All businesses rely on contracts. Unlike customer-facing functions, however, the software that powers the creation, execution, and management of these commercial obligations hasn’t made the shift toward digital … until now!
In my new report, The Contract Lifecycle Management Landscape, Q1 2023, I looked at the 26 notable contract lifecycle management (CLM) vendors that procurement, legal, tech execs, and risk professionals use to consolidate, create, and negotiate contracts; analyze risks, obligations, and entitlements of executed contracts; and integrate contracts into other related processes and applications. We define CLM solutions as:
Software that helps firms digitize existing contracts; automate the creation and negotiation of new contracts; and understand the risks, obligations, and entitlements in their contract portfolio. They provide analysis and reporting at the contract and portfolio level. CLM solutions also integrate with related process applications to ensure contact compliance, enforce obligations, and capture metrics to write better future contracts and improve the process.
Four Market Dynamics Push CLM Toward Innovation
In the two years since the last CLM market overview, a lot has changed. Global disruption, external factors, and an abundance of critical risk events forced CLM toward innovation while simultaneously creating barriers to adoption. This shift is most notable in these areas:
- CLM now comes in a flexible, easy-to-use platform. The rise of new market entrants offering no-code, multi-tenant software-as-a-service platforms provides the flexibility and interoperability for CLM to collaborate and report across multiple areas of the business. It also allows companies to scale the breadth of CLM use cases over time. This requires legacy vendors to increase usability, streamline upgrades, and simplify deployment to compete.
- CLM has strategic value, but vendors must help customers realize it. When utilized fully, CLM can help drive enterprise value and business growth, and customers are looking for this strategic value to help secure budget, yet many of the vendors in this market are still stuck pitching efficiency gains of contract automation. Vendors unable to master this value proposition quickly will struggle to win against competitors.
- Convergence of buy-side and sell-side CLM capabilities disrupt the market. More organizations adopt a single CLM to support both buy-side and sell-side contracts. The trend toward a single platform helps firms reduce technology debt, consolidate the number of vendors, and gain more value from their investment.
- Digitalization of legal operations yearns for AI. The digitalization of legal operations creates vast amounts of data that automation alone can’t handle efficiently. For CLM, AI and ML are no longer “nice to have” capabilities to help solve challenges such as contract document e-discovery, deduplication, clause extraction, and smart recommendations based on contract type.
Read the full report for more details on selecting a CLM vendor. Also, schedule an inquiry with me for insights into this market or to discuss your CLM program.