What is Contract Lifecycle Management?
Contract Lifecycle Management (CLM) is the process of strategically managing a company’s contracts in order to maximize operational and financial performance. It is a comprehensive approach to managing all contractual agreements a company enters into, from the initial request for proposal and contract negotiation to the execution or signing of the agreement and subsequent contract with the close out. Proper execution of CLM requires extensive cross-departmental training and contract management software, including contract lifecycle management software. At its core, CLM is the science of enhancing business value by implementing a systematic approach to managing the entire lifecycle of each contract, including monitoring compliance levels through all stages of the contract and rectifying issues with the contract as they arise. Companies looking to maximize financial success and operational effectiveness must have a streamlined approach to monitoring and enforcing contract performance. However , gaining insight into the performance of the various contracts a company is a party to poses a unique challenge for most organizations due to the volume of contracts and number of departmental stakeholders. For industries characterized by active commercial and government contracts, such as the defense and construction industries, having a robust CLM system is even more crucial in these fields. Research has shown that getting CLM right requires quality people. Contract lifecycle management personnel and teams must be able to understand complex legal requirements and have the ability to communicate clearly with all parties involved. Proper CLM necessarily enhances a company’s ability to anticipate risk, seize opportunities, and allocate resources more effectively. CLM impacts key business processes such as how a company executes contracts, manages supplier relationships, implements contract terms and conditions, and manages access to contractual information through the use of technology.
Contract Lifecycle Management Career Paths
Contract lifecycle management has flourished over the last decade, diversifying into a spectrum of specialist roles that have evolved to meet the demands of businesses and their ongoing compliance needs. With this evolution, new job titles and roles have appeared within the realm of contract management, reflecting the ever-widening scope of contract management. One of the most commonly recognized roles is the contract manager. A contract manager’s responsibilities often encompass the entire contract lifecycle, beginning with procurement, through negotiation and into contract renewal and expiration. In managing the end of the contract lifecycle, the contract manager needs to be well-versed in the termination and transition of existing obligations, periodic reporting, compliance with obligations, and renegotiation or termination. Contract specialists are also a vital part of the contract lifecycle. They are usually responsible for creating and maintaining contracts for a particular department. They will almost always be required to work closely with attorneys within the company to determine compliance and effectively communicate with the various stakeholders. A contract specialist must be familiar with policies and procedures and be able to effectively manage changes and amendments to contracts as necessary. It is important for contract specialists to be knowledgeable in relevant commercial business language and practices, and they need to effectively communicate with employees who may have no contract law experience. Another growing role in the contract management field is that of a CLM analyst. In today’s climate of increasing regulatory requirements, a CLM analyst ensures that an organization’s contracts are compliant with all applicable corporate policies and procedures as well as all external regulations. They are responsible for identifying and mitigating risks associated with the contract portfolio. CLM analysts play a key role in reporting to senior management on legal compliance and are required to have a strong understanding of domestic and international laws and regulations. Contract management is becoming an indispensable function of successful businesses and offers a broad range of opportunities and challenges to professionals across all skill sets and backgrounds. Organizations have begun to recognize the substantial cost savings and efficiencies that can be gained through proper contract management and, as a result, successful contract managers demand commensurate salaries. Contract managers and analysts are increasingly being seen as key staff members who add significant value to the business.
Popular Contract Lifecycle Management Skills
A successful career in contract lifecycle management requires a solid foundation of skills. As these positions can vary from administrative roles to senior leadership within a company, the skills required will depend on the function of the job. However, the key traits that employers seek include advanced negotiation, attention to detail, and overall proficiency in digital contracting software as well as Microsoft Office products. Contract negotiators with proven negotiation skills are highly sought after, as they can ensure that all parties are satisfied with the agreement reached at the end of the negotiation process. CLM managers monitor the process and minimize the amount of time it takes to reach an agreement so that it is done efficiently and effectively. Attention to detail is an important skill for every aspect of contract lifecycle management. This includes reviewing and entering data accurately, maintaining contract records, ensuring that terms are fairly represented, monitoring compliance, taking notes during meetings or contract negotiations, and recording relevant information. Even the slightest oversight could result in cancellation or legal repercussions, so strong attention to detail is crucial. Digital contracting software is the main technological tool that the majority of CLM professionals will use on the job. This can require training and practice to become more proficient. A CLM manager will likely oversee the use of this software within their department, so knowledge of the available programs is a must.
Emerging Technologies in Contract Lifecycle Management
Contract Lifecycle Management (CLM) has undergone a profound transformation in recent years, fueled by technological advancements that have made the process more efficient, accurate, and compliant. Today, organizations increasingly seek to leverage technology to enhance their CLM strategies, particularly in light of their burgeoning contract portfolios and the intricacies of modern business landscapes.
