Category Archives: contract management

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].)

Contract Lifecycle Management III: Do You Know Where it Came From?

In our first post, we introduced you to CLM, short for Contract Lifecycle Management, which is arguably one of the most uninspiring acronyms in the Supply Management space, but also one of the most important as 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, as succinctly stated in our last post, CLM touches almost every aspect of Supply Management and is taking a central place in your Supply Management organization.

And, in our last post, we tried to define where CLM starts and ends, but, as per our first post, the key questions are: what exactly is CLM, why do you need it, and, most importantly, what defines the core CM (Contract Management) platform that powers CLM? And why?

As per our first post, to answer these questions in a standard, and open, manner that will allow for common, comparable, measurements across the vendor-base that will not change from quadrant to quadrant or wave to wave, Spend Matters and Sourcing Innovation have come together to create common definitions for critical Supply Management technologies, starting with CLM. This effort, led by the prophet, the maverick, and the doctor, has resulted in an initial, landmark, ten-part series on CLM over on Spend Matters Pro [membership required] that begins in “Contract Lifecycle Management Part I: An introduction” and that will continue until CLM is made clear.

In the first part of our ten-part series we defined what CLM is, discussed some critical requirements, and indicated future posts would detail what technological capabilities were required to support them. But before we can get to that, we have to understand where the solution space is today and why existing platforms, on their own, don’t meet all of an organization’s needs, and how what’s out there currently fits together. That’s why “Contract Lifecycle Management Part III: The Solution Space” examines the space and helps you understand where CLM fits.

While Contract Management solutions have been around for a while, they weren’t the first set of solutions in the Supply Management space, with e-Sourcing (and e-Auction) and e-Procurement (and e-Invoicing) solutions taking they lead. Early Contract Management solutions materialized in the Supply Management space as a result of gaps in process support left by the other solutions. But as Supply Management matured, many of these first generation systems showed gaps themselves, and Contract Management is now much more than just a contract authoring, signing, archiving, indexing, and searching platform that first generation vendors will make it out to be. And this starts to become clear when you examine the solution space as a whole and see where all the pieces fit, or don’t fit, together.

The reality is that the Supply Management space is big, the full CLM process is involved, and CLM knowledge gaps are very common — but they don’t have to be! Head on over to Spend Matters Pro [membership required], check out the latest piece by the prophet, the maverick, and the doctor, and understand how the The (Supply Management) Solution Space currently fits together. You won’t regret it.

Contract Lifecycle Management II: Do You Know Where It Starts and Ends?

In our last post, we introduced you to CLM, short for Contract Lifecycle Management, which is arguably one of the most uninspiring acronyms in the Supply Management space, but also one of the most important as it overlaps S2C (Source-to-Contract), P2P (Procure-to-Pay), and, as a result, S2S/S2P (Source-to-Settle/Source-to-Pay) 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. But where exactly does it start and where exactly does it end?

The short answer is that it starts with data and ends with data. For example, in order to identify contract opportunities, spend, product, and service data is needed. To create good specifications, good data is needed. Authoring requires contract clauses in a clause data library. Contract Management requires term and obligation data. Performance management requires performance data. Risk Management requires event data. And so on.

However, in between, it includes the usage of that data in various obligatory, performance, organizational, and strategic processes designed to extract value from the contract. These processes make use of an extensive data repository and support organizational commercial performance management (that takes CLM to the next level).

The repository will contain clauses, templates, contracts, supporting documents, amendments, and metadata. This will support the authoring, negotiation, signing, and implementation of the contract, where the implementation will require monitoring, management, and corrective action. It will also track, and support expiry, closure, review, and, where appropriate, renewal. And, collectively, each of these activities will be seamlessly blended together to support Commercial Performance Management.

How? That’s what the first-of-its-kind co-authored CLM series by the doctor, the prophet, and the maverick will answer over on Spend Matters Pro [membership required], after it presents “The CLM Wheel”, which is the first accurate graphical representation of the continuous CLM process at a high level. Go check it out and then we can begin to address the question, which will involve first going back to the beginning in our next post.

