7 Capabilities to Look for in a Contract Management Solution
An organization-wide CLM platform can transform your contracts into strategic advantage, generating and accelerating value, mitigating risk, and providing the forward-looking insights you need to capitalize on the full value of every business relationship and improve your business in ways you never imagined.
1. Enterprise-wide capabilities
The conventional view categorizes contracts in three types: those that govern what you buy, what you sell, and how you run.
Many organizations have deployed separate solutions for each of these functions, only to find their contract data is scattered and siloed, with no unified strategy for how to get the most value from these critical documents.
A top-performing contract management system will be able to work with any type of contract, on any platform, for any type of user.
Capabilities to look for:
- Ability to manage buy-side, sell-side, and corporate contracts
- Native support for all major languages, currencies, and time zones
- Audit reports, change histories, and an operational data store to enable organization-wide analytics
- Security and access control across the organization
2. Ease of use and adoption
Digital transformation efforts often falter because users don’t adopt the technology.
With contracts, many in the organization will have “their way of doing things” that require change management to drive adoption. Finding a contract management platform that is easy to use can make this effort much easier.
Ease of use means that users can smoothly, quickly configure their personal workspace, or access the application anytime/anywhere through multiple devices. Can a sales user access customer contracts on their smartphone? Can the CFO approve a contract from a tablet? Can a contract specialist fulfill a contract request through their laptop?
A contextual user experience is also a critical requirement. Connecting contract processes into systems like Microsoft Word, Salesforce, and SAP Ariba can bring the technology to where users are already comfortable, encouraging adoption.
Capabilities to look for:
- Add-ins for use with Microsoft Word, Salesforce, and SAP Ariba
- An intuitive, contextual interface available in multiple languages
- User-configurable dashboards to suit the unique requirements of each role
3. Robust risk management
Contracts are not stand-alone entities. Each contract has the potential to trigger actions with other parties in the value chain. Successfully managing outcomes requires the ability to enforce the use of trusted and standardized language.
The ability to surface information across the entire value chain is necessary to drive risk mitigation and ensure compliance. One-click visibility into any contract provides users with the insights needed to achieve bold, high-performing business outcomes.
Capabilities to look for:
- Automated supplier checks
- User-configurable risk assessment models to detect and mitigate potential for risk whenever a contract is modified or external data changes
- Support for risk profiling based on contract terms and other configurable, pre-defined risk models
- Dynamically enforced, rules-driven approval workflows
“Organizations can only go as fast as their contracting process and techniques allow us to go, which means that without modern CLM, we're inhibited by how we can define what our future looks like.”
4. Post-execution obligation management
A CLM system should provide value well beyond contract execution to provide flawlessly reliable commitment tracking and fulfillment capabilities.
A configured, proactive solution should support the identification of obligations to be tracked throughout the lifecycle of a contract, including obligations pertaining to contractual clauses, mutually agreed-upon commitments, and assumptions. A robust CLM system should also support AI-driven extraction of contract obligations and assign them to the right owner in the organization.
Capabilities to look for:
- AI-driven obligation extraction and tracking
- Support for collaborative clause creation and approval
- Configurable clause language rules built right into the system
- Ability for clauses to be enforced on specific types of contracts and contract templates
“Contract management systems have resulted in up to 8% improvement in average contract value retention via full obligation fulfillment.”
5. Enterprise integrations
Contracts are at their most powerful when they are connected to the systems they power. Look for contract management solutions that integrate with other enterprise systems and connect contract data directly into core business processes. This empowers organizations to automate finance and compliance, increasing profit and reducing risk.
Capabilities to look for:
- Partnerships with established tech stacks that ensure joint roadmap and product development
- APIs to enable seamless, trusted data exchange with existing CRM, ERP, financial, and procurement systems
- Support for two-way metadata synchronization and integration to an active directory
- The dynamic ability to migrate contracts, metadata, and supporting documentation from a legacy CLM system
“CLM applications have made significant advances in the use of innovative technology to arrive at their current state. The applications have transitioned from glorified digital contract repositories to highly automated decision support tools that integrate with procurement, sourcing, and finance platforms.”
6. Industry configurations
Contracting standards and practices vary widely from industry to industry—the contracting needs of car manufacturers are far different from the needs of online retailers. Advanced contract management systems address these different needs with expert-driven configurations that more value, and deliver it faster, than less robust systems.
Capabilities to look for:
- Customer pedigrees that demonstrate industry expertise
- Pre-built dashboards that report on what matters most to your business
- Out-of-the-box Integrations to the technology that moves your industry
"Industry-specific CLM solutions enable organizations to tap into out-of-the-box capabilities and configurations designed specifically for their industry, offering efficiencies and insights that create competitive advantage."
7. Native AI capabilities
As generative AI revolutionizes how organizations do business, contracts should not be left behind.
Look for solutions that have a proven track record of intelligently applying AI to contract processes in ways that generate value and efficiencies for business.
Contracts contain highly sensitive business information, so ensure that any AI solution comes with robust data protection. Also vet whether the AI is sophisticated enough to conform to your organization’s specific risk and commercial strategies—the last thing any company needs is generative AI writing contract language that puts the company at compliance or commercial risk.
Capabilities to look for:
- Secure frameworks that keep you in charge of your contract data
- Ability to train AI on the most relevant contract data based on industry, contract type, risk tolerance, etc.
- Ability to analyze entire contract portfolios, vs. single documents
“40% of CEOs think they will need to transform their organization to be economically viable in a decade. As the world continues to increase in complexity, technology will play a critical role in creating opportunities for organizations to build trust and deliver sustained outcomes.”
