Choosing the Right CLM Solution: A Comprehensive Guide for Businesses

The slightest hiccup, in contract management, can doom your empire —- one false move, in how you handle a vendor, a consumer, or a legislative landmine you didn’t know existed, could cost you millions. In the hurly-burly of the now, business landscape, managing contracts efficiently is crucial for achieving operational excellence and minimizing risks. Contract Lifecycle Management - CLM -  solutions have rapidly emerged as powerful tools that help businesses boost their effectiveness. They, at their core, streamline their contract management processes.

This article's main goal is to guide you and your business in selecting the ideal CLM solution. We’ll be offering practical insights and considerations tailored to their unique needs and objectives.

The Complexity of Contracts in Modern Business

How many vendors do you have? How many third-party applications are you incorporating into your app? How many folks do you have cleaning up your franchises? Think of all those contracts — of each clause, each contingency, each financial landmine. Currently, businesses are intricate and chimeric — composed of multiple departments, internal and external. This makes them complex, and that complexity is governed by highly detailed contracts. Contracts in contemporary business environments have evolved into vast Homeric agreements. Huge multipage, encyclopedic monsters that often encompass a multitude of terms, clauses, and obligations. The growing difficulty and intricate nature of contracts demands a modernized approach to contract management. This is where contract lifecycle management solutions come into play.

What Are CLM Solutions?

CLM solutions, or Contract Lifecycle Management solutions, are specialized software platforms designed to manage every phase of a contract's lifecycle. They have been created to automate and help you and your team when it comes to contracts — to every step of them. 

From the creation - with a vast array of templates - and negotiation, to execution and renewal. These solutions also serve as a centralized hub for storing, tracking, and optimizing contract-related data and processes.

Why Businesses Need CLM Solutions

Did you know that according to the International Association for Contract and Commercial Management, the cost of a single mistake - in managing a contract - can end up being the equivalent of 95 of a business’s total income? Mismanaging one also comes with lost opportunities, redundancy costs, and losing out on cost-effective solutions. Not to mention getting a bad reputation. The adoption of CLM solutions is vital for businesses seeking to streamline and optimize their contract management processes. Here are several key reasons why businesses should consider implementing contract lifecycle management solutions :

• Operational Efficiency: CLM solutions automate manual tasks — this helps reduce administrative overhead and improve general efficiency in contract creation, negotiation, and approval workflows.
• Risk Reduction: Effective contract management with CLM solutions rapidly mitigates risks associated with non-compliance, missed deadlines, and contractual disputes. 
• Cost Savings: By rapidly automating contract-related processes and reducing errors, CLM business solutions contribute to cost savings in the long run. Not only that but from a tangible POV, they help in cutting back on work hours as well as office supplies. 
• Improved Compliance: CLM solutions ensure that contracts adhere to regulatory requirements and internal policies, reducing the risk of legal and financial consequences. Not only yours, and that of your vendors, and partners, but those imposed by your local government. 
• Strategic Decision Making: Access to advanced analytics and reporting capabilities within CLM business solutions enables data-driven decision-making for businesses.

Different Types of CLM Solutions

It’s important to take into account that there are different types of CLM software out there. When choosing a CLM solution, businesses can opt for different deployment models — let’s rapidly look through them: 

• cloud-based
• on-premises
• hybrid solution.

Each has its advantages and drawbacks, and the choice depends on factors like security, scalability, and IT infrastructure.

Key Features to Look for in a CLM Solution

These types of solutions are swarming with multiple features and actions. With the advent of new tech, such as AI, and blockchain, the sky's the limit when it comes to what they can do and how they will change and evolve during our lifetime. They will continually find themselves being updated by their creators. And those features will only get better and better over time. 

Let’s take a look at what you should take into account when purchasing a CLM tool. To quickly and effectively streamline and ultimately adopt contract management, businesses should prioritize CLM solutions with the following key features:

Centralized Repository

A centralized repository ensures all contracts are stored in one accessible location, simplifying tracking and retrieval. In offsite cloud servers that can be accessed remotely and from multiple endpoints or devices. This helps multiple stakeholders and contract writers - on both sides of the aisle - to access the tool and do revisions in real time. 

Contract Creation and Drafting Tools

These tools facilitate the creation and customization of contracts, saving time and minimizing errors. It’s important that they have an up-to-date repository of templates.

Automated Approval Workflows

The main purpose of these tools is to help you automate and make things easier —- as such it's critical that automation tools be exact and demanding in their precision. Automation streamlines the approval process, reducing bottlenecks and ensuring contracts move efficiently through the workflow.

Obligation and Compliance Management

CLM solutions should offer tools to monitor contract obligations and ensure compliance with terms and conditions. They should give you warnings and pop-ups in regard to key dates in the contract’s lifecycle. 

Alerts and Notifications

Real-time alerts and notifications keep stakeholders informed about critical contract events and deadlines.

Advanced Analytics and Reporting

Big Data is the BIG issue right now — how we analyze it and make it work for us is what matters. They facilitate a sort of learning curve from one contract to the other. Robust analytics and reporting capabilities enable businesses to gain insights from contract data, supporting strategic decision-making.

Integration Capabilities

The ability to integrate with existing systems  -e.g., CRM, ERP -  ensures seamless data exchange and improved overall efficiency. It’s critical to audit your system and platform and make sure the tools you're investing in will rapidly link up to it. 

Factors to Consider When Choosing a CLM Business Solution

Selecting the right CLM solution involves other far more personal key considerations:

• Understand Your Business Needs: Identify your organization's specific contract management requirements and objectives — not all businesses are the same. 
• Demos and Trial Periods: Request demos and trial periods to gain hands-on experience and assess the solution's suitability for your needs. You’ll be investing a lot in these solutions, they should come with a trial period. 
• Check Integration Abilities: Ensure that the CLM solution can seamlessly integrate with your existing systems to avoid compatibility issues.
• Seek Feedback and Reviews: Research customer feedback and reviews to gauge user satisfaction and the solution's track record.
• Scalability and Flexibility: Choose a solution that can grow and adapt as your business evolves.

Challenges in Implementing a CLM Solution

Implementing a CLM solution may present challenges, including resistance to change, data migration complexities, and initial training requirements. One of the biggest challenges will be the human factor — you’ll have to train your employees and make sure they take into account and appreciate the new tools they have been given. Create training seminars, and, above all, give them space and guidance. It’s essential to anticipate and address these challenges proactively.

The Significance of Choosing the Right CLM Solution for Business Success

Selecting the right CLM solution is a pivotal decision for any business. A well-chosen CLM solution can significantly enhance operational efficiency, reduce risks, cut costs, improve compliance, and enable strategic decision-making. By taking a proactive approach to contract lifecycle management and carefully evaluating their needs and options, businesses can set themselves up for success in an increasingly contract-driven business world.