Contract Lifecycle Management in Source-to-Pay and Procurement

Contract Lifecycle Management (CLM) in Source-to-Pay (S2P) and Procurement

To understand the importance of CLM, let me remind you of the true benefits of Source-to-pay.

You know, those benefits everyone in Procurement talks about but few can realise the benefits from due to their archaic legacy systems:

• Streamlining the Procurement process - automation and end-to end integration.

• Cost Management - supplier identification and spend insights.

• Supplier Management - delivering a structured approach to selecting suppliers and monitoring performance.

• Compliance & Risk Management - ensuring all Procurement activities adhere to company policies while identifying supply chain risks.

• Improved data visibility & reporting - consolidating data into a single platform while using data analytics to generate actionable insights

But from what I’ve seen the Source-to-Pay Process is often broken

I loved the keynote from the speech I attended in Amsterdam last October from Dr Elouise Epstein. You can listen to it here:

The “brokenness” of legacy systems has fed an outdated version of the S2P model.

I’d go so far as to say the native contracting tools embedded within most S2P systems are a piece of junk.

Tell me, honestly, have you ever used them effectively in you’re organisation?

We get stuck in the sunk cost fallacy of thinking we have to persist with what we’ve already got.

So what can you do?

Integrate a best of breed CLM within your S2P.

Purpose built CLM supports Source to Pay better than the embedded system. It’s that simple.

Here’s how:

• Sourcing and Negotiation: Streamlining vendor selection with contract templates and approval workflows

• Purchase Order Issuance: Ensuring alignment between contracts and purchase orders

• Receiving and Invoice Processing: Matching invoices to agreed-upon contract terms

• Payment: Automating payments based on contractually defined timelines

So why deploy a purpose-built CLM for Procurement?

Remember the benefits of S2P? The ones you’ve just not been able to unleash with your legacy system?

• Increased efficiency and reduced cycle times

• Improved contract compliance and risk mitigation

• Enhanced visibility and control over spending

• Stronger supplier relationships through clear communication

• Better data for negotiation and cost savings

That’s what Contract Lifecycle Management offers.

What to consider when it comes to choosing your provider?

Here’s what would be my top 5 checklist. If you’re going to market, make this your core evaluation criteria:

• Choose a system that’s intuitive and user friendly. I’d put this at the very top of my list. This is the only way you’ll ensure high adoption rates.

• Choose a provider that gives brilliant training and support to users to enable smooth adoption.

• Of course ensure the CLM system can seamlessly integrate with existing enterprise systems and plan and resource for migration of existing contracts and data.

• Data and Cyber Security - what are the system’s security features, including data encryption, access controls and audit trails to protect sensitive contract information.

• Reporting and analytics - how good are the dashboards and reports and how much is the provider investing in these, both to make them customisable to your needs and improve the service year on year?

It costs a lot less than ripping out your ERP

The value of a good CLM will pay for itself multiple times over, often within months of deployment.

You can’t have an effective or streamlines S2P without it so why are you labouring on without making the business case for the investment?

Is it sunk cost fallacy or inertia because you don’t know who to choose?

Checkout this great option here for starters:

The future of CLM will be driven by advancements in Artificial Intelligence and cloud technologies, leading to smarter, more efficient, and secure contract management processes.

Businesses, with increasingly fragile supply chains and macro-economic instability, will lean on Procurement teams more than ever to deliver compliance and risk management to protect them

Contract Lifecycle Management will be the linchpin to this, while providing valuable insights and driving better business outcomes, not the legacy system your business bought in 2012!

Do you agree?