Understanding the difference between a CLM tool and a robust CLM platform 

Often, in the realm of contract management, the terms “CLM tool” and “CLM platform” are used interchangeably. However, they represent vastly different levels of functionality and capability, and understanding these differences is crucial for organizations looking to optimize their contract lifecycle management (CLM) processes. 

In this article, we’ll explore the distinctions between a basic CLM tool and a robust CLM platform and why a single tool may not suffice for the complex contracting needs of modern businesses. 

What is a CLM tool? 

A CLM tool is typically a software application designed to handle specific tasks within the contract lifecycle. These tasks might include: 

• Document storage: A centralized repository for storing contracts and related documents 

• E-signature integration: Facilitating the electronic signing of contracts 

• Basic workflow automation: Automating simple contract approval processes 

• Template management: Providing standard contract templates to streamline contract creation 

While these functionalities are essential, they represent only a fraction of what is needed for comprehensive contract management. A CLM tool is often limited in scope and may not integrate seamlessly with other business systems, leading to siloed information and inefficiencies. 

What is a CLM platform?

In contrast, a robust CLM platform like Agiloft offers a comprehensive suite of features designed to manage the entire contract lifecycle from initiation to renewal or termination. Key characteristics of a robust CLM platform include: 

• Advanced workflow automation: Automating complex, multi-step approval processes across different departments 

• AI and machine learning capabilities: Leveraging AI to analyze contract data, identify risks, and provide insights 

• Integration with enterprise systems: Seamlessly integrating with ERP, CRM, and other enterprise systems to ensure data consistency and streamline operations 

• Customizable dashboards and reporting: Offering advanced analytics and reporting tools to monitor contract performance and compliance 

• Collaboration tools: Facilitating collaboration among stakeholders through shared workspaces and real-time communication features 

• Compliance and risk management: Ensuring contracts comply with regulatory requirements and identifying potential risks 

A robust CLM platform is designed to handle the complexities of modern contract management, providing a holistic solution that enhances efficiency, reduces risks, and improves overall contract performance. 

Why a single CLM tool is not sufficient for complex contracting needs 

Modern businesses operate in a dynamic and complex environment where contracts play a critical role in defining relationships with customers, suppliers, partners, and employees. Here are several reasons why a single CLM tool may not be sufficient to meet these complex contracting needs: 

• Diverse contract types and use cases: Organizations deal with various types of contracts, including sales agreements, procurement contracts, employment agreements, and more. Each type of contract has unique requirements and workflows that a single tool may not be able to handle effectively. 

• Integration with other systems: Contracts are interconnected with other business processes such as procurement, sales, finance, and legal. A robust CLM platform integrates with these systems, ensuring that contract data is consistent and accessible across the organization.  Agiloft’s Integration Hub, for example, can connect your contract data to more than 1,000 enterprise applications like Workday, Slack, and Teams. A standalone tool may lack this integration capability, leading to data silos and inefficiencies.  

• Scalability and flexibility: As organizations grow, their contract management needs evolve. A robust CLM platform is scalable and flexible, capable of adapting to changing business requirements and unforeseeable events. In contrast, a single tool may become obsolete or inadequate as the organization expands. 

• Advanced analytics and reporting: Effective contract management requires insights into contract performance, compliance, and risks. A robust CLM platform provides advanced analytics and customizable reporting tools that help organizations make informed decisions. A basic tool may lack these capabilities, limiting visibility into contract data. 

• Compliance and risk management: Regulatory compliance and risk management are critical aspects of contract management. A robust CLM platform like Agiloft includes features that ensure contracts comply with relevant regulations and identify potential risks. A single tool may not offer the same level of compliance and risk management capabilities. 

• Collaboration and communication: Contract management involves multiple stakeholders, including legal, finance, procurement, and sales teams. A robust CLM platform facilitates collaboration and communication among these stakeholders, ensuring that everyone is on the same page. A standalone tool may not provide the necessary collaboration features, leading to miscommunication and delays. 

The benefits of a robust CLM platform 

Investing in a robust CLM platform offers several benefits that go beyond the capabilities of a basic CLM tool: 

• Enhanced efficiency: Automating complex workflows and integrating with other systems reduces manual effort and speeds up contract processes 

• Improved compliance: Ensuring that contracts comply with regulatory requirements and internal policies reduces the risk of legal issues and penalties 

• Better decision-making: Advanced analytics and reporting provide insights into contract performance, helping organizations make data-driven decisions 

• Reduced risk: Identifying and mitigating potential risks in contracts protects the organization from financial and reputational damage 

• Increased collaboration: Facilitating collaboration among stakeholders improves communication and ensures that contracts are managed effectively 

Conclusion

While a basic CLM tool can handle some aspects of contract management, it is often insufficient for the complex contracting needs of modern businesses. A robust CLM platform like Agiloft offers a comprehensive solution that addresses the entire contract lifecycle, providing advanced features and capabilities that enhance efficiency, compliance, and risk management. 

For organizations looking to optimize their contract management processes, investing in a robust CLM platform is a strategic decision that can deliver significant long-term benefits. By understanding the differences between a CLM tool and a robust CLM platform, businesses can make informed choices that align with their specific needs and objectives. 

Ready to learn more? Read our blog here to learn how European pharmaceutical company Norgine increased compliance and operational efficiency with Agiloft CLM.