Who Will Lead ECM?

When I stated that OpenText would not be “THE” leader in Enterprise Content Management (ECM), I mentioned that there were three groups from which a leader would emerge.  I’ve seen a change as I moved from working with the Documentum platform to working with OnBase in both the industry and customers that have three solutions groups emerging to take the place of Legacy ECM.  The areas that are putting pressure on Legacy ECM are Open Source ECM, Low-Code ECM, and Content Enabled Solutions.

What Driving This Change in Leadership

The whole point comes down to total cost of ownership.  How vendors look at the purchase and accounting of an ECM solution has always bothered me.  When a vendor tells a customer how to make the deal fit they company’s budget, to me it’s much like a car salesman saying, “What can I do to get you into this car?”  The fact that software is a depreciable asset and that services work is an expense line item should not matter.

Total cost of ownership should matter to a department that has a specific dollar amount allocated to solve a simple ECM problem.  Its budget didn’t look at the perspective of software assets and services expenses.  It was approved for a certain dollar figure through its annual budget cycle.  So splitting the services over years to fit into budgets is just playing games.  That is especially true when it’s done to cover costs of a simple content solution, which has more options today than it did in the 1990’s.

The problem is that for too long, ECM has been a custom solution game.  Many of the vendors still see it that way. The times have changed and solutions and platforms have changed.  The strength of an API-first platform, like Documentum, is less important.  To most users, the concepts of ECM are common place even if the recognition of an ECM market is not.  Customers are expecting software vendors to bring more to the table.  This is why we see content solutions being addressed by many different vendor markets, like Electronic File Sync and Share, Contract Life Cycle Management, etc.

ECM Challenges have Many Variations and Many Solutions

Not all ECM problems are the same.  Solutions like Human Resources On-Boarding and Contracts Management are pretty standard across most organizations.  For some, their process may be more unique.  Then there are those systems that will only be viable to a small number of companies because they are only a few companies have large or complex document problems.  For example, there are less than a dozen major companies that build commercial and general aviation aircraft in the world.

There’s a ratio that is often discussed in ECM deals that is rarely visible in general before the deal is made.  For every dollar of software there is usually a multiple of dollars that goes to the services to build that solution.  In legacy ECM platforms the number was often eight dollars of services to one dollar of software – 8:1.  It is currently roughly 6:1 or 5:1 services to software ratio.  With $100,000 software platforms, that means that the total cost of ownership is $600,000 to $700,000.  This makes sense for a custom solution for an aircraft manufacturer maintenance manual solution or a pharmaceutical new drug application.  It gets to be a little pricy for a compliance tracking solution for food producing company or a new accounts application in commercial banking.

It is total cost of ownership for a solution that is causing the ECM landscape to evolve and become fragmented.

OpenSource solutions replace Legacy ECM Platforms for Custom Solutions

I see Open Source platforms taking the place of Legacy ECM platforms in solutions that are very unique to a specific company or small industry.  If features cannot be easily used across organization or industries, this becomes an ideal opportunity for a custom solution.  In some cases a solution may be a competitive advantage.  This is another opportunity for a Custom Solution.  Industry solutions like aircraft maintenance manuals, new drug submissions, engineering document management, will continue to be custom solutions for now.  I say for now because even these challenges have had out-of-the-box solutions at times, like CSC FirstDoc for drug submissions.

The use of an Open Source platform almost eliminates the costs of the software.  These platforms significantly reduce if not eliminate software costs.  The budget for these solutions is all about the services to develop these custom solutions.  This value of using Open Source verses Legacy ECM is something that Dave Giordano at TSG promotes. He has expanded his company’s focus to include Alfresco and Hadoop in addition to Documentum.

The Open Source category includes Alfresco, Hadoop, and Nuxeo.

Low-Code ECM solutions replace Legacy ECM Platforms in Configured Solutions.

End users of standard processes like accounts payable, human resources, or corporate counsel are demanding that their solutions be developed faster and cheaper.  They look at these common solutions and rightfully expect that vendors have developed these before and will not require weeks of requirements gathering followed by months of development to complete.  With legacy ECM platform, these solutions are often addressed by frameworks, but still often have lengthy timelines.

To address this there has been an emergence of Low-Code ECM platforms.  These low-code platforms focus on configuration of objects and workflow rather than customizations.  This speeds up the development process and reduces the services to software ratio down to 2:1.  In our earlier scenario, that $100,000 software purchase needs only an additional $200,000 to get an end solution.  Legacy ECM platforms have seen this change too which is one reason why Documentum developed D2.

Vendors in the Low-Code ECM category include M-File, OnBase and Lexmark.