Contract Lifecycle Management I: Do You Know What It Is?

Today’s post is co-authored by the prophet.

CLM, short for Contract Lifecycle Management, is arguably one of the most snooze-inducing acronyms in the Supply Management space, but yet also one of the most important. That’s because proper CLM not only overlaps both the Sourcing (or Source-to-Contract [S2C]) and Procurement (or Procure-to-Pay [P2P]) cycles (for strategic sourcing of buy-side categories), but also influences the full Source-to-Settle (S2S) / Source-to-Pay (S2P) cycle and provides a partial foundation for risk management, performance management, change management, and supplier [relationship] management (as well as in-depth post-mortem reviews that increase organizational knowledge and effectiveness for years to come).

Moreover, good CLM is arguably the foundation for enterprise CLM, or e-CLM, which goes beyond just buy-side contract support and also includes sell-side contract support to cover the transit of goods from supplier to customer, or, as us network modellers like to say, from source to sink.

But just what is CLM? And where does it fit in Supply Management? According to Gartner, it is a solution and process for managing the life cycle of contracts created and/or administered by or impacting the company. (Source) But what does that mean? And more importantly, what does that mean to you as a Supply Management professional? (Let’s be honest — we don’t care much about sales support because there’s nothing to sell if nothing is purchased, manufactured, or created for delivery. Supply Management comes first.)

In simple terms, Gartner’s definition means that, in order to effectively manage your contracts you need the right processes and the right platforms to support those processes. Chances are your organization, which has been contracting since its inception, has, at least, a decent understanding of the right processes but needs a lot of help identifying the right platforms. But where do you turn?

Vendors? They have a great definition of their platform and how they believe it will help you, but with such a narrow view, how do you know it’s right for you?

Analysts? They have a broader definition, as each of the big firms have their own definition of a Contract Management (CM) suite, but this definition is still not a great one. First of all, it’s heavily influenced by the vendors they talk to the most. Second, and most important, their definition changes from quadrant to quadrant and report to report, sometimes arbitrarily, all based upon which vendors they believe should be in the quadrant and which vendors they believe should not, all based on size, suite, or some other half-baked definition of CM. “Should-haves” become “must haves”, “must haves” become “should haves”, and the baseline requirements for vendor consideration, such as suite breadth, vertical support, minimum customer counts, and even minimum revenue ebb and flow with the tide.

Peers? How do you know they know any more than you? Unless they are in the Hackett Group top 8% or the Supply Chain Top 100, chances are they don’t. Remember, one out of every two companies still does not have modern sourcing or procurement systems. And even if a peer has a system, and even if that system isn’t one that just happened to be bought at the word of an analyst or the salesmanship of a vendor, it still doesn’t mean it’s the right system for your organization.

Professional Organizations? Organizations like the ISM and CIPS tend to focus on process, not platforms. Members, not vendors.

The reality is that you don’t really have anywhere to turn for a good, solid, stable definition that you can bank on and measure against. That’s why, for the first time, Sourcing Innovation and Spend Matters, the leading independent authorities on Supply Management, have come together in a joint effort led by the prophet 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.

Starting this week, over on Spend Matters Pro [membership required], the first part of Contract Lifecycle Management 101 which introduces an in-depth eight-part series that defines CLM in detail is available for your reading pleasure. This landmark joint-authored series outlines its historical, and typical, implementations, details the must-haves, should-haves, and nice-to-haves of a core CM (Contract Management) platform, specifies must-have and should-have integrations, and provides some tips on how to find the right provider. This series is the first in a set of landmark series (which will also include series on Third-Party Management [3PM] / Supplier Relationship Management [SRM], e-Sourcing, and e-Procurement) which will define once and for all what the technology platforms should do, why the platforms should do it, and provide a standard, open, public benchmark against which all vendors will be measured. As such, the doctor strongly encourages you to head over and check it out.