How to Build a Business Case for Contract Lifecycle Management
No matter how beneficial any new system or software might be, it’s unlikely to get funded without a clear and compelling business case to justify the spend, complete with projected business outcomes. This is especially true for investments in long-term, potentially complex deployments like a contract lifecycle management (CLM) solution.
With multiple projects competing for the same funds, it’s essential to understand and explain the benefits of CLM—demonstrating exactly how the investment will help leadership achieve the objectives they’re accountable for—to gain swift and decisive approval.
What a good business case includes
At the simplest level, a strong business case does three things:
- Demonstrates a detailed understanding of the present state
- Paints a desirable picture of an achievable future state
- Maps a clear tactical path from the present to the future
In the end, any investment is ultimately about financial return. The best reason for an organization to spend money is to make even more money back as a result. To pitch the CLM effectively, your business case needs to do the three things listed above with a keen eye toward identifying, quantifying and articulating the monetary value of the expected improvements.
You also need to align the benefits of your investment with broader company goals. For example, if your organization has a broad commitment to improving efficiency, you need to pinpoint specific areas of waste (e.g. paper waste, shipping costs, spend on outside council etc.) that CLM can improve. If the goal is to acquire a certain number of new customers in your financial year, focus on the way smoother contracts can reduce turnaround time, making it easier to close business before that deadline.
As you put your business case together, make sure you’re focusing on quantifiable metrics at each stage of the journey you’re proposing. CLM is a product that will impact multiple teams and processes. You need to understand which metrics define those teams and processes, then make realistic projections about the way those metrics will change after CLM adoption.
Which objectives can CLM help your team achieve?
Now that you know what your business case needs to do in general, let’s talk about the specific ways CLM can impact your organization. There’s no one-size-fits-all list of benefits that all CLM customers experience, but here are a few common ways that CLM adds value to modern teams:
Accelerate the speed of agreements
Time is money. The faster your team can complete common agreement tasks, the more money revenue you’ll save. By building in more automation and standardization, your team can reduce contract turnaround time, which means money comes in faster, procured services are delivered earlier and your employees can answer important business questions sooner.
Improve the ease of doing business
Another less quantifiable but powerful outcome of CLM adoption is the corresponding ease of doing business. Organizations that do measure this—either by tracking net promoter score or their own internal metrics—have reported that CLM creates a better experience for both employees and customers. This is a good result on its own, but happier customers and employees both translate to long-term revenue.
Minimize contract value leakage
Contract value leakage occurs when parties sign contracts that contain suboptimal language. It may result from poor contract management after the contract is signed—often stemming from a lack of clarity about what’s in the contract and what terms could be acted upon. CLM helps combat contract value leakage in pre- and post-signature processes in many ways. It improves the availability of information by creating a centralized, searchable repository. CLM also predefines standard workflows improves global visibility and automates version control. It can even send reminders before key events (like a renewal date) so you don’t have any surprises.
Simplify compliance efforts
Companies often dedicate multiple resources to minimize compliance risk when drafting contracts. These resources are expensive. CLM reduces the need for companies to spend so much money on compliance by creating a streamlined process that ensures every contract ends up in front of all the right people at exactly the right moment. You can also be sure employees are using approved language because they have a clause library at their fingertips.
Lay the groundwork for intelligent analysis
CLM connects every tool and system in your wide system of agreement. That interconnected system offers a solid foundation to collect and analyze agreement data. That cohesive base of data opens the door for intelligent analysis tools to identify trends, uncover opportunities and answer critical business questions.
Make a compelling case
The teams that get their projects funded are often the ones that tell the best stories. Since leaders may not know much about CLM systems or their value, it’s critically important to paint a compelling picture of the benefits you expect to receive. Know the people you’re presenting to and tie your case to work or metrics that their team owns. CLM will have a significant impact at both the organizational and the personal level. Make sure you’re emphasizing the right balance for your audience.
A great last step is to look into potential vendors and find one that offers assistance at every step along the path to adoption. Knowing exactly what kind of support you’ll get from your CLM partner can help ease concerns and answer questions when you make your pitch. A good vendor should also be able to point to a history of helping similar customers achieve their contracting goals. Detailing your vendor’s successful track record might be the last piece you need to cement a strong business case.
To learn more about DocuSign CLM and what it can do for your team, check out our CLM toolkit. It has everything you need to make a winning business case and start implementing CLM at your organization.