This week we held a very popular webinar on CLM and how it can help in the current business environment. Since so many viewers said it was helpful, we wanted to give you a chance to watch a replay of the webinar and discuss some of the highlights below.
What is CLM?
Contract lifecycle management, or CLM, is software that manages all aspects of a contract or legal agreement from creation to negotiation all the way through execution.
Just about every organization runs on contractual agreements, which is the paperwork associated with sales, purchases, NDAs, license agreements and so on. PricewaterhousCoopers says the average enterprise maintains 20,000 to 40,000 contracts. Yet, most companies manage contracts manually. Gartner estimates that 85% of companies do not have an enterprise contract management system.
So, what does a CLM system do? At its most basic level, a CLM system provides a single digital repository where organizations can store all their legal documents. Sophisticated systems use artificial intelligence to import contracts, analyze the language in them, flag risks, manage contractual obligations, and more.
Why do Organizations Buy Contract Management Software?
- Disorganization: companies and departments are tired of dealing with contracts all over the place. In fact, most contracts are stored on people’s laptops.
- Losing track of expirations and renewals: with tens of thousands of contracts, that can amount to real money. An IACCM study showed that enterprises lose 9% of their revenue due to poor contract management. If you’re a $100M company, that amounts to $9M a year.
- Security: contracts contain a lot of sensitive information, so storing them on individual laptops or hard drives is a serious security vulnerability.
- Regulatory compliance: this is a huge headache for legal departments. If your legal documents are not in centralized and in digital form, there is no way to know if you’re in compliance. If a problem does come up, the discovery process will be a nightmare.
- Risk: if your documents are not in one place and digitally searchable, you have no idea what risks are lurking in them.
- Convoluted contract processes:
a. It takes too long to generate a contract. There is no standard language. Feels like re-inventing the wheel every time a contract is created.
b. Approval process takes too long.
c. You cannot easily generate metrics and reports
d. Your legal paperwork exists independent of other systems
Efficiency and Risk
At the end of the day, the two biggest reasons companies buy a CLM system are to improve efficiency and reduce risk. In fact, 81% of customers surveyed in the Gartner 2020 Magic Quadrant for Contract Life Cycle Management said they bought CLM to create operational efficiencies and 73% cited compliance and risk management. When we asked Agiloft customers, they also talked about operational efficiencies, but the imperative reason to buy was to minimize risk.
How can CLM Help in the Current Environment?
- Conserve cash and contain costs
- Preserve Revenues
- Minimize Risk
To learn more about how CLM can help you cut costs and minimize risk to your organization in the current crisis, watch the webinar below:
To learn more, go to our contract management page or read more about contract management on the Agiloft blog.