January 19, 2023

Three Ways Most CLM Implementations Fail — And What Stakeholders Can Do To Address Them

As the threat of recessionary pressures weighs down on the freedom and flexibility of legal departments, general counsel (GCs) are tasked with improving the tools they use and their efficiency in running their legal departments. Most departments can make great strides in this area by introducing artificial intelligence, machine learning and automation to speed up time-consuming, manual workflows. In commercial contracts and managing NDAs, contract lifecycle management (CLM) platforms can offer many efficiencies and benefits to the enterprise as a whole.

CLMs can be a powerful tool for in-house counsel, so long as they are appropriately selected, implemented, and integrated into the enterprise’s systems. Unfortunately, many departments struggle with integrating their CLM programs into their workflows, leading to costly oversights in the contracting process and damaging impediments for the business and legal divisions. 

Some of the most common issues related to CLM implementations are described below. Vice President of CLM Solutions, Jim O’Hare will explore all of these and more in our “How to Propel Your CLM Transformation Journey” webinar.

1. Migration of erroneous data

Legal teams often use CLM programs to centralize critical data and create the playbooks and key automations required to speed up the contracting function. The way many departments prepare this data can lead to migration headaches — and ultimately undermine an enterprise’s efforts to install and implement its CLM program of choice successfully. Their success in achieving a successful migration hinges on proper data formatting and coding in compliance with the typical markers a CLM system can understand and categorize.  

Unfortunately, platforms generally don’t treat data the same, which can spur migration hurdles. For instance, one internal study from IBM of their customers found that 36% of the data their customers had initially prepared for data transfers was improperly formatted and inaccurately coded. These hiccups / This misconception can frustrate an organization’s ability to leverage a freshly-installed CLM’s new features and impede the organization’s ability to make progress in automating their contract lifecycle management. In addition, improper data labeling practices can present equally-significant obstacles for legacy data migration from older systems, putting that data at risk of being lost in translation during migration.

How companies can solve this issue

Data migration is usually the longest phase for any CLM implementation — and it’s not hard to see why. While a CLM system can dramatically rework a legal department’s workflows, it is only as effective as the amount of preparation an organization’s project management team devotes to it. It would be foolish and naive to assume the data on a company’s SharePoint or Costpoint systems is migration-ready; teams have to account for system and coding quirks in the CLM system to ensure the system properly tags and classifies any data it receives from those sources. Legal departments should work with company stakeholders to set up a dedicated project management team to oversee the implementation process to relieve IT personnel from the unenviable prospect of numerous support tickets. This team should have the required administrative tools and access for classifying reusable clauses, organizing contract party data, and more. Corresponding with a CLM vendor’s technical team and reviewing the CLM platform’s documentation can also give the project management team the necessary information to confirm and execute effective labeling practices for data stored on SharePoint, Costpoint, and other platforms and applications.

2. The transition of data from sales to services departments

If one had to ferret out the source of the most frequent points of failure underlying unsuccessful CLM implementations, data and request transfers from sales to services departments is one of them. At their heart, the sales and services functions have different priorities. At many organizations, for example, there is a constant tug-of-war between whether the sales department’s CRM or the legal department’s CLM should pilot how organizations store indispensable contract data. The reason? Sales teams and vendors do not engage the input of essential service divisions early in the sales cycle. This trend is not necessarily the fault of the business’s sales units. If a services division does request a seat at the table, most vendors will neither encourage nor allow it, often out of fear the concerns of the services department will get in the way of closing the sale. However, all this does is give the vendor’s sales and engineering team an incomplete, filtered view of the business problems the organization wants the CLM to solve. As a result, any solution the vendor recommends and delivers will overlook the equally-important needs of the GC. This tactic can backfire once the organization installs its CLM and puts it to use, as it would put legal and sales departments at risk for unnecessary communication breakdowns and bogged-down approval turnarounds.

How companies can solve this issue  

Stakeholders can address this implementation faux pas by ensuring that the sales and services teams are more in sync with each other during the CLM shopping and integration stages. During these stages, clear communication between sales and services figureheads can eliminate many issues that could get lost or overlooked in vendor sales presentations. Rather than having a single department steer the company’s CLM integration and purchase process, it should entrust these duties to a multidisciplinary project management team. This team can collect necessary information and preferred program requirements from different departments to find solutions that allow sales and services divisions to better synthesize and synchronize their CLM efforts. Alternatively, the sales department can appoint specific point people to pass along materials and service transition call takeaways to the company’s legal and services stakeholders to compile their concerns. Sales teams can then consult this data to advocate for the organization’s services professionals before the vendor’s sales, engineering, and transition units.

3. Failing to embrace the concept of “readiness”

Of all the aspects of a CLM integration that we at LegalEase value, “readiness” ranks at the top. By this, we mean having teams put together the administrative tools and resources required to test out and drive a project forward. Unsurprisingly, achieving readiness entails careful planning, conversations about program requirements and preferred design, and more. This practice, unfortunately, runs counter to how most companies approach most CLM implementations. Instead, many jump the gun in hopes of jumpstarting results. They install the solution, give access credentials to team members, and expect everything to run smoothly. The process-related failures that arise from skipping or jumping key preparatory steps can beget execution failures and underperformance over the long term. By skipping key steps and conversations, the final implementation can fall well short of expectations on both the sales and services side, putting the whole organization at risk for costly contract management errors. Not to mention the ire that can arise from delayed launches; the last thing a project management team needs to worry about is to add to the delay of a CLM rollout over miscommunications on fundamental features and transitions.

How companies can solve this issue

As enticing as it would be to jump from CLM purchase to CLM execution, any company in the implementation fast lane will inevitably careen into problems during and after implementation. Strategic planning and patience are key to a successful CLM implementation, both of which underscore the core of “readiness.” Instead of aiming to roll out its chosen platform as quickly as possible, a CLM project management team should focus on carrying out the implementation process one phase at a time. Instead of pushing right into program design, project teams should hold a requirements workshop with key stakeholders in sales and legal to understand the business problems they want the CLM to solve. With this knowledge, teams can better integrate the legal function’s preferences with takeaways from the sales transition call to help prioritize CLM feature rollouts and integrate dashboard design preferences. Rather than immediately going live and working on user adoption, teams should collaborate with enterprise and vendor engineering teams to debug coding issues, perform user acceptance testing to maximize dashboard acceptance, and run tests to vet the program fully. Diving quickly into a CLM integration can foster an environment rife with roadblocks. Treading slowly and deliberately, on the other hand, can help teams better anticipate those roadblocks to pave better roads for successful CLM adoption and implementation.

CLM implementations should not be rushed. By organizing data, involving the perspectives of service divisions, and approaching implementations slowly and deliberately, a company’s project management task force can more effectively foster increased adoption and long-term success for their chosen CLM programs.

We are very excited to share some additional information on CLM best practices with viewers in our upcoming webinar, “How to Propel Your CLM Transformation Journey.” You can find out more about best practices for identifying CLM goals, designing CLM implementation strategies, identifying and rectifying process gaps, and how to best organize management, communications and goal planning.  

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