Contract Lifecycle Management VI: Do You Know What The Should-Haves Are?

In Part I of this series, we argued that CLM, short for Contract Lifecycle Management, while seemingly one of the most bromidic acronyms in the Supply Management space, is also one of the most important. This is because, as summarized in Part III of this series, 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.

However, as noted in previous posts, up until now, CLM has not been well defined and the best definition, which could arguably be that given by Gartner (see Part I), has been, more or less useless, because you already know it’s a good process supported by a great platform. What you need to know is what that platform is as vendors, analysts, peers, and even professional organizations don’t, or won’t tell you. That’s why, in a landmark effort, Sourcing Innovation and Spend Matters, as the two leading independent authorities on Supply Management, led by the doctor, the maverick, and the prophet, have joined forces to define, publicly and openly, the core Supply Management platforms, starting with CLM.

In our previous posts we elucidated the need for a core CM (Contract Management) platform because existing Supply Management systems weren’t enough, and then, in our last post (Part V), we outlined the must-have core capabilities of a CM platform, as discussed at great length in Core Contract Management over on Spend Matters Pro [membership required], Part V of the doctor, the maverick, and the prophet‘s landmark ten-part series fully defining CLM.

Today we are going to outline all of the important should-have capabilities of a contract management platform, discuss a couple of them, and then refer you to The Standard Contract Management Platform, part six of the landmark ten-part series co-authored by the doctor, the maverick, and the prophet over on Spend Matters Pro [membership required], for an in-depth discussion of each should-have capability.

To make sure there is no confusion, a should-have capability is a capability that, while not absolutely required, significantly impacts usability and performance by the absence of these features and most industry leading contract management solutions will support the majority of these capabilities to some extent.

The following capabilities are should-have:

  • Clause Library
  • Full Text Search & (Legacy Contract) Discovery
  • Collaborative Creation
  • (Fine-Grained) Roles Based Security
  • Contract Workflows
  • Rules Management
  • Contract Authoring via Rules-Based Contract Builder
  • Schedule & Rate Card Support
  • e-Signatures
  • Task Management / Tracking
  • Event Monitoring & Issue Escalation
  • Corrective Action Management
  • Dashboards and Contract Analytics
  • Native Integration to MDM Platforms

As with the set of core capabilities, most of these you probably expect, and for some of these you probably have a fairly good idea why (even if you are not sure exactly what functionality is required for a proper implementation), but a few of these are probably unexpected, including Corrective Action Management and Native Integration to MDM Platforms. We’ll discuss these two capabilities, but refer you to our in-depth piece on The Standard Contract Management Platform over on Spend Matters Pro [membership required] for coverage of the rest. (But the must-have, should-have, and nice-to-have function lists will be made, and remain, public as they are the common measuring stick that both Spend Matters and Sourcing Innovation will be reviewing and measuring vendors against going forward.)

Corrective Action Management is critical because issues will always arise during contract execution and they will not always resolve themselves or be resolved by the supplier. And while the organization may have a process for dealing with issues, and even a platform for doing so, those actions have to relate to, and be mapped back, to a contract to not only insure that both parties meet their obligations and performance hits necessary levels, but that resolutions are tracked and performance, pre-and-post issue resolution, is tracked and measured appropriately. After all, not all value in a contract is in the price list — sometimes it’s in the value-add, sometimes it’s in the staff augmentation, and sometimes it’s in the innovation.

Native Integration to Master Data Management (MDM) platforms is important because contracts are with approved suppliers on approved items and services under a well-defined categorization for agreed upon prices and delivery dates. All of this data is defined in existing systems, and much of it (with the exception of agreed upon prices and delivery dates) can come from the Master Data Management [MDM] system (which is generally the ERP, but could be a Sourcing or SRM platform with MDM capabilities). If the integration is not there, then a lot of information has to be manually rekeyed, which introduces considerable opportunity for error that can result in agreements for higher-than-negotiated pricing, slack delivery arrangements, or data miscategorizations that will result in erroneous spend analysis down the road. (Approximately one in one hundred keystrokes is erroneous, and this is one of the reasons that 88% of Your Spreadsheets are Garbage.)

However, every other should-have capability listed above is just as critical to usability and performance, and to understand why, and what the platform has to support with respect to those should-have capabilities, check out The Standard Contract Management Platform over on Spend Matters Pro [membership required], part six of the doctor, the maverick, and the prophet‘s landmark ten-part series fully defining CLM.