At the forefront of these technological shifts are popular CLM software tools that enable organizations to streamline, automate, and optimize contract processes. Some well-known and widely used options include SAP Ariba, Agiloft, and Icertis, each with a unique suite of features designed to simplify different aspects of contract management. These tools are particularly effective in centralizing contract data, facilitating collaboration between parties, ensuring compliance, and tracking contract performance over time.
For instance, SAP Ariba integrates with an organization’s various business systems, giving it the capacity to manage anything from sales and procurement contracts to product warranties . Meanwhile, Agiloft offers bespoke solutions tailored to suit a company’s specific contractual needs, which is particularly useful for organizations operating in highly regulated industries. All offer cloud-based solutions that are accessible from anywhere, helping to overcome geographical barriers and silos between departments.
The use of contract lifecycle management tools is particularly prevalent in large organizations and corporations that have a high volume of contracts that are vital to their operations. However, even smaller and medium-sized businesses are embracing the shift towards more sophisticated contract lifecycle management strategies. As a result, there is a growing demand for professionals who possess the skills necessary to implement and manage various CLM software systems.
The implications of this are clear: professionals and organizations must either update their skills accordingly or find experts who are knowledgeable in these technologies. Contract lifecycle management software tools have brought drastic changes that organizations looking to maximize the value of their contracts should take into consideration.
Contract Lifecycle Management Education and Certification
While contract lifecycle management concepts have been around for decades, a distinctive area of study is still emerging. As the concept of contracting evolves, integrating various elements of business strategy, legal expectation and information technology, universities are expanding their programs to prepare professionals more fully. Currently, individuals pursuing a career in contract lifecycle management focus on the study of contract management, contract negotiation and dispute resolution, contract law, contract administration and project management. Administrative concerns related to the organization of the management and oversight of contracts are key areas of emphasis. Various universities offer undergraduate and graduate programs that assist students in this realm, and continuing education is now available in both contract law and contract management. While most professional certifications require a degree, CLM professionals can also pursue more specialized training through continuing education programs. The National Contract Management Association, for example, offers a program in contract management facilitated by Purdue University. "Even if you have a degree, the specialization you get while getting a certificate helps you stand out in the employment field," says Dr. Richard Nolen, dean of the Purdue University College of continuing studies. Elevating the role of contract lifecycle management in business requires professionals who can address the entire scope of contracting, and certification programs help prepare those professionals. Certification provides proof to prospective employers that you have acquired a certain level of knowledge and professional expertise.
Breaking into the Contract Lifecycle Management Job Market
Finding the right contract lifecycle management (CLM) position requires both strategic networking and a targeted approach to the job market. Start by identifying key players in the industry and understanding who employs CLM professionals. Major law firms, corporations with large legal departments, and dedicated CLM service providers are all potential employers.
Networking is crucial in this area; get connected to executives who hold the most relevant titles at the companies you want to work for. For example, CPO, GC, CLO, and CAO can all lead to the department that manages the CLM process. Use LinkedIn to find both people who currently fulfill these roles and those who used to fill these roles – people change jobs frequently in corporate structures so a former CEO may now be a board member at another organization.
Ideally, you’ll want to engage with a person who is actively hiring in a CLM department because they’ll know which roles are currently available. Once you get access to this information, keep your resume and LinkedIn profile updated to reflect the specific needs of the organization you’re applying to. Resume templates are standardized but your resume should be personalized to the position and organization you are applying for because it allows you to describe how exactly how your experience applies to their position .
When engaging with an employer through a formal application or an informal meeting network wise, be sure to be as specific as possible about your interest in that particular organization. A generic response to something specific tells an employer that you don’t really care about their specific mission or business but instead are sending out a generic form letter. This will not get you far in contract lifecycle management any more than it would in other business fields.
Once you have your CV finished and you’re ready to interview, consider the difference between the interview that you might be having for a different business role. For this role, you’ll need to show both knowledge of the individual industry and the greater business environment. You’ll also need to be able to handle questions regarding the types of business challenges that you might be presented with: It’s tempting to respond in generalities to this type of question but you must show that you are an analytical thinker and are responsive to the business case itself.
Beyond those four areas, you’ll want to do a good job of responding to more conventional interview questions. In the C-suite, it’s still fairly common for people to read from a list of questions and expect you to respond in kind. Practice answering questions like the ones below: In contract lifecycle management, you’ll be expected to respond in an empathetic manner and be open to discussion about the different way that your future company might do business.