When your contracts number in the thousands or more, it’s clear that you need a system to effectively manage and extract valuable information from them when you need it. Many organizations turn to Contract Lifecycle Management (CLM) for this purpose, which seems like an obvious choice from its name.

However, CLM implementations have absurdly high failure rates. Gartner predicts that by 2024, 50% of first-time CLM implementations will fail to deliver the expected benefits. What’s the reason behind these dismal numbers?

While CLM can effectively oversee the process of creating contracts and legal documents, it does not necessarily provide value for procurement operations that require more than just basic contract oversight. CLM systems require significant time and resources for implementation and maintenance, which can distract from other core business activities. Procurement teams usually find that they never actually get around to administering these valuable contracts or making the data available for research, analysis, and preparing for future projects. Extra time and effort is needed to reach a stage where CLM tools can be relatively effective, creating unnecessary challenges for procurement teams.

Instead, Contract Management Solutions have emerged as a strong alternative, promising a more holistic and integrated approach to contract management for procurement needs.

Key differences between Contract Lifecycle Management and Contract Management Solutions:

As a summary, CLM manages the entire lifecycle of contracts from initiation to renewal. Contract Management Solutions not only manages contracts but also leverages them to drive business value, converting the contracts into rich and actionable data. You can see an illustration of this in the graphic below.

Getting the Most Out of Your Contract Management Solutions

A common misconception that must be addressed is that Contract Management Solutions are seen as glorified filing cabinets. This is patently untrue; they go beyond storing and retrieving documents to include features like automated reminders, secure access controls, and advanced search capabilities.

Critically, Contract Management Solutions allow for easy integration with other business systems, providing a seamless flow of data across the organization. This integration capability is something many CLM systems lack, leading to data silos and inefficiencies.

To get the full value out of Contract Management Solutions, some of the features procurement organizations must look out for include:

• Quick and easy-to-use search capability with procurement-focused contract data
• Alerts set for expiration, renewal, and termination notification to prompt action
• Features to enable collaboration and communication among the procurement team and stakeholders
• Contract data at your fingertips even when working on a sourcing project or RFx event
• Easily profile the entire book of contracts for risks such as ‘no termination for convenience,’ ‘auto-renewal,’ or ‘assignment’ clauses
• Monthly ingestion of newly signed contracts reduced the administrative burden of keeping data current