Opinions and discussion on content management by two of the biggest guys in the business. *Measured by combined weight

CLM Vendors in your mirror are closer than they appear

Contract Life Cycle Management (CLM) is one of the ecosystems where the lines between what that business solution solves and Enterprise Content Management (ECM) can solve are blurring.  I spent the last few months researching the CLM industry from the view of ECM.  What I’ve learned is that an entire CLM ecosystem has evolved independent of ECM with the same features and functions offered by ECMThis ecosystem is much larger than I thought.  Now I know that many of them have capabilities that match ECM.  Some CLM vendors even exceed the capabilities that many ECM vendors can offer.  The question of configuration versus customization is much simpler when the configuration scenario doesn’t require any customization.  What can be done out-of-the-box with CLM is far more than I think most expect.

The CLM Baseline

Just as in any vendor scape, there are many vendors that just offer the basics.  The basic features of CLM are to manage the storage of contracts and track their renewal or expiration.  Both are very basic tasks, but ones that many corporate legal teams still perform manually using spreadsheets.  I believe that is due to an idea that software solutions are too costly.

When a CLM solution is being developed on a base ECM platform there is a cost associated; such as requirements gathering, defining attribute models, and developing triggers for expiration.   Development of a simple Tickler File isn’t that simple on an ECM platform.  This baseline of CLM is often what many see as a CLM solution both as users and vendors in both ecosystmes.

CLM Beyond the Basics

Workflow functionality appears to be the next level differentiator.  It starts with contract approval and negotiation processes.  Contract approvals are workflows inside the organizations while contract negotiations are workflows that go outside the organization.  Oddly these two workflow tasks are functions that some vendors either include support for one or the other, but only a few offer both.

These workflows vary in capabilities from an ECM perspective.  Some offer graphical support.  Some offer both parallel and serial workflows.  The biggest differentiator is whether or not external workflow participation is supported.  In some cases the, negotiation workflow may require the user to send an email manually.  In other solutions, external users receive automated emails.

Only one or two of these solutions support voting logic in workflow.  None appear to support delegation for “out of office” users.  Both of these are common functionality for ECM vendors.  While workflows are used for the approval of contracts, there seem to be no inclusion of workflows for approval of templates or clauses.

CLM from Drafting to Obligation Tracking

The strongest solutions start at Contract Drafting.  Contract drafting uses templates, and in some cases in conjunction with clauses libraries, to develop a new contract.  This works much like compound document assembly in ECM terms.  These contracts are either generated manually, through a wizard, or automated from a 3rd party application, depending on the vendor.

This tier of solutions also offers vendor portals that allow external users, at a minimum, to check-out contracts for red-lining.  Some solutions also offer the ability of these external users to attach related documents to the contracts, like exhibits and appendices.  Fewer still offer these external users the ability to see when contracts are due to expire and receive notification.

The first of two unique strengths in this space is using individual contract’s clauses to calculate complexity around a contract.  For example, if a specific clause comes back as red-lined from a vendor that has been classified a critical, that contract will be flagged as requiring potentially extra negotiation.  This allows corporate legal teams to triage their contract negotiation process.

The second unique strength is the ability to track the obligations associated to a contract.  This goes beyond the renewal date and looks at things like periodic reviews and quantity discount levels.  This functionality looks at the contract more from the vendor relationship level.  Looking at a contract screen not only shows you when that contract expires but how much that specific contract was worth.

Again, not one CLM vendor offers all of these functionalities in a single solution and some offer them at different levels.  At this level of functionality, I was surprised that only a few considered records retention a feature.

Summary

CLM has moved beyond a simpler Tickler System.  The strengths of ECM that CLM cannot match are how content is shared across the enterprise solutions and the complexity of managing large volumes (millions) of documents.  However, CLM vendors offer advanced ECM features like associating business value and process metrics to contracts and clauses.  The overlap between the two is great.  In the future, CLM and ECM vendors will be competing more often for the same customer dollar.

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