Daily Archives: July 24, 2015

Contract Lifecycle Management IV: Neither Sourcing Nor Procurement Are Enough.

In Part I of this series, we argued that CLM, short for Contract Lifecycle Management, while arguably one of the most blah-blah-blah acronyms in the Supply Management space, is also one of the most important. This is because, as summarized in Part III, it overlaps S2C, P2P, and, as a result, S2S/S2P as well as intersecting with risk management, performance management, change management, and supplier (relationship) management. In other words, CLM touches almost every aspect of Supply Management and is taking a central place in your Supply Management organization.

We also argued that while the common definition of CLM was correct, as it stated that CLM required the right processes and the right platforms to support those processes, it was not useful because while an average organization has a decent understanding of a good contracting process, it does not have a good understanding of what the right platforms are to support them.

Why? Because most organizations don’t have anywhere to turn for a good, solid, stable definition of what a good supporting CM system is. Vendors only educate on their platform. Analysts only educate on the definition that is common across the cross-section of the market they are covering. Peers can only educate you on what they have, which might have been chosen randomly. And professional organizations stay out of the mix by focussing on process.

That’s why for the first time, Sourcing Innovation and Spend Matters have come together in a joint effort led by the prophet, the maverick, and the doctor to, once and for all, define the core Supply Management platforms, starting with CLM, the most misunderstood of the Supply Management misfits.

In our last post we asked if you knew where contract lifecycle management came from because one can’t move forward until one understands where the space is today, why existing platforms on their own (and Sourcing and Procurement platforms in particular) don’t meet all of an organization’s contract management needs on their own, and how what is out there now currently fits together.

That’s why Part IV: The Traditional Platforms of the landmark series over on Spend Matters Pro [membership required] by the prophet, the maverick, and the doctor examines all of the core Supply Management platforms out there today: e-Sourcing, e-Procurement, 3PM/SRM (Third Party Management / Supplier Relationship Management), GRC (Governance, Risk, and Compliance) and traditional CM; describes their core capabilities; indicates how they address different parts of the contract lifecycle; and sets the stage for our discussion of what defines the core of a(n integrated) CM platform that actually meets an organization’s contract management needs.

One might be tempted to think that just because their e-Sourcing platform (or P2P platform) contains a Contract Management module, that their contract management needs are met, but nothing could be further from the truth. This is because Contract Management (CM) is not (traditional) Sourcing, which is the process of identifying a source of supply. As a result, such platforms mainly focus on contract archival and meta-data management, and maybe contract authoring, but contract management is more than authoring and signing, it’s also execution and implementation. It’s making sure each party meets their obligations, complies with identified regulatory requirements, minimizes risk, and collaborates when issues, or disputes, arise. Remember, contracts not being executed as intended is a large reason that 30% to 40% of savings identified during the sourcing process never materialize.

The situation is similar if you have a P2P system with a CM module, a 3PM / SRM platform with a CM bolt-on, or even a first generation CM solution that was written to please the lawyers and not the day-to-day buyers and relationship managers. (But to understand why, you’ll have to check out our full post on The Traditional Platforms over on Spend Matters Pro [membership required].)