CLM – Contract Lifecyle Management or a Career Limiting Move - Part Two
The following is part 2 of our article “CLM – Contract Lifecyle Management or a Career Limiting Move”. For Part 1 click here
6. Capabilities and specification
A common mistake in these projects is to just look for a system; so be cautious if you are asked this directly.
There are several reasons for this. First, the most successful projects involve optimizing how a company contracts on an enterprise basis. This involves many components. There are many great systems out there but there is nothing that solves every need. Any ideal solution may involve more than one system implemented against a backdrop of organisational change and transformation. Second, beware of the vested interest. We often see advisors and/or others in this market who are wedded to systems. This could be due to where their skills are invested or where they have long term financial arrangements. Some too (unlike Hyperscale Group who are independent!) have behind the scenes reseller and commission arrangements which can taint their judgement. Third, when looking at this area is it important to forget systems and think more of capabilities. We have touched on this before (see 2021 Business Planning. The 10 "Must Haves" for a Digitally Savvy Law Firm — Hyperscale Group Limited) but it is vital to work out what capabilities you will need now and in the next 5 years. The best approach is to rank where you are now and where you need to get to and then measure this against your tech stack (in particular MS365 which has huge capabilities). This should be done on an enterprise basis to help deliver the biggest return as efficiently, cost effectively and swiftly as possible. You may/may not need a system and focus on the business’ proper needs as opposed to a system someone likes or which pays out a large third-party commission that you never see.
This can also affect your long-term play. One GC I know was being outclassed in negotiations with her main customers. They were surfacing key data analytics on previous contracts when negotiating new deals. This GC’s long-term aim involved not only short-term capabilities to execute and organise contracts better but also a longer-term data lake of contracts categorised by genre and in machine -readable format. This plan would have taken two or three years to execute, with shorter term benefits in the interim, but it was vital to explore and understand this, together with the longer-term capabilities needed by the business. Our aim was to take her on a journey where every quarter her capability got stronger.
7. Tech Stack
I have been lucky in life to carry out a wide range of roles: lawyer, ops professional, KM professional, sales, compliance and partner responsible for technology, the list goes on. These roles have made me realise that it is always vital to understand an organisation’s tech stack and strategy, as well as the needs of the various stakeholders. Successful contract management projects are normally cross-organisational, cross-departmental transformation projects, where data integrity and strategy are key. Integrations with an organisation’s core tech stack will be vital, as will the way it harmonises with overall tech strategy and cost per user.
All too often we see failed projects where engagement with technology teams is an afterthought. Systems are effectively chosen before engaging with an IT team, the very people who normally have the best organisational knowledge on what other parts of the business are doing. Also, as a recent trend, the arrival of MS365 has caused organisations to accelerate the diminution of their tech stack. Their appetite to leverage point solutions is reducing and this includes CLM systems. Data strategy and security are also increasingly important. Talking to the IT team both early, and in depth, is vital and often when we see failed products it becomes apparent that this has taken place all too late.
Anyone attempting to implement a technology project of this nature without understanding the Tech Stack and the options it brings will increase the risk of failure so you should ensure that the person helping you has the skillset to do this.
