Recently published on July 25th 2016, the Forrester Wave for Contract Management designated the top 14 contract management solutions available to companies today. Judge on a 28 point criteria, this Wave report was the first report on this market by a leading analyst firm in 5 years. While the features and functions of individual solutions vary from offering to offering, there are 5 key functions that, according to Forrester Research, every leading Contract Lifecycle Management system must have. Given the importance of Contracts and Contract Management systems in today’s business environment (business relationship are defined entirely through contracts – lots of them), these capabilities are must haves for companies looking to turn their contracts into a competitive advantage.
Key Functions of Contract Management Systems
1) A High Integrity Contract Repository
For many businesses, the thought of storing contracts in a physical filing cabinet is fit for a horror movie. Nowadays, a secure, cloud repository has become table stakes for leading CLM systems. By far the most common use case for CLM solutions, cloud repositories must enable users to easily access and search online for the contracts they need – while ensuring that the contracts are 100% secure. Advanced search capabilities enable users to quickly find any data element (including contracts, attachments, clauses and provisions) they need. According to Forrester, 93% of the 41 vendor reference clients they interviewed are using CLM solutions for their repository functions.
2) Advanced Analytics
72% of the clients Forrester interviewed used their CLM system for contract analysis and reports. Leading Contract Management solutions give legal teams the power to improve contract performance by providing insights into contract cycle times, term usage, and commonly negotiated clauses. Advanced CLM analytics help transform legal teams into revenue producers as well – helping your sales teams to track renewals, identify cross-sell and up-sell opportunities, and improve negotiation tactics and terms.
3) Automatic Contract Authoring and Generation
By enabling sales and legal teams with automatic contract authoring and generation capabilities, the benefits are twofold. First you can streamline the drafting process – allowing your expensive legal resources to use their time more effectively. Second, automatic generation gives management more control over the contracting process. Equipping your legal and sales teams with pre-approved clauses, terms, and structures ensures that your contracts are in compliance with legal standards and guidelines. Just 56% of CLM clients have this function deployed, according to Forrester.
4) Contract Integration with Transaction Systems
The data contained in a contract is vital to the success of every aspect of B2B business. Forrester therefore identifies Contract integration with the transactional systems in your business as a must have capability for effective Contract Management. From Order Management Systems to Procurement, many departments around a company rely on the contract specifics of what has been sold to the customer, at what price, with what service levels, and under what conditions. By connecting to Configure Price Quote solutions, companies can ensure that all the needed information contained in the quote is pasted on through the contract and into revenue management systems. By seamlessly integrating the flow of information between business systems, companies can help to ensure that they are compliant on previous agreements. CLM customers are hoping to connect these systems, however only 20% of clients Forrester interview have done so to date.
5) Contract Optimization to Improve Contracting Processes
According to Forrester, the end goal of CLM solutions must be to make the contracting process more efficient, and drive better business relationships. So far, only 10% of CLM clients interviewed have made partial progress. By leveraging Advanced Analytics, equipped with Machine Learning capabilities, executives can improve the contract process over time based off of prescriptive insights.