September 8 by Vijay Shah
Now over halfway through the year, 2020 has proved to be extremely challenging for business. The pandemic has served as a wake-up call for most organizations, exposing the weaknesses in their internal processes and systems as they pivoted and adjusted to a “new normal.” Businesses are quickly realizing the necessity of Digital Transformation, shifting it from a mere business trend to a critical need as they optimize for the current situation and plan for future disruptions. And, as one of the most affected teams throughout the pandemic, legal departments are showing a growing interest in transforming the contract management process.
In fact, the contract lifecycle management (CLM) market, which is already a multi-million-dollar industry, is witnessing a double-digit growth rate. With the shift to remote work, fewer in-person deals being conducted, and a growing concern around maintaining compliance and security in digital transactions, legal teams and organizations are looking to contract management solutions for answers.
As a CLM provider, we’ve worked with our customers and prospects over the years to continuously understand their needs in order to provide an effective solution. And, as 2020 and the pandemic have progressed, we’ve found that seven key factors are influencing organizations’ need to adapt and implement contract management solutions:
1. Remote Workforce
With offices closed, employees working from home, and a lack of IT preparedness, the initial phase of the pandemic proved chaotic as many moved to quarantine while also keeping business running. These issues raised awareness around the need for a reliable, cloud-based CLM solution which can be securely accessed on-demand from anywhere. Many legal teams faced a reality check as they struggled to access copies of contracts and important data while operating remotely.
2. Volume of Contracts
Enterprise legal teams are constantly under pressure to deliver, even in non-pandemic times. But as reality set in regarding how the pandemic would affect business, legal teams were suddenly overwhelmed with contract revisions, revising terms, and reviewing force majeure clauses. It quickly became clear that the sheer volume of contracts demanded a tool that could help teams easily find, review, edit, and revise contract terms from remote locations.
3. Multiple Stakeholders
Multiple approvers from different departments—including sales, procurement, finance, and other stakeholders—is hardly a new concept in the business world. However, as most shifted to remote work, managing multiple stakeholders became increasingly challenging for legal teams. Identifying and tracking the changes made by different approvers while maintaining multiple versions greatly increases the chance for error, which can ultimately result in revenue losses for the business. A CLM solution with a central repository can keep track of and manage different contract versions, while also offering notification and reminder features to help legal teams track the edits from different stakeholders.
4. Global Business
International business operations and a global customer base expose enterprise organizations to the risk of litigations in regional markets. Legal teams must ensure the organization adheres to local laws, but the process can be costly, especially if disputes arise and must be solved. A CLM solution can reduce such risks and support the global operations. Smart contract terms within the system can guide legal teams through local laws to save time, effort, and money.
With the constant changing rules of engagement, adhering to compliance standards is always the topmost priority for the legal department. Failing to comply with the governing laws can cause a huge loss of revenues and reputation, which any enterprise cannot afford. Leading CLM solutions can ensure organizations comply with such governing bodies and limit risks.
6. Revenue Leakages
There are several common contract-related issues that can cause a loss of revenue for enterprise organizations. An inability to track renewals, missing payment cycles, and non-fulfilment of contract clauses due to manual processes and traditional tools often results in revenue leakage. More advanced CLM solutions can prevent these losses through the ability to send notifications and reminders to task owners, which might otherwise go unnoticed.
7. Digital Transformation
The pandemic has proved that the usage of on-premise solutions, broken business processes, and reliance on manual tasks can bring business to a standstill. Organizations are realizing they must prioritize their investments in digital transformation and rely on next-gen technology to keep them in a race for growth.
Solutions like cloud-based CLM and CPQ are helping enterprises in their digital transformations and connecting their key processes in their commercial operations. Implementing a robust CLM solution can no longer be neglected if any organization is planning to digitally transform their business.
As businesses look for solutions to help them survive and grow through these challenging times, there are many factors that point toward contract management solutions.