Content Enabled Back Office Solutions replace Legacy ECM Platform in Common Solutions

There’s a whole new emerging market of content solutions that solve one specific business problem.  Often these are in areas like Contract Life Cycle Management or Human Resources On-Boarding.  Across organizations in common jurisdictions or geographies, these processes and their documentation requirements remain the same.  This has allowed for vendors to emerge that solve these specific problems.  These solutions also exist in areas like Compliance.  Though there may be differences in the processes, the general complexity has been simplified with specific solutions.

I’m currently addressing this in my research.  My Buyer’s Guide for Contract Life Cycle Management (CLM) identifies 35 vendors.  I’m doing similar research in Human Resources and Compliance.  These vendors offer ready to use solutions that can be configured in a short period of time and integrate to line of business applications.  What they do not do is address the use of content across the enterprise or records management.  Because they solve one business problem their costs are often significantly less than an ECM platform.

While there are individual leaders by solution, there is not one vendor that climbs to the top as we look at ECM.  SAP has solutions in CLM, with Ariba, and On-Boarding, with SuccessFactors, but does not address the enterprise nature of accessing content.

In addition to SAP, ones to watch are Gimmal and Flatirons Solutions.  Both offer specific solutions across multiple departments on ECM platforms as a partner solution.

The ECM Market has Changed                                                                  

Legacy ECM strengths have been its ability to be molded to fit into any solution.  As end users start to see that content solutions are more and more common, they are expecting price points and deployment schedules to reflect these common solutions.  The era of spending weeks of discovery followed by months of custom coding to develop standard content solutions is coming to an end.  It can be seen in the growth of niche content solutions.  With all the Legacy ECM solutions now being supported by two big vendors, OpenText and IBM, these new options will continue to grow in strength.

2016 Contract Life Cycle Management Buyer Guide Released

When I started down the path of looking at Contract Life Cycle Management (CLM) solutions a few months back, I wasn’t sure what I expected to find.  Very quickly I came to realize that Enterprise Content Management vendors barely recognize CLM vendors exist. Once I started my research, I quickly found that the CLM landscape is much larger and broader than most ECM and even CLM vendors can imagine.

I stopped my search at thirty-five CLM vendors.  I’ve taken a deep look at twenty-three of those vendors.  In the guide, I’ve highlighted how their solutions fit into capabilities of the market in general, identified company officers, locations, and funding.  I also addressed twelve vendors that for some reason stand out in CLM but don’t currently fit in with the majority of the market when looked at as a whole.

To receive a complimentary copy of BMO Consulting’s 2016 Contract Life Cycle Management Buyers Guide, please fill out our subscription form.  After you subscribe, we will send you an email with a link to the report.

Contract Life Cycle Management with Information Governance

Out-of-the-box CLM solutions often meet corporate counsel’s needs more efficiently than building a custom CLM solution on an Enterprise Content Management (ECM) platform.   What ECM platforms offer that the CLM vendors miss is Information Governance.  Information Governance is an accountability framework to ensure proper handling of both documents and information within an organization to meet corporate and regulatory needs.  One would imagine that this would be of particular interest to corporate counsel.  Let’s follow the CLM life cycle with Information Governance in mind.

 CLM Lifecycle

Draft – Draft is when an organization creates a new contract.  Drafting is usually done from a contract template or previous copy.  Each type of contract – employment, vendor, franchisee, etc. – would have its own template.  These templates could include clause support, where individual paragraphs or entire sections are represented by different attributes of a contract.  For instance, an employment contract for Florida may have different clauses than one for California.

Drafting, or authoring, can be done manually or automatically.  With manual drafting, the user would select, or be sent a workflow task with, a template for the new contract.  In automatic drafting, a tool is used to select the appropriate contract template and clauses for that individual contract.  This tool can be a wizard which requires manual entry of data, or a button that generates the new contract based on a data file.

Review – Review is when an organization receives an external contract.  Typically an organization will have a stated policy that all contracts must go through a review process before acceptance.  This corporate policy is one that should identified by Information Governance.  The first step in review is ingesting the contract into the system and entering relevant data to the index.  From this point the contract follows the normal path.

Negotiate – Negotiate is the process of give and take on a contract to reach an agreement.  Contracts and changes to contracts are reviewed or created by both parties.  This includes red line or markups and annotations.  This process can be performed independently using copies of the document that are downloaded or sent via email.  The second party may be able to access a CLM directly to change the contract.  The actual negotiation process can be performed in real-time over the phone or on-line through a single instance of the solution.  The negotiation process ends when both parties reach an agreement to approve the contract.

