Imagine that you sign one contract every day of the month. On day one you start with contract value of $1, the next day you move on to $2, day three is $4, day four is $8, then $16 and so on. Do you see where I am going with this? At this rate, how much do you think all your contracts would be worth after 30 days? Have a guess, it would be an equivalent of:
- Nice dinner for a group of four at a 5-star hotel (champagne included)
- Two-week all-inclusive holidays for two in a luxury resort at the Maldives
- 1963 Ferrari GTO
- Round trip to the moon.
If you are not familiar with exponential growth, the answer might take you by surprise. Actually, it is all these things and more because at the end of the month your contracts would be worth over 1 billion dollars.
This number might not seem intuitive because the human mind is more adapted to estimating linear change than exponential change (unless you are a statistician, of course). This, however, is the rate technology is developing these days. We have the momentum and it seems unstoppable. Effectively this means that processing power, capacity, communication speed – all of them practically double every one to two years.
So how does this relate to contract lifecycle management (CLM) tech and what does it mean to a company considering a significant investment in technology? Well first off, things are moving fast. But beyond that, without some thought now, there could be a number of pitfalls or speedbumps on the digital highway. Here are a couple of things to consider to avoid the common pitfalls that cost not only money but also productivity and employee and customer satisfaction.
Pitfall # 1 The next best thing is just around the corner
If you do not see the perfect solution to all your business problems on the market right now, you might be asking yourself: if technology improves at such an inconceivable rate with breakthroughs in automation happening every other day, why not wait some time and then get the upgraded version? Unfortunately, it’s like with mobile phones. Even if you are an early adopter and you snatch the cutting edge model the odds are it will be outdated practically the moment you take it off the shelf. And whereas it might be ok to spend up to a couple thousand on new mobile every two years or so, this approach might not necessarily be feasible for a suite of enterprise software worth a couple of million, not only because of financial reasons but also logistics factors.
Unless your strategy for the next couple of years is crystal clear, you know exactly what you want out of a CLM suite and these features or functionalities are on a provider’s roadmap, you are most likely wasting valuable time. Just as software capabilities double at short intervals, so does the complexity of your organization’s technological landscape and the amount of data your produce. Waiting in this case usually means lagging behind and not getting your money’s worth out of your contracts for even longer.
Pitfall #2 AI will sort out my messy data ecosystem
AI is everywhere these days – every provider seems to suddenly offer modules that automate work and perform seemingly impossible tasks with one click (and sometimes even without it!). And you know your competition already has their AI and this has given them competitive edge in their contract management. So why not go all the way and implement AI solution of your own? Before we dig deeper let me clarify one thing. Artificial intelligence is not a buzzword that is going to go away when a new fad appears on the market. AI-based solutions more often than not deliver on their promises, they are here to stay and they will only get better in near future. With this in mind, if you want an AI solution then by all means go for it but bear in mind that “intelligence” in AI does not equal "human intelligence" and it will not do things it was not designed to do by itself (not yet at least, maybe not ever). One, AI algorithms feed on massive amounts of data that needs to be properly prepared and maintained. Two, time and considerable effort are needed to train it and to embed them in your organization. So if you want to go in this direction then it is great for your organization both short and long term but take into account the requirements to prepare the data fabric for AI to operate and plan in advance for time, capacity and resources to make it work to your advantage.
Pitfall #3 Brand new CLM implementation is the ultimate solution to business issues with the contracting process in my organization
Let me be honest. Lack of appropriate software might be slowing you down and making rules more difficult to comply with. But most likely the real source of business issues with your contracting process is… your contracting process. While I am all in favour of out-of-the-box software solutions for a neat, quick implementation you still need to consider all the elements you “put” in the tool. Optimized templates, clear clauses, unambiguous rules, streamlined process with no rework loops or communication gaps, mapped integrations up and downstream - experience shows that for complex global or multinational organizations it is these components that make or break an implementation rather than a specific software solution itself.
Realistically, for large and even mid-size organizations these days it is not possible to keep up with the pace of the 4th industrial revolution. However, proper planning and thoughtful preparation with specific business problems in mind will make your solution more likely to deliver, more future proof and scalable thus making the exponential growth in technology working for and not against you.