While 2021 marked another year of uncertainty due to the pandemic, the circumstances this year fostered growth and innovation within many industrial sectors, especially enterprise technology.
One critical back-end process that delivered value to enterprises throughout the pandemic is contract lifecycle management (CLM), according to Eric Laughlin, CEO of Agiloft. This relates to the various practices relating to the management of a contract from initiation through award, compliance and renewal.
As well as demonstrating the benefits of CLM during 2021, Laughlin is focused on the patterns within the sector for 2022.
CLM Further Solidifies its Place in Top Five Most Critical Enterprise Software Functions
Laughlin predicts that: “In 2022, contract lifecycle management (CLM) will solidify its place in the enterprise technology stack as one of the five key enterprise software functions alongside customer relationship management (CRM), enterprise resource planning (ERP), procurement and human capital management (HCM). Five years ago, CLM was viewed as an ancillary function, but not fundamental to business operations. Fast forward to today, it’s heavily relied on throughout enterprises and became mission-critical when the pandemic and remote work accelerated digital initiatives.”
He adds that with the CLM market evolving rapidly: “It’s time to rethink enterprises’ approaches to contracts. Historically, organizations relied on contracts solely as a defensive shield, relegated to dead-end digital representations of paper. This is not the case anymore – contract data is a digital asset serving as the DNA of business relationships, which enterprises can analyze and act on across the business.”
A further advantage is where: “CLM also helps to ensure the enterprise is protected from a financial standpoint. If CLM software is outdated or not configured properly, it can cost companies an average of 9% in annual revenue. This revenue leakage is caused by missed contract deadlines, late renewals, compliance fines, etc. Therefore, CLM is now equally important to a company’s bottom line as managing customer relationships and sales.”
In 2022, the Talent War Will Give Rise to the Career Field of “ContractOps”
For the second trend, Laughlin considers the trends from this year, noting: “In 2021, we saw many consulting firms struggle to find and retain top talent with contract lifecycle management (CLM) process experience, as well as CLM customers trying to hire internal administrators to run their contract management software. Due to growing demand, 2022 will see the rise of “ContractOps” and the beginning of a talent war to secure their services. As CLM establishes itself as a business-critical function in the enterprise, a new breed of in-house professionals will be required to handle the processes and technology used to manage contracts since LegalOps teams will be focused on managing spend, maximizing productivity and streamlining legal processes.”
The consequence of this, says Laughlin was: “ContractOps professionals will be highly sought after, with consulting firms, technology vendors and general counsel all vying for the best and brightest talent with the right experience. ContractOps will also feed into the continued growth of no-code CLM platforms because it allows one person to make updates to CLM platforms without having to enlist software developers to add new processes by writing new code.”
For the Future of Enterprise Software, Connected Experiences are Essential
An important development will relate to the customer experience, says Laughlin. Again, this is based on trends detected this year. Laughlin says: “In 2022, enterprise software will go beyond simple integrations between applications and move toward more holistic, connected experiences. These “connected experiences” take traditional integrations a step further with added functionality and increased flexibility.”
Laughlin adds: “This new level of connectivity will be essential because it connects siloed data and workflows across the enterprise, allows better collaboration across apps and brings teams more value from the apps they use on a daily basis.”
In the Highly Competitive Market, Repository-centric CLM Isn’t Enough
Change is a fundamental part of the sector, says Laughlin. Looking at the current CLM market landscape Laughlin finds: “There are now a ton of different players and many of their offerings are essentially contract repositories with contract management software layered on top. This simplified approach can work for a smaller company, but for a larger enterprise, a contract repository system simply isn’t enough to manage hundreds of thousands of unique contracts and associated workflows.”
Further changes and consolidation will occur, says Laughlin. By this: “With that said, we’re seeing CLM providers that only offer basic workflows secure massive Venture Capital investments and new competitors in that space popping up left and right. As a result, in 2022, there are going to be some failed companies in that market segment because there are so many competitors offering the same limited contract management capabilities. What will set the winners apart from the losers? Flexibility, connectivity and implementing cutting edge technology like AI for an accurate view of contract data across the enterprise.”