Approve – Approving a contract is a separate part of the negotiation process.  The individuals that negotiate a contract are not necessarily the same individuals that approve a contract.  Much of the negotiation process may deal with terms and conditions of a contract that may not require involvement of the person that will approve, or sign, the contract.  For example, an executive may not read every line of a contract but instead rely on corporate counsel.

Approval typically ends with a signature either in “wet ink” or electronic form.  Different laws and requirements govern the use of electronic signatures.  Internal electronic signatures are typically a matter of corporate policy.  In the U.S., external electronic signatures are governed by the Electronic Signatures in Global and National Commerce Act (ESIGN), the Uniform Electronic Transactions Act for each state, and the Federal Trade Commission.  Which electronic signature is used for each type of contract is part of Information Governance.  It is this signed, “wet ink” or electronic, contract that falls under the control of Information Governance.

Administer – Administer addresses the contract life cycle from signed accepted document until the contract expires.  Usually this step addresses tracking contract expiration or contract renewals.  Administration of contracts is now starting to track obligations, both date and event based.  For example, ensuring that an updated inspection certificate has been received or that pricing changes reflect purchase levels met according to the contract.

Renew – Renew addresses the issue of continuing the terms of an existing contract.  Contracts can take many forms but some representative options are expiring, auto renewal and evergreen.  An expiring contract has a defined end and in order to renew, a new contract is needed.  An auto renewal contract has a contract period defined, for instance one year, with a predefined number of review periods.  For example, an annual contract with 3-years of auto renewal.  The final example is an evergreen contract. An evergreen contract renews automatically after a predetermined period and requires termination to stop the contract.

A component of contract renewal is contract amendment, or making changes to a contract.  While contract amendments are typically made as a contract nears its renewal timeframe, the actual amendment may be submitted much earlier during the administer phase.

Retention – Retention of contracts occur once a contract expires or becomes superseded.  Retention is the concept of maintaining contracts for a predetermined period of time, usually tied to a regulatory requirement.  Retention looks to minimize any potential risk of not having access to the contract that may come about from regulatory audits or potential litigation.  Retention is a key concept in Information Governance.

Audit – Audit looks at individual contracts and their history through the organization.  At a minimum, the audit process should capture who created the contract, who approved the contract, and who renewed the contract.  Other items that may be of interest to most corporate counsel are who edited the contract, and who reviewed the contract. These same questions may be asked of the templates or individual clauses stored in the system.  For example, who reviewed and approved a specific clause.  The audit process covers all aspects of a contract’s life.

Analytics – Analytics looks at the contracts as both a collection and as individual documents.  In its simplest form, analytics takes the role of reporting and custom reporting.  A CLM solution needs to be able to identify which contracts are due to expire or are up for renewal.   It should also be able to report on workflow processes reporting on queues and task durations.  Analytics can go further and report on the contract level.  For contracts, this means tracking the value of contracts.

Summary

Like any other content solution, Information Governance addresses many functions of contract life cycle.  This goes beyond roles, groups, and workflows.  CLM solutions offered by traditional vendors, unlike those developed on ECM platforms; often miss critical Information Governance concepts like document retention policies.  Information governance is not just part of an ECM solution but any solution that touches corporate documents and information.

Building a Custom Contract Life Cycle Management Solution on ECM

I’ve been researching the Contract Life Cycle Management (CLM) ecosystem which has started to overlap the Enterprise Content Management (ECM) ecosystem.  In yesterday’s post, I grouped the CLM vendors into three categories based on the level of their out of the box functionality.  But I really can’t give a perspective on CLM without addressing a custom CLM solution built on an ECM platform.

So what does a custom CLM solution on an ECM platform look like?  ECM platforms, especially those that include compound document support, can easily support everything from contract drafting to obligation tracking.  Here are the additional features that would be in the CLM solution you could build on an ECM platform. Continue reading “Building a Custom Contract Life Cycle Management Solution on ECM”

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. Continue reading “CLM Vendors in your mirror are closer than they appear”

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. Continue reading “Contract Management is a Convoluted Landscape”

Proof Finding ECM Platforms is Difficult

I think most of the time, we in the industry take for granted that “everyone” knows what ECM (Enterprise Content Management) is.  If you have a document management problem, you suddenly miraculously figure out that what you really have is an ECM problem.  You then immediately discover the Gartner Magic Quadrant and you are ready to deploy.  I think that it is for this reason that there are so many vendors in the ECM space.

When I finished my first pass on Contract Management solutions for our index of ECM vendors, I found over 62 vendors.  I was amazed.  It started to show me the vast size of the small vendor space within ECM.  I wrote about this last year in “Two Guys and a Computer.”  But why is it so large?  My hypothesis is that it is hard to find the solution you need. Continue reading “Proof Finding ECM Platforms is Difficult”

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