Yesterday we noted that the real reason no one’s buying your traditional contract lifecycle management system has not changed in eight years. That we’re still in the situation that, to be blunt, many of these solutions can still be built by a high school student with Microsoft Word and Access and mad visual basic scripting skills. A situation that, to be blunt, is pretty pathetic. We also noted that, when we first addressed the subject eight years ago, SI was only able to identify one true value of a CLM system — a value that only materialized from deep, real-time, integration with the P2P (and, to be honest, only used the metadata).
Since then, SI has only identified three other sources of true value, but, as we explained in yesterday’s pst, one of these can still be accomplished by a high school student with Microsoft Word, Microsoft Access and mad visual basic scripting skills.
So when does a system provide true value? When it offers one, and preferably both, of the following:
2. Prescriptive Analytics
And we mean true prescriptive analytics. Just integrating a third party analytics platform, like Qlik, and creating some fancy reports based on standard operational metrics (like turnaround time, new contracts per month, average expiry rate, etc.) is something that can be done by the script kiddie with an open source reporting engine. And even throwing in some predictive trend analytics isn’t that valuable as their are open source libraries with dozens of textbook algorithms to throw against your data set.
We mean real prescriptive analytics that takes the data, runs the trends, compares it to a knowledge-database of standard times across companies and industries, identifies those trends that improved with the application of one or more specific actions, and recommends those actions to decrease turnaround time, automate renewal processes, negotiate better results in a category, industry, or geography, etc. True situationally aware intelligence. That’s true value #1.
3. Semantic Intelligence
Let’s say a new compliance requirement or initiative you never expected comes at you out of left field and you have 3 months to get in compliance. You don’t track any metadata associated with it, only started using clauses in the past two years that might cover the requirements, but it really depends on the variant of the clause used, the geography in which it was used, and the rest of the contract. How do you identify which contracts are likely to be in non-compliance quickly and those that definitely need human attention without actually manually reviewing each contract without a clause you are sure is safe? Of which there could be thousands?
This is where a modern machine-learning backed semantic intelligence solution that can automatically scan, parse, index, and make sense of all your contracts comes into play. A solution that can, from enough examples of sufficiently compliant and/or irrelevant contracts (across the industry, not just your company) determine those definitely not in compliance and those most likely not in compliance and give you a probability. One that can also determine those contracts that can be eliminated from review due to expiry or coming expiry and those coming up for renewal that need one or more clauses inserted and automatically identify the right personnel. One that get’s it right 95% to 98% of the time, a success rate that will be better than the temp manpower you’d otherwise have to higher.
These solutions didn’t exist 8 years ago. But now we have almost a dozen players, mostly new, with this type of functionality — which you won’t yet find in most suites. So if you want your suite CLM to have value, better find one of these new, standalone, BoB contract intelligence platforms that can integrate and integrate it. You’ll finally be able to drill deep enough to extract gold from the claim your original CLM vendor sold you, that, up until now, has proved worthless.
So if you want real value from a CLM solution, get one that embeds natively with your P2P through APIs, offers integrated prescriptive analytics, and provides you with modern semantic intelligence capabilities. Then you will truly find value that you could not find before.