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5 Principles for a Successful CLM Implementation

Why deploying just the technology isn’t enough

Contract Lifecycle Management (CLM) Technology is no longer a ‘nice to have’ for businesses, but an essential tool to help manage financial, operational and regulatory risks that can arise through limited oversight of contracts, or poor contract management. It is also essential to improving efficiency, reducing contract cycle times and the administrative burden on Legal as well as other business functions to analyse contracts and provide management information.


However, a number of businesses we speak to have not realised the technology’s benefits and seen low adoption rates as a result. This is often due to poor implementation, where the focus has been on standing up technology rather than what the technology is enabling, which is the people. Below are five key principles we’ve identified that are required for successful implementation

Principle 1: Start with Process


Before implementing a CLM tool it is essential to optimise your current contracting/contract management processes, as well as your delegations of authority for both contract approval and signature.

It is important to gain buy in from key users of this process (Legal, Procurement, Sales etc.) and other geographies if you’re going global. Once the process is set it should not be customised as it’s rolled out via the tool without a credible reason (e.g. regulatory) and should be done with proper change management to assess the impact.

Without optimisation, you risk digitising an existing inefficient process, which will reduce tool adoption and the overall benefits of the CLM tool.

Map your existing process, identify areas of inefficiency and design a new process with minimal hand-offs and clearly identified approvers/signatories for different contract types and risk profiles.

Principle 2: Fix your Data


Carefully consider the contracts and information you want to store on the tool rather than uploading all your information as-is. The tool is only as useful as the data within it.

Migrating contract documents is not as easy as ‘drag and drop’, information needs to be extracted from these documents to make them useful. This means you need to understand what information you want to see and making sure your contracts are in a suitable form for them to be ‘readable’. It can take months for this to be done properly with the use of AI and other technology and so it should not be underestimated.

Start by sanitising your existing contract base by removing duplicates and archiving terminated contracts, for example, consolidate the information centrally or have it clearly mapped. Explore the use of technology and support to help with this activity. Then consider your master data (vendors, customers, entity info), ensuring you have a clean source for this and are also aware of which systems will hold it.

Principle 3: Optimise your Contract Templates


Building on our second principle, optimising your contract templates is also an important activity to complete before implementing a CLM tool. Optimisation in this instance means:

  1. Identifying all your existing templates;
  2. rationalising these where possible; and
  3. ensuring you have the most up to date versions with the latest standard positions and fall-back positions.

Technology can be an excellent enabler to this process by using AI tools to analyse your current templates against completed contracts. This allows you to identify your most common positions and provide a data driven approach to developing new standards.

Optimising your contract templates has several benefits; it improves risk management as the most up-to-date contractual positions are included in templates as well as ensures you are taking consistent positions. It also enables business users to better self-serve as its easier to identify the correct template. This has the additional benefit of reducing demand on legal due to requests from the business. Implementation time is also reduced as fewer templates will need to be configured.

Principle 4: Start Small


CLM tools have several impressive features, however it is important to recognise the current level of maturity within your business as to whether it is ready for those features.

For example, your business may store contracts on local hard drives, draft contracts based on the last version used, negotiate over email and sign by hand. In this a scenario, a tool could help digitise this process with a central repository, drafting capability from online templates/clause libraries, negotiation through a collaboration platform and e-signature. This is a significant amount of change for the user though who, at the moment, is just using basic word processing software.
There are several pre-requisites that must be considered such as:

  1. process (see principle 1)
  2. data (see principle 2)
  3. content (see principle 3) and
  4. most importantly, people (see principle 5)

Start with a minimum viable product that will be beneficial to the business, then phase the deployment of additional capabilities as the business matures in its use of the CLM tool. A roadmap should be developed to show users how the tool will evolve over time.

Principle 5: Change Management is Essential


The cause of most failed CLM implementations is a lack of change management and senior sponsorship. Technology is often seen as a silver bullet to fix a broken process, to increase efficiency or reduce cost but it is redundant if it isn’t used properly or deployed in the right way. Technology, after all, is an enabler and cannot be implemented in isolation or without considering each of the principles above.

It is essential to understand the impact of the change to current ways of working for potential users of the tool. Once this change impact is understood, awareness and knowledge of the tool’s capability and what the change means for specific user groups, as well as the business must be built. This should be done through regular comms from both business leaders as well as local managers.

During implementation you then must provide adequate training and comms to the affected user groups so they are able to use the tool correctly. Once the tool is implemented support materials should be available for users as well as new starters so they can be appropriately on-boarded and knowledge of the tool’s capabilities can be reinforced.

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