stakeholders, communicating back to them “we heard you”
• Understanding what is important across all levels of the organization so your communications are relevant to everyone, and you can create them to ensure your message is relevant
• Establish success criteria that resonates across the organization for measuring and reporting
• Governance around policies, AI mistakes, and legal language
• Clear responsibility and rules for who owns what piece of each process
• Establish a clear training plan based on your user population and culture, start training early and gradually. Finish off with full system training but bring them along with you.  

For example, Marcelle recalls a client who only wanted to pay for train-the-trainer but didn’t invest in end user training. “They got what they paid for which was a solidly built CLM solution that no one knew how to use,” she says.

Make the most of your CLM investment with Ironclad

An ideal CLM implementation has all of your data in one place, and allows you to run an AI-driven workflow that makes your team move faster and work smarter. But to do this, you need to establish clear standards and requirements for your entire process, investing in a CLM tool that can meet you where you are now—and scale to where you’re going.

Learn more about how you can customize Ironclad to fit your organization.

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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.