Reflections on IACCM – Part 1: Modern Day CLM Adoption
A few months ago at the IACCM Conference in India, I was honored with the opportunity to present to an audience of leaders in corporate legal and IT from New Delhi and Bangalore.
At the International Association for Contract & Commercial Management (IACCM) conference, I focused on how modern-day Contract Lifecycle Management (CLM) software is changing the landscape of the day-to-day tasks of a legal team. And, how the application of machine learning algorithms in business decision making is promoting real-time guidance for business stakeholders.
The audience had in-depth and insightful questions about how CLM technology is reshaping practices in the corporate legal landscape.
What is the CLM adoption rate for enterprise companies in India? What does 2020 and beyond look like?
Enterprise Contract Management technology in India has only started receiving due respect from General Counsels and CIOs. In North America and EMEA, contract management technology is a must-have for any business with decent turnover. Whereas in India, I am personally aware of large enterprise businesses that have not invested in automating their legal function, which consequently has slowed them down and left them behind their competition. Many of the businesses remain content with their own in-house, custom-built legacy software, while some of the new-age businesses are caught in the dilemma of build vs. buy when it comes to automating their legal function. In this regard, I always prefer referring to the Contract Management Maturity Model™ designed by Apttus:
About 60% of enterprise businesses in India have a repository of some type (mostly SharePoint-based) where legal departments store their contracts either in scanned or PDF versions. This corresponds to Level 1 of the graphic (bottom block). However, most of these repositories have
highly limited or non-existent reporting capabilities (Level 2). It would be fair to say that about a fourth of the enterprise businesses have invested in building reporting and analytics around their contracts in India. No more than 200 enterprise businesses in India would likely have implemented a professional contract management solution or have custom-built CLM software that allows for seamless authoring and negotiation as well as integration with CRM and ERP solutions. And less than 0.01% of the enterprise businesses in India have implemented some form of applied AI to ensure superior performance and ROI for specific business areas.
If someone compares the above numbers with the rate of adoption of technology in North America and EMEA, it would be at least 3x for each of the blocks beginning at Level 2 (Reporting and Analytics) up to Level 5 (Applied AI). However, the adoption of global best practices in doing business coupled with heightened regulatory and shareholder scrutiny plus a massive emphasis on corporate governance due to the recent instances of high profile corporate and banking fraud in India has led to increasing interest from enlightened CIOs and general counsels to implement cutting-edge contract management technology.
I want a customized CLM that meets all my needs.
The argument of build versus buy was fundamentally relevant when it came to third-party technology solutions with long CAPEX and perpetual ownership in the bygone decade. Such software required frequent updates every couple of years, which in turn meant additional significant spend on software. Now, we are in a world of software that is cloud-hosted. Today’s CIO is not interested in investing money in perpetual software. The modern-day CIO is more interested in establishing technology partners (not ‘vendors’), who understand their business and offer configurable solutions that do not require significant effort in coding and offers ease of adoption. The question of ownership of software has shifted from CAPEX-based decision to OPEX-based decision. Executives do not want to lock up capital in software. An even stronger argument that favors subscribing to contract management technology versus building your own is the ROI and best practices.
A bank’s key objective is to make money for owners through lending and investment decisions and develops business processes and practices to ensure the best ROI for its owners. But that does not give it core competencies in developing the best contract management solution, which is regularly updated with new features and functionality relevant to its business. If instead the bank invests in building technology, it would have to invest huge chunks of money into a team of IT/legal experts and keep investing at regular intervals to ensure the software remains relevant. In conversations with CIOs and general counsels at some of the leading IT businesses in India, they admitted their attempts in building an in-house CLM software did not result in the desired ROI but ended up burdening their own teams with a significant amount of change requests from business users who wanted more and better functionality! Thus, their investment in an in-house CLM solution was not sustainable and put them behind the competition, who did the intelligent thing by opting for best-in-class software to automate their contract management solution.
Leading CLM solutions are built for easy deployments across different business verticals and address nearly all the business use cases relevant to that vertical. Apttus’ CLM solution has enterprise businesses (including leading Fortune 500 companies) across various verticals – manufacturing, healthcare and life sciences, technology, and many others – but that does not mean that Apttus provisions separate CLM technology for each of these verticals. The core technology is the same, and all it requires is a point-and-click configuration to make it business-ready for any customer in any of these verticals.
In part 2 of this blog series, I’ll discuss the impact of AI on legal departments.