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.

In Part I of this series, we argued that CLM, short for Contract Lifecycle Management, while arguably one of the most tedious 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, 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 last post in this series we discussed that neither sourcing nor procurement were enough because Contract Management, the core platform powering CLM, is not (traditional) Sourcing, which is the process of identifying a source of supply. Nor is it (traditional) Procurement, which is the process of acquiring products and services that have, in many cases, already been contracted for. Contract Management is the end-to-end negotiation, execution, and implementation of contracts that also supports performance, compliance, relationship management, and, when it happens, dispute management and corrective actions. And as a result, it requires a platform with the right mix of core and supporting capabilities. In today’s post we’ll list the core capabilities and discuss a couple of them, but for the full picture, you’ll need to check out our in-depth piece on Core Contract Management over on Spend Matters Pro [membership required].

The following capabilities are core:

• • Contract Library (& Document Archival)

• • Template Management

• • Key Contractual Data Element Search & Discovery

• • Tamper Protection for Signed Documents

• • Security

• • Amendment Control / Change Management

• • Audit Trails

• • (XML) Data Import & Export

• • Contract / Document Authoring / Versioning

• • Obligation Management

• • Alerts

• • Reporting

• • Expiry & Renewal Management

Most of these you probably expect, and for some of these you probably have some idea why, but a few of these are probably unexpected, including expiry management and obligation management. We’ll discuss these, but refer you to our in-depth piece on “Core Contract Management” over on Spend Matters Pro [membership required] for coverage of the rest. (However, 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.)

Most people overlook the importance of contract expiry and renewal management because they figure that once a contract is over, it’s over, and no longer needs to be managed. That’s only the case if the contract is truly over, there are no future obligations, and, most importantly, the contract doesn’t automatically renew unless explicitly cancelled in writing. Without a good contract management system with auto-renew detection and expiry management, many organizations suffer evergreen contracts that lock them into above-market rates for outdated and inferior products because they don’t realize an evergreen contract exists until after the final date for termination has passed and they are locked in for another one to three years. Maybe your buyer got tired of constantly negotiating the office supplies contract and believed that getting 20% off of MSRP was a smashing success and locked in an auto-renew clause that said, if not cancelled in writing by the buying organization within 30 days of contract expiry, the contract would auto-renew for another year, under the same terms and conditions, at the same rates. But if the buyer, who didn’t do his homework very well, didn’t realize that the MSRP rates were 40% more than the vendor’s cost, then the vendor is, of course, going to let this contract coast forever (especially since the organization is providing double his typical profit margin as compared to his big GPO clients that negotiated 30% off MSRP), and the organization will likely be automatically locked into a renewal that is costing it an extra 10% on office supplies.

Similarly, most buyers or category owners often feel that obligations are the responsibility of the supplier, so obligation management isn’t that important. But even if everything is the responsibility of the supplier under the contract, it is still up to the buyer to insure that the supplier meets their obligations. Specifically, if there are insurance requirements then the buyer has to make sure the right policies are in force (or risk opening his organization up to multi-million dollar lawsuits). If there are compliance requirements, the buyer has to make sure that the right tests, reviews, or approvals are in place before the products are shipped or sold (or risks goods being delayed, seized, or even destroyed at the border). And if the organization needs to acquire, or renew, licenses to meet its end of the contract, it has to make sure it does so at the right time (or risk losing access to critical IP or software tools).

And even though we only called out renewal and obligation management, each and every other core capability listed above is just as critical and to understand why, and what the platform has to support with respect to that core capability, check out
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.

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.