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Contract Management is a Convoluted Landscape

Over the past few months I’ve been talking about how Enterprise Content Management is a platform and that the ECM landscape is changing.  I’ve been noticing this trend where “new” to me vendors have been popping up on my radar.  At first glance, I labeled each one as a niche vendor.  As new names came up, I realized that I was actually seeing a much larger parallel market.  Solutions vendors were emerging in areas that had been typically custom solutions built on ECM platforms.  In some cases large vendor landscapes had emerged.  One case in point is Contract Life cycle Management.

Contract Lifecycle Management is an Enterprise Content Management solution

Rather than create new terminology, which I believe adds to the confusion, I’d like to use Gartner’s definition for Contract Life cycle Management (CLM):

Contract life cycle management (CLM) is a solution and process for managing the life cycle of contracts created and/or administered by or impacting the company. These include third-party contracts, such as outsourcing, procurement, sales, nondisclosure, intellectual property, leasing, facilities management and other licensing, and agreements containing contractual obligations now and in the future.

Looking at Gartner’s definition for Enterprise Content Management (ECM):

Enterprise content management (ECM) is used to create, store, distribute, discover, archive and manage unstructured content (such as scanned documents, email, reports, medical images and office documents), and ultimately analyze usage to enable organizations to deliver relevant content to users where and when they need it.

One can quickly see that CLM systems require ECM capabilities, and therefore an ECM platform.  Clearly Contract Life cycle Management is a type of Enterprise Content Management solution.  CLM requires contracts to be authored or drafted, stored, participate in workflow, integrated with other enterprise, be retained as a record, and possibly be signed electronically.  All of these are core functionalities of an ECM platform.

ECM by itself is not a CLM solution.  ECM does offer the abilities to support these requirements but they need to be configured.  This is why ECM is a platform and not a solution itself.  CLM is easily supported by any ECM platform.  To some extent, every critical requirement of a CLM solution is supported by core functionality of an ECM platform.

Contract Lifecycle Management Solutions Vendors

In my first pass of identifying CLM vendors, I found 24.  (I discussed my approach when I showed how difficult it is for a business user to find an ECM platform.)  These vendors offer out of the box CLM solutions that are configured for their end user’s needs.  Only two of these vendors state that they were built on an ECM platform, which happens to be SharePoint.  The CLM vendor landscape is breaking out into three key groups.

Fifty percent of the vendors offer the basic ability to maintain an index of contracts and make notifications when the contracts are due to expire.  This minimal functionality can be huge for those organizations that still use desktop computers or network shares to maintain contract libraries and keep them indexed in an Excel document.  These solutions fall under the radar of most ECM platforms because their costs outweigh what the customers are willing to spend.  Cost isn’t a challenge for the CLM vendors.  Some even offer solutions that start with one or two users.

The other half of the vendors offer a more robust feature set.  This includes workflows, template libraries, annotations, markups, etc.  These CLM vendors also include integrations to at least one or several ERP (Enterprise Resource Planning) / CRM (Customer Relationship Management) vendors like; SAP, Salesforce, Oracle eBusiness, MS Dynamics and MS Great Plains.  With these features, these vendors would compete with ECM Platform vendors offering a custom solution for contracts management.  The difference is that usually ECM platform vendors only support one ERP/ CRM solution, usually SAP or sometimes Salesforce.

What really stood out was that half of these vendors, or 25% of all CLM vendors, offered solutions to support other business processes in an organization.  The same repository used to manage contracts was also able to support HR Documents, AP Processes, Procurement, and even compliance.  This goes head-to-head with the ECM platform vendor’s key messaging, being able to solve more than one business problem with a single platform.

ECM Vendors mostly have Partner CLM Solutions

A few of the ECM vendors, like d.velop, M-Files, OpenText, SER Group, and Xerox, offer out of the box Contract Management solutions.  These solutions match the robust features provide CLM vendors and usually offer integrations with a single ERP/ CRM vendor.  Most ECM platform based contract management solutions are provided by partners.  Finding these partners’ offering is usually a challenge.

You really need to work hard to find a platform vendor that supports contract management or any specific solution.  Of the seven Magic Quadrant Leaders, only Microsoft offers a partner directory that makes it easy to find specific solution partners.  Four of the others offer partner directories, but you can’t search for solution types.  OnBase only lists its strategic relationships.  Lexmark doesn’t even have a catalog of partners.  This makes it hard to define exactly what sort of functionality these partners bring with their contract solutions.

Content in the Back Office Big Three

The back office solutions of accounting, human resources, and legal are part of every enterprise.  ECM vendors have looked to custom code or a partner’s solutions to fill in this needThis has led to new solutions vendors that not only match the specific business needs but at costs that are often more appropriate for the business user.  CLM is just one of several areas where ECM vendor landscape and solution specific vendor landscapes are merging.  How this will evolve over the next few years will be very interesting.

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