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NEWS, IDEAS, AND INSIGHTS FROM THE SIRION TEAM
A compelling business case for enterprise-wide CLM software
A single contract can have hundreds of metadata fields, obligations, and clauses. True contract management entails keeping track of all this data along with expiry and renewal deadlines, adherence to regulatory requirements, and more. It is no mean feat on its own and the scale and complexity of this set of tasks is directly proportional to the scale of an organization’s operational footprint. Contract mismanagement is inevitable when manual processes are involved. The problem is exacerbated by the fact that the average large enterprise or public sector entity has contract-related data sitting on 24 different disjointed systems.
As a result, forward-looking contract managers are keen on leveraging AI-enabled contract lifecycle management (CLM) solutions to digitally transform and breathe new life into their contracting practice. Best-in-class CLM solutions can streamline contract data management by creating a centralized data repository and applying analytics to deliver key intelligence that can positively impact business outcomes.
However, at an enterprise level, choosing and implementing a CLM solution is easier said than done. Typically, the responsibility of selecting any new technology solution rests on a sponsor or a team among the leadership. They account for broader considerations than contract managers before taking the decision. If they are on the fence about implementing a CLM solution, here is how a compelling business case can be made in favor of investing in one right now.
#1 – CLMs can help create smarter contracts by bridging operational silos
Contracting at the enterprise level should essentially be a collaborative process. When different functions – such as procurement, finance, legal and sales – contract in silos, it is more than likely to increase risk exposure, cause compliance issues, and have a potentially negative impact on the bottom line by way of value leakage and inflated overhead costs.
Each business function involved in the contracting process plays a unique role, and therefore has unique demands from a CLM solution. For instance, the legal team is responsible for drafting and negotiating a new contract, but they cannot work in isolation and require insights on suppliers and vendors. These insights need to be provided by procurement teams, who are primarily responsible for monitoring vendor performance after a contract is executed. And then there is the finance team – it helps determine the minimum pricing, payment terms, associated risks, and more. Seemingly, every team in the value chain holds a key piece of the contracting puzzle but lack a meaningful way to make them fit together.
A CLM platform can complete the puzzle and bridge these functional silos across various stages by establishing a single platform that allows all teams to collaboratively draft, review, negotiate, approve, and sign off on a contract. This process is faster and prone to fewer errors than the traditional, manually driven contracting process, and allows each team to leverage the other’s expertise to ensure better outcomes for the entire enterprise.
#2 – CLMs can help businesses respond faster to potentially disruptive real-world events
The advent of the COVID-19 pandemic made it necessary for organizations to alter their operations, adapt to the “new normal”, and identify new risks. It also became imperative to make amendments in contracts to accommodate changes that reflected a new business reality.
However, for most organizations, contract data residing in siloed systems prevented accessibility and visibility. Discovering and addressing hidden risk elements embedded deep within contracts became a challenging task to say the least. A manual review process proved to be neither scalable nor agile enough to respond to the pandemic’s fallout and is unlikely to be able to address unforeseen risks introduced by future Black Swan events.
AI-powered CLM solutions, however, can be the foundation for a modern, highly scalable contract review practice. It can be leveraged to digitize and migrate contract data to a centralized repository, which can then be interrogated on demand to discover insights into risks, gap areas such as missing clauses, and even slight deviations in contract language that can potentially widen risk exposure during Black Swan events. Organizations that have AI-driven CLM platforms in place are more likely to be in a better position to respond to an unprecedented event that can cause major business disruptions.
#3 – CLMs can potentially pay for themselves when implemented for end-to-end contract management
At the end of the day, return-on-investment against any enterprise technology is critical for making a strong business case. This is something that a sponsor will have to lead with to approach a larger decision-making audience and get their buy-in. Investing in a platform that can deliver ROI by ensuring full value realization from every commercial agreement is therefore a critical parameter.
Key to fulfilling this parameter would be a technologically advanced CLM platform that can heavily automate manual processes and incrementally reduce risk exposure. Such a platform should also be able to ensure that a business only pays its suppliers for exactly what has been delivered. This can be achieved if a CLM can validate supplier invoices against contracted pricing and actual delivery data.
In doing so, an AI-led CLM platform can essentially pay for itself by generating value that measurably exceeds the initial investment.
SirionOne: Single CLM platform. Seamless Contract Intelligence
SirionOne enables everyone in the enterprise value chain to collaborate and work towards ensuring effective contract management. As a best-in-class AI-led platform, it helps organizations transform how they create and manage contracts. SirionOne has been built to help businesses meet their unique contract management needs and offers seamless functionality across the complete lifecycle of a contract – from authoring and negotiation to AI-powered legal review, automated risk assessment, and execution.
As we move ahead, global organizations will face increasingly complex challenges, exposing the limitations of their legacy systems and processes. By using technology to transform how they contract, enterprises can become more resilient to disruptive forces and begin to realize greater value from every commercial deal they enter into, with the help of a true CLM solution