Carina Kuhl, VP of Marketing for the IACCM (contract management) in her LinkedIn post asks the question: Is contract management 'the next big thing' in terms of creating competitive advantage?
As an individual who regularly crafts, negotiates and manages contracts, and as someone also working for a SaaS Contract Lifecycle Management (CLM) solutions company, I know quite a bit about the subject and the answer is a resounding "YES", it very well may be.
We live in an increasingly competitive world and any opportunity to recognize additional revenue and/or to reduce expenses is a universal business goal. Good CLM solutions help companies to achieve this goal. It isn't just the small to medium businesses who need help. You would shocked to learn of the Fortune 1000 companies who I have spoken with who are managing their contracts circa 1990. For those of you who are challenged by math, 1990 was 25 years ago!
All CLM is Not the Same
There are a couple of issues I wish to explore. Most large enterprises are using some type of ERP solution. It is how they run their businesses. After what is typically a very significant investment, these systems deliver the value required by their users across a broad business spectrum. Most ERP solutions also have contract management components. Historically, such components have been complex, difficult to use and inflexible. As a consequence, they go unused or are only used minimally. The result is that contract management suffers and revenue and cost reduction opportunities are not realized. It doesn't matter how capable a contract management system is or how many features it has, if it is not intuitive, easy to use and easy to navigate, user buy-in won't occur and utilization will be limited.
SMBs, by comparison, are storing contracts and associated data on share drives or are using ECM solutions such as Box, Dropbox, or SharePoint as repositories. Putting repository access aside, both large enterprises and SMB's suffer from the same issue i.e. how to manage and derive benefit from contract meta data, typically being managed in MS Excel or Access. As good a spreadsheet and database Excel and Access are, they are ill equipped to manage the plethora of contract management details i.e. contract obligations, incentives, penalties, deliverables, alarms, reminders, task management, reporting and KPIs. It is not just the easy ability to find documents in a CLM repository that helps a CLM create competitive advantage. As important, is the ability to enter and mine contract meta data across large document data sets.
Acheive the Promise
The promise of competitive advantage through more effective contract management is real, good solutions are readily available and ROI can be very fast. If improved contract management can help you to avoid unwanted automatic contract renewals, alert you to take advantage of contact incentives that have been missed or to avoid contract penalties, implementing a CLM probably makes sense and its cost can be recovered quickly.
Remaining competitive is serious business in this "adapt or die" world and CLM may very well be the next big thing for creating competitve advantage. Don't be slow to adapt. If your competitors adapt faster and better than you, at some point remaining competitive won't be something you will need to continue to worry about.
Tags: Knowledge Base