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Home » Blog » Contract Management » The Paradigm Shift in Contract Lifecycle Management: Why 2024 Demands a Rethink of Your CLM Strategy

The Paradigm Shift in Contract Lifecycle Management: Why 2024 Demands a Rethink of Your CLM Strategy

Contract lifecycle management trends 2024
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Gone are the days of clunky, paper-based contracts and siloed contract management processes. In 2024, the Contract Lifecycle Management (CLM) landscape has undergone a seismic shift, driven by two key forces: the surge in digital transformation initiatives and the unprecedented rise of Artificial Intelligence (AI).

Businesses are rapidly embracing digitalization to streamline operations and gain a competitive edge. This digital revolution extends far beyond marketing campaigns and customer interactions – it’s fundamentally transforming how contracts are negotiated, executed, and managed. Manually managing contracts in a digital age is not only inefficient, but it also exposes organizations to significant risks. Inconsistent contract language, missed renewal deadlines, and buried clauses with hidden liabilities can all have a detrimental impact on your bottom line.

This blog post is designed to be your guide. We’ll explore key contract lifecycle management trends, future-proof considerations for your CLM selection process, and what Contract Managers, Legal counsels, and Sourcing Leaders should prioritize.

Contract Lifecycle Management Trends 2024 and Beyond


The Rise of AI in CLM

One of the most significant trends shaping the CLM landscape is the integration of Artificial Intelligence (AI). AI is fundamentally transforming how contracts are managed, offering functionalities like:

  • Contract Visibility and Data Extraction: AI can automatically extract key terms and conditions from contracts, enabling efficient data retrieval and analysis.
  • Automated Contract Review: AI can identify deviations from standard terms and highlight them for review, streamlining the negotiation process.
  • Contract Risk Analysis: AI can assess risk based on specific clauses and suggest mitigation strategies.
  • Continuous Improvement: AI can analyze contract data to identify process bottlenecks and suggest areas for improvement.

Read more: Leverage Generative AI for Contract Management: Unlock ROI & Efficiency

Future-proofing Your CLM Selection Process: Key Considerations

While AI offers exciting possibilities, it’s crucial to choose a CLM solution that caters to both your present and future needs. Here are some key considerations to keep in mind:

  • AI Integration: Look for a solution that offers robust AI functionalities natively, rather than relying on partner integrations. This ensures seamless workflow and avoids potential compatibility issues.
  • Focus on Use Cases: Don’t get caught up in the hype. Evaluate the specific AI use cases offered by the CLM solution and prioritize those that align with your organization’s needs. For instance, if contract negotiation is a pain point, prioritize solutions with strong automated contract review capabilities.
  • Scalability and Adaptability: The CLM market is constantly evolving. Choose a solution from a vendor with a proven track record of innovation and a commitment to developing new AI functionalities.
  • User Adoption: Remember, the best CLM solution is only as effective as its user adoption. Opt for a solution with an intuitive interface and user-friendly features that cater to different user profiles within your organization (e.g., contracts managers, legal teams, procurement specialists).

Beyond AI: Core CLM Functionalities Still Matter

While AI is grabbing headlines, it’s important not to lose sight of the core functionalities that form the foundation of any effective CLM solution. Here are some essential features to consider:

  • Digital Workflow Management: A robust CLM solution should seamlessly integrate with your existing digital workflows, facilitating efficient contract creation, approval, and execution processes.
  • Legacy Agreement Management: Many organizations struggle with managing legacy paper-based contracts. Look for a CLM solution that can help you digitize these agreements and integrate them into your digital workflow.
  • Update and Renewal Management: Streamline the process of managing contract updates and renewals with automated reminders and notifications.
  • Security and Compliance: Ensure the CLM solution offers robust security features to protect sensitive contract data and complies with relevant industry regulations.

The Voice of the Customer: What Matters Most to Contracts Professionals

According to Kaitlynn Sommers – Sr Director Analyst, KI Leader at Gartner, a key factor driving CLM selection is the ability to support a digital workflow. Contract Managers, Counsels, and Sourcing Leaders prioritize solutions that can help them:

  • Digitize Legacy Agreements: Moving away from paper-based systems to a centralized digital repository.
  • Manage Update and Renewal Workflows: Automate reminders and notifications to ensure timely updates and renewals.
  • Gain Efficiency: Streamline contract processes to free up valuable time and resources.

How Zycus Merlin GenAI is empowering CLM users

Zycus Merlin GenAI’s modular architecture, built on microservices, ensures scalability and adaptability to address various use cases. The platform caters to both simple use cases, like contract summarization, and complex scenarios requiring specialist intervention. Importantly, Zycus adopts a human-centric approach. AI serves as an assistant, not a replacement, for human expertise. Users retain control over decision-making, while Merlin GenAI empowers them with valuable insights and streamlined workflows.

