The business world is in a constant state of change with new innovators overtaking slow-moving, tried-and-true behemoths while hopeful start-ups dominate the underbrush. Throughout this landscape of shifting suppliers, prices, quotes, and promises, contracts serve as the anchor points, the lines drawn in the sand that business are legally bound to execute. Because of this, contracts have become the lifeblood of modern commerce, taking on a mission-critical status within organizations.
But, surprisingly, contracts are still poorly tracked and, in some cases, exist in a virtual vacuum within legal or compliance departments. In fact, IACCM estimates that poor contract management costs companies up to 9% of their total yearly revenue. Contract management software can track renewal dates and approvals, but what about tracking performance, compliance, vendors, and other commercial elements surrounding contracts? What about measuring the contract value as it is exchanged internally through organizations? Contract management software in its current form can no longer keep up with the constantly shifting needs of an entire organization or begin to maximize the value of its contracts. Contract and commerce lifecycle management (CCLM) aims to remedy this growing problem.
What is CCLM?
Contract and commerce lifecycle management (CCLM) is a new methodology that expands upon traditional contract lifecycle management by incorporating surrounding commercial processes into the contract management solution. The effect of CCLM puts contracts at the core of all commercial activity and uses them to document and drive value across the entire organization.
By bringing contract-adjacent processes (vendor management, buy/sell side operations, CRM, ERP, and even IT service management) into the orbit of CCLM, organizations can not only monitor contract obligations and performance across departments—they are empowered with enterprise-wide commercial data that informs future decisions regarding costs, suppliers, customers, and internal processes.
It’s All About Data
In addition to reducing compliance and security risk with one secured solution, CCLM’s most valuable asset is the data it delivers to the enterprise. With the rise of artificial intelligence, machine learning, and data science in business operations, data has become immensely valuable. While modern CLM, ERP, and CRM solutions are great at collecting data inclusive to their processes, they are oftentimes only looking inwards at transactions and agreements that have already taken place. Also, their data often does not play nice with other departments or solutions. In other words, they are not providing performance or financial data that can be used to drive value outside of their specific team or department.
In a recent white paper, Spend Matters expresses the need for CCLM like this:
“Wouldn’t it be great to track and translate customer commitments to internal service-level fulfillment and then back out to supplier SLAs – while tracking both financial and non-financial obligations in that flow of value? Can’t there be a single commercial system of record that ties to all of these processes that manage this value flow in internal and external value chains?”
CCLM solves this problem by reorienting these value-creating activities under one unifying element—the contract. However, for many the definition of a contract will need to evolve beyond a risk-transferring document that is stored in a repository. With a core system that revolves around them, contracts will need to include traditional contract data as well as relevant commercial data that syncs the contracts with internal and external stakeholders, workflows, and processes that engage in the bi-directional flow of this data.
Emerging Technology Makes True CCLM Possible
This new methodology is only possible with the rise of new technologies like no-code software and artificial intelligence. With CCLM so interwoven in an organization’s processes, it must allow quick modifications to workflows, permissions, templates, and data for it to be practical as a solution. No-code software enables this for CCLM, giving business users a way to configure new workflows and modify existing processes with just a few mouse clicks instead of waiting weeks or months for the engineering team to write, test, and roll-out code changes.
Similarly, artificial intelligence and machine learning allow CCLM to continually drive value by turning data into insights and suggesting changes to workflows and processes. With AI models built into CCLM, the solution can flag managers when performance issues are on the horizon or raise the alarm when risky clauses or supplier data enters the system. This gives organizations powerful AI tools for contract management that can extend to other processes as well, especially if the AI models themselves are built on a no-code platform that is easily configured as new applications present themselves.
As these technologies mature, holistic contract and commerce lifecycle management will emerge with them, giving organizations an all-inclusive platform to drive more revenue while continuously improving contracts and related commercial processes.
To learn more about CCLM, read Spend Matters’ recent white paper titled “Contract and Commerce Lifecycle Management: A new approach to enterprise value creation that puts contracts at the core of planning and execution”.