In this series, we have defined and discussed contract lifecycle management (CLM) and the requirements for an extended contract management solution. In the first few posts we laid the foundations for the series by discussing the various processes and supporting solution elements that surround CLM as a way of bounding the CLM solution space. We subsequently detailed the requirements for a CLM system from a data and process perspective, as defined by our CLM wheel model.
However, in our series to date, we’ve largely ignored the commercial performance management aspects that CLM also needs to support. This goes beyond the strategic aspects, and the performance and obligation management aspects, to the competency requirements and the integration requirements necessary for an organization to not only use, but maximize the value from, such a system.
In particular, at a minimum an organization needs to consider, and obtain support for:
- Procure to Pay
because CLM encompasses everything that happens between a contract being signed, which is where traditional strategic sourcing ends, and the supplier being paid for goods delivered and accepted
- Compliance beyond Invoice Matching
because while this is critical to prevent overspending (and the need for expensive cost-recovery), there are also insurance requirements, regulatory requirements, and other requirements that, if not met, could be much more costly
- Risk Management
as one unexpected, and then unmanaged, event can result in a 20% overspend instead of a 10% savings
And this is just the beginning. Depending on the organization, the following could also be critical:
- IP Management
if it has a lot of intellectual assets
- License Management
if it uses a lot of software products (and instances) or licenses a number of works for publication and distribution
- Inventory Management / System Integration
if the organization requires a lot of assets to be purchases, leased, and managed during the contract term to fulfill its obligations
And, of course, other commercial aspects could be important as well for organizations in a specific vertical. To find out more about some of these areas, and why you can’t forget the commercial perspective when evaluating contract management systems and prioritizing the must haves, should-haves, and nice-to-haves, check out Part VIII of the doctor, the prophet, and the maverick‘s series on Contract Lifecycle Management over on Spend Matters Plus (membership required).