CLM Meaning and definition: everything you need to know
What is CLM (Contract Lifecycle Management)?
CLM stands for contract lifecycle management which streamlines the contract process.
Contract Lifecycle Management
Contract Lifecycle Management (CLM) is the process by which an organisation can improve the way it manages the lifecycle of the contracts and agreements it creates and deals with.
This can include vendor contract management, third-party contracts, customer contracts, sales agreements, intellectual property agreements, employment contracts, non-disclosure agreements, employment contracts, value or outcome-based contracts and all other types of contracts and agreements.
Effective contract management can help businesses save time and money, minimise risk and boost sales potential. The Forrester State of Systems of Agreement 2019 research found that inefficient or manual agreement processes create problems for 98% of organisations.
If you can increase productivity in managing contracts, you can get deals signed faster and free up time to deal with other business matters. During the contract life cycle, the steps involved with processing require multiple tasks and usually include individuals from several departments. The exact requirements of each contract vary based on the organisation involved and are particularly influenced by the company’s size.
Read on to find out almost everything you need to know about contract management and contract lifecycle management software.
What is contract management?
Contract management has several elements involved in managing agreements between an organisation and its suppliers, vendors and customers. Contract management can include creation, execution, and analysis to maximise your business’s operational performance and cut financial risk. Discover more about contract management trends. Contract management software helps streamline and digitise how legal agreements are managed to make the contract process more efficient. CLM software can bring several advantages, including:
- Increasing efficiency and reducing the costs of generating, reviewing, approving, signing and renewing contracts.
- Superior risk management capabilities versus manual processes.
- Contract management enables key staff like sales and legal teams to concentrate on critical tasks rather than contract management admin.
- An easy-to-access contract repository - often allowing cloud-based contracts
Contract management for large businesses
Large businesses tend to have different demands and requirements for contract management. They need a secure document and contract management platform such as DocuSign CLM to generate documents, collaborate with stakeholders, and automate business processes to accelerate the path to revenue - all while keeping things accessible yet secure.
It can often help larger businesses to consider breaking the contract lifecycle into a step process which helps to simplify the generation of contracts, administration, execution, management of contracts and storing of all necessary documentation.
Contract management for small businesses
Contract Lifecycle Management is essential for all companies, not just the larger ones. Smaller organisations often need to be more agile and work with smaller budgets and teams, forcing them to do more with less. This can often mean manually generating, sorting through, or managing agreements wastes time and money that could be better invested elsewhere.
This was part of the thinking behind the recent launch of DocuSign Gen for Salesforce, an easy-to-use app that allows sales reps to automatically generate polished, configurable agreements with just a few clicks - saving employees time while eliminating errors. Importantly for smaller and medium-sized businesses, apps like DocuSign Gen for Salesforce are easy to set up and are admin-friendly, saving time and hassle as reps get up and running without professional services.
In this article, Deloitte Legal investigates mid-market/mid-size businesses that are starting to recognise that they can derive significant benefits from CLM frameworks.
Benefits of contract management software
There are many benefits associated with digital contract management. It is faster, allowing businesses to get deals signed and underway far quicker than in the past.
- It is cheaper, saving both time and money.
- It is more efficient: perhaps most notably, the best CLM solutions leverage workflow automation capabilities that allow businesses to configure automated workflows based on different contract types, with new workflows automatically triggered based on the document activity and contract cycle stage.
These benefits can help keep a deal on track by sending the contract to the right people and reminders when actions are required, helping to prevent bottlenecks.
Digital contract management is robust and confidential; good contract management software will offer a secure audit trail. This is a crucial advantage of contract management with DocuSign, which allows you to track your documents through every step of the process.
Additionally, using an electronic signature platform will maintain a complete, automated history of every activity, including viewing, printing, sending, signing or declining to sign a document.
How does Contract Management Lifecycle software integrate with other Business Processes
CLM software ensures that data is verified and consistent from one workflow process or department to the next, across the entire organisation. CLM automates and streamlines contract processes through document generation, routing and negotiation, document signing, integration solutions, search and analysis.
Historically, agreement management, including document generation, approval, routing and signing, required ongoing manual coordination between a number of internal and external people and solutions. Contract lifecycle management brings those disparate operational processes together under one roof to create a seamless end-to-end agreement management experience.
- Using a CLM supports compliance with legal and regulatory requirements and data compliance. It makes it much easier to adhere to update specific terms and find and update multiple contracts that need amending for legal or regulatory reasons. It can make it easier to locate documents too. For example, under the GDPR law, businesses must get consent to use customers' personal data. GDPR requires organisations to provide evidence of compliance by keeping records of their data processing.
- Using a CLM ensures the collaboration and workflow between departments is smooth, and it becomes easier to integrate multiple business processes such as risk management or procurement. Each stage of approval is easily tracked.
CLM in Practice
Successful organisations across the globe are already using CLM systems:
Facebook’s HR Team implemented CLM and were able to onboard new employees faster with DocuSign CLM. DocuSign CLM’s automated workflows with Salesforce, Workday and ADP allowed Facebook to eliminate paper from this workflow. Facebook’s HR team were able to save more than 40 hours per week on admin that they could use for more strategic work.
Pioneering blow dry salon specialists Drybar have seen rapid growth in recent years, and they needed a better way to access, manage, and store agreement templates and contracts. With the implementation of DocuSign CLM, the relevant members of the team can access any document from anywhere in the world. It’s much easier to locate documents, and the Drybar team have saved hours of administration time daily.
Discover more about other organisations already using CLM.
Contract Management Lifecycle - best practices
Implementing contract lifecycle software can help teams to follow contract management best practices. There are a number of elements to keep in mind when choosing a Contract Lifecycle Management software solution.
- Flexible, configurable workflow - can you amend the workflow according to your organisation’s needs?
- Seamless document generation - The right documentation generator can help you automate the creation of sales agreements.
- Can you quickly locate documents? - There should be a centralised, searchable repository.
- Support for collaboration and negotiation - Does the solution allow several team members and customers to collaborate and negotiate seamlessly?
- Clause library - can you automatically add common legal clauses to agreements with ease?
- Rich integrations - can the system integrate with your current systems?
- Does the solution have best-in-class security
The best practices for setting up and maintaining a CLM system
As well as implementing best practices for choosing the right CLM system for your organisations, you should also consider best practices for rolling out the CLM implementation and maintaining the system. Key points to consider are:
- Setup - Put together your CLM roadmap and be clear about who needs access - and what level of access is required by each role.
- Workflow & Automation - Start small. Identify one or two workflows that could benefit from the use of CLM software and start with those for your automation. Map out current processes and develop a clear understanding of the current workflow. Changing too much too fast in your implementation could put adoption at risk.
- Training - Ensure that critical users have adequate training on the new system and that there is regular communication of ongoing training needs.
- User Adoption - Plan how to roll the CLM system out across users and communicate the plan to all stakeholders.
- Maintenance and Support - ensure you have a frontline support team staff ready to help users with ongoing maintenance or support issues.
- Scalability - consider how you will roll out to other workflows if initial tests succeed.
- Measuring Success - Your rollout plan should include some measures of success. You could include many metrics, including time and cost savings, productivity increase or ROI.
Discover more on how to implement CLM software.
Summary: Contract management
Here’s more on how to hit the ground running with CLM. Contract management through tools like DocuSign Gen for Salesforce and DocuSign CLM can help companies achieve these best practices. It’s about much more than saving money and building efficiencies: it helps your organisation save time and frees up the resources of key staff to expand your business.
Read this Deloitte Legal blog to understand their approach to CLM and learn how to accelerate your Contract Lifecycle Management implementations.