May 31, 2024 – Organizations are facing increasing complexity in managing vendor contracts, leading to a critical need for streamlined and effective contract lifecycle management (CLM) to mitigate risks and ensure compliance. Recent market disruptions and regulatory changes have heightened the urgency for efficient CLM processes. Info-Tech Research Group's latest blueprint, Design and Build an Effective Contract Lifecycle Management Process, addresses this urgent need by offering a comprehensive guide to enhance CLM processes. By centralizing contract documents, refining processes, and implementing the right tools, organizations can drive operational efficiency and secure their contractual obligations in today's fast-paced business environment.
Info-Tech Research Group’s “Design and Build an Effective Contract Lifecycle Management Process” blueprint provides actionable insights to streamline CLM, ensuring improved efficiency and compliance.
“Contract lifecycle management systems, and therefore CLM processes, continue to evolve. Vendors in the space are constantly modifying their features and functionality, and the industry’s players are rapidly changing due to vendors entering, merging, and leaving,” says Phil Bode, principal research advisor at Info-Tech Research Group. “Artificial intelligence is the latest innovation being leveraged by the CLM providers, making the systems more sophisticated and easier to use. However, CLM still requires human participation to track down contracts, draft use cases, identify requirements, and run the systems. In addition, validating or spot-checking the work of the artificial intelligence with a human in the loop ensures things run smoothly.”
Info-Tech’s blueprint emphasizes the need for a structured and phased approach to CLM. By addressing foundational issues first and then implementing advanced tools, organizations can enhance both operational efficiency and compliance. This method ensures that each step is built on a solid foundation, allowing for sustainable improvements in managing contract lifecycles.
“For the CLM system to be effective, a lot of work must occur before implementation, such as defining the problem statement, desired process, requirements, use cases, and negotiations,” explains Donna Glidden, principal research advisor at Info-Tech Research Group. “It’s important to understand the limitations of the tool since it won’t solve all problems. For example, the best CLM system on the market won’t completely fix process and noncompliance issues.”
The firm’s research highlights how effective CLM processes can drive strategic business outcomes. Emphasizing a well-structured and phased implementation approach, the blueprint illustrates how organizations can align their contract management practices with evolving compliance and regulatory standards. This integration not only enhances contract execution precision but also reduces administrative overhead and mitigates risks associated with noncompliance and mismanagement. By adopting comprehensive CLM practices, organizations can stay ahead of regulatory changes and market dynamics, ultimately fostering a more proactive and resilient contract management strategy.
CLM requires a flexible approach tailored to the organization’s goals, culture, maturity level, scope, and other factors. Info-Tech’s blueprint outlines the following framework to guide organizations through various stages at their own pace and based on their unique needs:
- Location: Organizing and developing a plan to locate contract documents and move them to a “central” location. The primary outcome from this phase is a Contract Location Plan.
- Process: Identifying leading practices for a CLM process and comparing them to the current process. The primary outcome from this phase is a gap analysis to improve deficient areas in the CLM process.
- System: Defining CLM requirements and identifying and selecting a vendor that best meets the organization’s needs. The primary outcomes from this phase are guidance and the steps required to acquire and implement a CLM solution.
Info-Tech’s resource details how effective CLM can transform business operations, emphasizing the importance of strategic and systematic implementation. This recommended approach ensures that organizations can manage contractual obligations efficiently while maintaining high compliance standards. By adopting a phased methodology, organizations not only mitigate regulatory risks but also unlock significant operational efficiencies and cost savings. With the right CLM processes in place, organizations can achieve greater visibility and control over their contracts, fostering a proactive and resilient organizational culture.
For exclusive and timely commentary on this topic from Info-Tech’s analysts and access to the complete Design and Build an Effective Contract Lifecycle Management Process blueprint, please contact pr@infotech.com.
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