Selection Criteria For Legal Department CLM Platforms
Selection Criteria For Legal Department CLM Platforms
Over the past several years, the Contract Lifecycle Management (CLM) software market has been growing at an impressive rate. This growth has created opportunities for corporate legal departments to begin to reinvent themselves, through innovation and process efficiency.
As companies strive to improve their contract management processes and reduce risks associated with contractual agreements, the demand for CLM platforms has increased significantly.
This growth has also generated the need for resources dedicated to assist with CLM implementations. In many circumstances, project implementations have been longer and more costly than expected. CLM tools often lack features that enable simple configuration, resulting in significant customization. Adoption has proven to be slower than desired, mainly due to user experience deficiencies and general learning curve challenges.
Many companies are now rethinking their CLM implementation approach. The focus is shifting from high licensing cost and slow to value implementations, to more agile and cost-effective solutions and a more gradual, but impactful deployment arrangement. To improve adoption, they are looking to couple their CLM solution with tools that simplify the user experience for request intake and review processing.
A CLM platform is best used to manage a contract’s lifecycle from drafting agreements that have pre-approved language, contract review steps, managing negotiations with counterparties, contract execution, obligation management and renewals or terminations. Using a CLM platform, you can import existing contracts, extract, and analyze clauses and save templates that you can make use for your next contract.
With so many options available in the market, it can be challenging to determine the right CLM platform for your organization. Selecting the major brands might not always be the ideal approach.
The first thing that needs to occur when starting your initiative is a current state assessment. In other words, spending time to fully understanding your situation, what tools already exist, and what is going to work for your constituents.
It is best to recognize that there is a natural maturity curve with any type of software platform. Companies need to be realistic about which of the features they will be able to leverage at what point in time. It is always best to address high impact challenges, that ideally can be addressed quickly, so that momentum can grow based on real life use cases.
When choosing the best contract lifecycle management platform, it is best come up with a set of criteria that ensures that near and long-term capability needs will be addressed, and can the solution be leveraged in a way that enables the growth path that best suits the needs of all user types.
In this article, we’ll discuss selection criteria for modern CLM platform.
1. Flexibility and Innovation
CLM is evolving rapidly, mainly due to the struggles that many organizations are experiencing along with the latest development in technology such as AI/ML/LLM. If the chosen solution is not evolving at the desired pace, the common challenges will remain.
The CLM platform you choose should be configurable and flexible to meet your unique business needs. Look for a solution that allows you to tailor your workflows, templates, and fields to your organization’s specific requirements. It should be quicker to adapt and innovate in response to changing market conditions or customer needs.
As part of the platform selection criteria, organizations should include how willing is the vendor to quickly implement functionality that may be missing or limited.
2. Ease of Use and Adoption
A complicated or difficult-to-use solution can lead to low user adoption rates and undermine the success of the platform implementation.
The platform should be user-friendly, intuitive, and ideally works within systems that users regularly leverage, so that user adoption is achieved. The ideal system should leverage easy and configurable interview questionnaires to simplify intake, and users should be able to initiate contracts processes from external systems.
3. Integration Capabilities
Like other software products in the legal department, many CLM platforms have been deployed as siloed solutions. While this works for some scenarios, it often creates challenges for various user personas. Valuable data contained in the system is less accessible and end-to-end processing can become difficult.
CLM platforms should integrate seamlessly with your existing systems such as CRM, ERP, Teams, data repositories, eSignature solutions, automation platforms, and other business applications. This is designed to ensure a better user experience, a smooth flow of data and minimize manual data entry.
Look for solutions that have Open API and can integrate with LC/NC automation platforms so that the CLM platform’s capabilities can be extended, and sophisticated workflow can be supported without needing to make customizations to the platform.
4. Template Authoring and Management
The CLM platform should enable users to create, edit, and manage contract templates and clauses, quickly and easily. It should be able to handle simple contracts such as NDAs to most complex contracts involving multiple clauses, related documents, and calculations etc. It should support all types of contracts, e.g., Sales, Procurement, Legal, and HR, etc.
Template creation should be accomplished without requiring any programming or coding. This functionality can streamline the contract creation process, reduce errors, and improve contract quality.
5. Contract Drafting, Collaboration and Negotiation
The CLM platform should facilitate drafting, internal collaboration and negotiation between parties involved in the contract process, including internal and external stakeholders.
Users should have a simplistic user experience for drafting agreements and the parties should be able to work using the known tools such as Microsoft Word, Word On-line, Google Docs, where they can review, edit, and track changes.
The platform should provide necessary assistance using clause libraries, playbooks, and integration with latest AI capabilities such as LLMs. Also look for solutions that provide real-time commenting and versioning capabilities.
6. Contract Tracking and Monitoring
The platform should allow users to track and monitor the status of contracts at every stage of the lifecycle, from drafting to expiration. Post Execution Management functionality provides insights into contract obligations, performance, compliance, and risk management.
The platform should support pre-configured, and ad hoc tracking activities to ensure contract obligations are being adhered to throughout the term of the agreement. The platform should be able to be extended with LC/NC automation to manage more sophisticated work process scenarios, when needed.
7. Analytics and Reporting
The CLM platform should offer advanced analytics and reporting capabilities to help users make data-driven decisions, identify trends, and optimize contract performance.
8. Security and Compliance
The CLM platform should have robust security features, including data encryption, access controls, and compliance with relevant regulations such as GDPR, HIPAA, and CCPA.
9. Pricing and Scalability
The CLM platform should be priced competitively, and the vendor should offer flexible pricing models to suit your organization’s needs. Additionally, the solution should be scalable to accommodate your organization’s growth and changing requirements.
10. Customer Support and Training
The CLM platform vendor should provide excellent customer support and training to help users maximize the value of the software. Look for vendors that offer comprehensive onboarding, user training, and ongoing support services.
In conclusion, selecting the right CLM platform for your organization can be a daunting task. The most tedious parts of your work when it comes to choosing the best solution for your business are the areas of understanding how contract management automation works, evaluating your business needs and researching the CLM provider’s capacity to handle your needs.
By considering the ten criteria discussed in this article, you can narrow down your options and choose a solution that meets your unique business needs. Remember, a well-chosen CLM platform and vendor partner can help you streamline your contract management processes, reduce risks, and improve overall contract performance.