8. Adoption
It is no secret that the research shows that projects have high failure rates and to be successful projects need to get the technology, people and process right in the requisite measures. There is no doubt that Contract Management projects are notoriously more difficult than other projects. Reasons for this include:
1) People’s views of what contract management vary enormously from document and e mail management to high end AI data point analysis and blockchain automation. Sometimes this is pinned down and sometimes it is not. Even where it is, people’s beliefs sometimes don’t broaden, meaning that even if you deliver to spec you are destined to disappoint. The old expression “you can’t please all of the people all of the time” is particularly true when 100 key stakeholders want 100 different solutions. There are ways of dealing with this though;
2) Where people are “invested” in particular solutions or have preferences this can manifest itself in behaviours which queer the pitch;
3) Fear can take over. Sometimes people don’t like change and sometimes they are fearful about what change will mean for them. A successful CLM project will deliver improved dashboards and trend analysis which can then be used to take key organisational decisions and perhaps expose parts of an organisation which are less efficient;
4) Seldom do people like systems imposed on them, especially where they feel a system is not the interface they want and will force them to do things they don’t want to do;
5) Finally, sometimes you get the “assassins”; the people who recognise what is at stake. Some individuals are fearful and do what they can to disrupt or to get things on their terms. Often, they become experts overnight and can be disruptive in meetings. Seldom do they know what they claim to know. If not managed they can be the very people who contribute to an organisation not saving £300mil per year. One way to combat this is by engagement, proper consultation and stakeholder management. Projects need to be inclusive, and the views of those at every level, from coalface to managerial should be voiced and heard. The assassins need to be managed and understood. The operating vision needs to be developed and finessed. In many ways this is the ultimate change management job, where the change and benefits realisation carry on long beyond implementation.
9. Budget, Business Cases and TCO
Contract Management incorporate a broad church of projects of varying shapes and sizes. Often the more you discuss requirements the more the shape and size of these projects change. Sometimes they become larger as things are learned; on other occasions they are reduced as people realise these projects are simply too large to tackle in their entirety. New stakeholders can move into or out of the picture depending on other priorities and the importance afforded to the project can change.
Setting a budget can therefore be difficult, or difficult until full discussions have been had. To succeed there are several things to get right:
First, Business Cases trump budget. Yes, costs are important but what is more important is saving 1% or more. Second, often formulating this business case is not an insignificant task. You need it to be right. It needs to take into account the wider organisational cost savings i.e., if the business is expanding there will be savings that will be made by having the right platform. If legacy systems are being retired the savings will be less costs of dealing with legacy. Third, the Total Cost of Ownership should be properly modelled. This is always important but here there are multiple variables, such as the savings and costs of multiple systems, the support of systems, cloud/hosting costs, systems which are being replaced and the potential ownership savings from no code systems.
Budget, Business Cases and TCO are all addressable but need proper time and consideration. A properly developed business case is hugely beneficial.
10. Painpoints, POCs and Dashboards
For Contract Management projects to succeed they need to bring benefits to as many people as possible and not just give them an additional job.
In any analysis it is vital to understand the pain points and to rank and quantify them. These can be isolated or widespread. Solving as many as possible will speak volumes and will help your project succeed. Proof of concepts will help with your business case and persuasion too; it will show the benefits and people are more easily persuaded when they see a system with their contracts and processes. Increasingly this is relatively easy for cloud based and no code systems. For some systems we have seen very low proof of concept proposals which have been hugely persuasive (although in fairness to suppliers proper effort needs to go into the POC and its success factors). In terms of Dashboards, I have always been a fan and have worked in this space for 20 years. For Contract Management implementations it is vital to be clear on what outputs and dashboards you want, what areas to do you want to span, what drilldowns do you want and what trend analysis do you need to surface? Do you have management reports you can replace, and can you improve key metrics like total lifecycle times of contracts? How can these be improved and how much more quickly can you get to revenue? Getting this area right (together with the underling datapoints) is truly transformational.
And so, to conclude, this is a superb area. It is also an area where legal (and indeed procurement, contract management and sales) can add real value. They can really bring benefit to businesses with significant financial returns. If I were a CEO of a PLC I would make this a key strategic project as I think the benefits are potentially endless. I would also want dashboards as accurate predictors of work throughput and sales.
But beware. For lots of the reasons above these projects can fail. It is easy for people to contribute to the Contract Management Graveyard or to implement isolated projects which start to die the day they are launched. The import thing is to plan, take your time and recognise the significance of these projects. Learn from people who have done it before. Deliver that £300mil pa saving (or more). Deliver market leading Contract Management Lifecycle as opposed to making a Career Limiting Move.