Why did adopting the contract lifecycle management become necessary post-COVID-19 world?

Before COVID-19, the companies were imbibing digital modification, some at a praiseworthy speed. The changed scenario post-COVID-19 encouraged companies worldwide to adopt a new work culture and technologies supporting the new culture. We are proceeding more into the new normal; digital modification is no longer a process, and it is necessary. Without that, the organizations will not survive in the post-Covid era.

For the legal department in every company, it is essential to protect the business by identifying and mitigating risks proactively. To ensure that, contract management is the core function of the legal department - which is made easy by adopting contract lifecycle management - starting from drafting, negotiation, reviewing, approval, finalization, till closure.

A well-equipped contract management cycle decreases the chances of losing money and credibility in the business.

According to the International Association for Contract and Commercial Management (IACCM), poor contract analytics management decreases 9% of revenues each year, on average. KPMG reports state that poor digital contract management can lead the business to lose up to 40% of a contract's value.

The risk of financial and reputational losses caused by a poor contract management system makes it necessary to streamline the contract processes.

What makes contract lifecycle management indispensable in 2022?

The next normal post-pandemic has made contract management software vital for persisting business operations. Coping up with the new work culture, the legal professionals now working remotely pushed the demand for digital contracting tools to secure contract processes running smoothly without unnecessary hurdles.

What are the necessary components to choose the right CLM tool?

The CLM software, considering the security concerns and maximization of the business operations, should rely on these five considerations:

First Consideration:

Make Digital Contract Management System Objectives meet the Strategic Goals and Objectives of Your Company.

Most of the companies preferred highly fragmented digital smart contracts under the impression that different company functions require a unique approach, such as closing a sales deal requiring additional action than bringing in a new supplier.

Such a situation makes it necessary to adopt a unified CLM to meet its overall goals, including all the aspects related to growing revenue, diminishing costs, adequate cash flow, etc. It also includes plans around enhancing compliance and minimizing risk.

Second Consideration:

Coordinate The Objectives of Company to requirements of Individual Stakeholder

Once the CLM tool meets the company-wide goals, the coordination with the individual stakeholders' unique requirements is the next step. This step identifies the points vital to them and their priorities.

Along with the company's global objectives, mapping the individual requirements enables the digital contract management software to meet everyone's needs better while serving through a single contract management solution. The more rapid cycles, automatic processes, lowered risk can benefit significantly by pooling their resources on a single, effective contract management system.

Third Consideration:

Financial Alignment to Company Objectives

When many companies are trying to hold on to cash, it can be challenging to partner with several organizations that are doubtful about adopting new technologies. The solution lies in the right contract management software that creates a financial case in alignment with the company's overall objectives. This feature enables a balance between cost-saving strategies and ways to accelerate the revenue. A robust contract lifecycle removes the hindrances between closing deals and faster revenue realization.

Fourth Consideration:

Be A Smart Follower of A Smart Trend

We have already discussed above that the research by IACCM indicates that companies lose 9.3% of their annual revenue, on average, due to contract value leakage linked to poor management contract lifecycles processes.

The IACCM data reveals following the outbreak of COVID-19,  that around 81% of organizations favor implementing, replacing, or adding intelligent contract lifecycle management automation to their business processes.

Fifth Consideration:

Be Ready To Face The New Competitive World

Another effect of the pandemic is that there is no time to wait and watch; therefore, digital solutions require to show their worth faster. If you run your business on a company-wide CLM system, it has to establish a quick result.

The companies with a core team of stakeholders already have an advantageous position to understand the department's current procedures and advanced technologies deeply. Even if you don't have that advantage, you can still create innovative plans to deliver the values fast by using the proper contract collaboration.

It's also essential to identify the contracting key performance indicators and start calculating them before deploying CLM tools so that it builds momentum for more ambitious digital contract management software projects for the upcoming days.