Watch Video: How iContract is revolutionizing the way organizations handle their contracts, from initiation to renewal

  • Contract Visibility and Data Extraction: This fundamental use case involves using AI models to extract terms and conditions, along with other metadata, from contracts. Zycus Merlin GenAI excels in this area, leveraging its compound AI ecosystem. General-purpose models handle common tasks, while domain-specific models ensure superior accuracy in procurement-related data extraction. Additionally, the knowledge graph facilitates information retrieval and utilization across various AI models, leading to a comprehensive understanding of contract data.
  • Automated Contract Review: Zycus Merlin GenAI goes beyond data extraction to offer automated contract review functionalities. It can identify deviations from pre-defined playbooks or accepted terms, highlighting these areas for further review by procurement or legal teams. As Kaitlynn mentioned, Merlin GenAI can progress further by recommending red lines based on the organization’s established terms and conditions. This capability utilizes Merlin generative AI. While human oversight remains crucial, Merlin GenAI significantly reduces review time and streamlines the process.
  • Contract Risk Analysis: While many vendors offer some form of contract risk assessment, Zycus Merlin GenAI takes a more nuanced approach. It doesn’t just provide basic risk scores. Instead, it leverages its AI models to analyze contracts clause-by-clause and assign risk levels. This granular assessment aligns with Kaitlynn’s observation that understanding risk at a clause level is critical for effective contract management.
  • Watch Video: AI Contract Risk Analysis with InstaReview

  • Continuous Improvement: Zycus Merlin GenAI offers functionalities that extend beyond immediate contracting needs. It can analyze historical contract data and identify areas for improvement in the contracting process. This aligns with Kaitlynn’s emphasis on “continuous improvement” as a valuable AI use case. Merlin GenAI can recommend changes to contracting workflows, identify bottlenecks, and suggest optimizations based on real-world data. This data-driven approach empowers organizations to continuously improve their contracting efficiency and effectiveness.

Conclusion

The future of CLM is bright, with AI poised to revolutionize the way contracts are managed. However, it’s essential to choose a solution that considers both cutting-edge functionalities and core CLM features. By focusing on AI use cases aligned with your needs, prioritizing user adoption, and not neglecting core functionalities, Contracts Managers, Counsels, and Sourcing Leaders can select a CLM solution that future-proofs their organization’s contracting processes and drives long-term success.

What are waiting for! Future-proof your contracting with Zycus CLM. Book a demo today!

FAQs

1. What are the benefits of integrating AI into my CLM solution?

AI offers a multitude of benefits for CLM, including:

  • Increased Efficiency: AI automates tedious tasks like contract data extraction and review, freeing up valuable time for contract professionals.
  • Reduced Risk: AI can identify potential risks within contracts, helping you negotiate better terms and avoid costly surprises down the line.
  • Improved Compliance: AI can ensure contracts comply with industry regulations, minimizing the risk of legal issues.
    Enhanced Insights: AI can analyze contract data to identify trends and patterns, providing valuable insights to inform your contracting strategy.

2. How can I ensure user adoption of a new CLM system?

User adoption is crucial for maximizing the ROI of your CLM solution. Here are some tips:

  • Invest in User Training: Provide comprehensive training to all users on the new CLM system’s functionalities and benefits.
  • Prioritize User-Friendliness: Choose a solution with an intuitive interface and features that cater to different user skillsets.
  • Encourage Feedback: Actively solicit feedback from users and address their concerns to ensure a smooth transition.

3. What are some of the challenges associated with implementing a new CLM system?

Here are some potential challenges to consider:

  • Change Management: Transitioning from manual processes to a new digital system can require a cultural shift within your organization.
  • Data Migration: Migrating existing contract data into the new CLM system can be a complex process.
  • Integration with Existing Systems:
    Ensure the new CLM system integrates seamlessly with your existing enterprise resource planning (ERP) and other relevant software.

Related Reads:

  1. Generative AI for Contract Management
  2. Ultimate Guide to Contract Management: Benefits & Best Practices
  3. What’s new in Zycus’ Contract Management Software?
  4. White Paper: The Why, What & How of Contract Management
  5. White Paper: 5 Steps to Realizing Value from Contract Lifecycle Management
  6. Zycus Bolsters End-to-End Contract Management with ‘Zycus CLM Connect’ app on Salesforce AppExchange
  7. Zycus positioned as a Leader in Contract Lifecycle Management for Buy-Side by an Independent Research Firm
  8. Revolutionizing Procurement Requests and Intake Management: Empowering Users in the Procurement Ecosystem
  9. Unlocking Success: Intake Management Best Practices And Key Strategies
  10. Revolutionizing Procurement: The Promising Future of Intake Processes
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Amit is a seasoned business leader who brings to Zycus about 18 years of experience in strategic marketing and communications, business management, and strategy. As CMO and Head Global BD, he is responsible for all aspects of global marketing and demand generation. He also leads other strategic functions like sales ops, bid desk and sales enablement. Before joining Zycus, Amit was based in London and served as Managing Director at OakNorth, a B2B SAAS unicorn and supported large enterprise engagements across the US, Europe, and Australasia. Amit holds an MBA from NITIE and B.E from REC Surathkal (NIT Karnataka). He has also completed an executive program in strategic marketing from Stanford Graduate School of Business. He was recognized as 40under40 by Reputation Today in 2017, has been a Power Profile on LinkedIn in 2018 & 2016, and has served on the advisory board of S.P.Jain Institute of Management & Research and Fintech committee of FICCI.
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