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Allison Caggia

Where Do I Start with Contract Management Technology?

Today’s interview will address the question, where do I start with my contract management technology? The interview is led by Allison Caggia, content and communication strategist at Malbek, and she is joined by Craig Conte, who is a partner at Deloitte Legal. At Deloitte, Craig is responsible for their contracts legal management consulting team and has been working in contract management and tech enablement for over 20 years. Craig is a qualified US lawyer who has practiced outsourcing in IT transactional law in New York and is a member of the global advisory board for World Commerce and Contracting.  

Recognizing that CLM solutions are a critical part of speeding revenue in the door, Craig points out that the contract is primarily a business document, not a legal one. This means that how it impacts the business, from Sales to Procurement to IT, is vital, and the burden on legal can be alleviated by technology. Craig shares why the user experience of a CLM system depends on user adoption, and he provides practical suggestions for where to start internally before you even begin looking at tools. Craig suggests involving the right people in the “dating” process of selecting a CLM solution and advises starting small to gain success in one group before expanding to other departments. So, grab a glass of wine, and let’s talk about contracts…  

 

Allison:
Thank you very much for sharing a few minutes of your day with us.  

We really wanted to hear from you and about your experience helping your clients over the years with this evolving technology. So, I just thought I would start with this question. What is it about this technology that is so critical these days? 

 

Craig: 
CLM is a critical part of the world right now. The past few years have taught us that we must work on united platforms around the world. Teams are not sitting together, and we are disparate all over the world. How you connect the contracting activity is key, particularly, because contracting and contract management is an activity that’s touched on by everyone yet owned by no one.  

 
But nowadays people are realizing that this is something that they absolutely must have. But where are you looking at this from? Is this from the pre-award area, the contracting part, or the post-award or contract management, commercial management area? And what started off as maybe just something that would be at the first level of a business case, if you would, of how do we make this faster? Everyone wants to make things faster. If it’s faster, it’s better. And so that does cut the cost of things, but really, it is about business outcomes. 

 
So, if I’m going to be creating my contracts faster if I’m trying to use my templates faster, for what end? And how can I do that? As CLM really is the enabler for how do I do this in a way that gets me to revenue in the door? Because the idea of closing a contract is that there’s some exchange of money going on. So, I am incentivized to make sure that either I’m balancing my risk or I’m getting money in the door as fast as I can. And what’s really the outcome? We worked with a client who’s a pharmaceutical company and they had a cancer drug. And clinical trial agreements were taking them six months to sign the agreement before they could even do the clinical trial. Imagine that. By using proper use of CLM and other techniques around there and better tooling, they were able to get that from six months to 50 days. 

 
And think about that on several levels, it’s money that is getting life-saving cancer drugs to the market quicker. Hooray, good for society. But, from a capitalist perspective, patents have limited ability to commercialize. So, getting an extra four months or so of time to commercialize something that’s global medicine, is huge. That hits directly to the bottom line. So, people realize that there are certain things you can do with paper and pencil, but technology is better. And having that there for the business outcome, I think, is an absolute necessity. 

 

Allison: 
CLM really supports the entire organization by providing access to the data, and access to the process. How are you seeing the legal team, maybe throughout your career in recent years, how has it expanded where maybe what started out as, as you mentioned, pushing paper and having attorneys carry the heavy lifting of all the negotiation, the contract offers, etc.? It seems that CLM technology integrating with sales, supporting the finance organization, and integrating with IT, affords an opportunity to integrate across the enterprise. 

 

Craig: 
I’m a lawyer by training myself and obviously, all lawyers are magic. But the reality is to draft a contract, that is a business document and sales have a big part to play in that. Procurement has a big part to play in that. The IT team has a big part to play in that. And some contracts do require a wizard to draft it, so you do need that. But with lots of contracts, you see legal teams opening to the idea of not needing to review everything.  

 

This is where automation helps. If I have a tool, if I have a process and I have a template that’s correct, and my positions are there, I can put this into the technology that’s consumable for sales. It speaks like sales, like their CRM system or a P2P system in procurement. It looks like something they could use. This enables the business to self-serve. Think about this- I’m old enough to remember having to go to the ticket agent and get my ticket. Nowadays if I had to go to the ticket agent, I’d lose my mind. If I had to talk to someone to check my bag, I’d go crazy. I want to do this myself. I think I can manage this myself. And that is where the business is. I think that legal has evolved to the point of realizing that if I use the right technology and if I put the right information into it and the right guidelines, the business can do a lot of this themselves. Now there will always be the company with hyper risk and a very important ERP deal or even an M&A deal … that’s where you should use the magical lawyer, but that every day BAU, maybe a CLM is better. 

 

Allison: 
So, you mention a good point because that self-service, the promise of self-service, the value of self-service, all the efficiencies that are there, I guess that places some degree of emphasis or priority on the CLM itself to provide a user experience. That is easy, and it does not require a lot of technical training. You cannot go and check in your bags at the airport if you need to spend 10 minutes learning how to run that application in the first place, would be an example. So, what have you seen from contract management tools through the years around the evolution of the UI? 

 

Craig: 
To be frank, software engineers built the tools out here. A lot of times, in a vacuum. The functionality was there but the usability wasn’t necessarily always there. How we use our smartphones, how we use our TVs, and even how we drive cars all demonstrate usability, and that sort of user experience has become critical. The same thing with the CLM tools, they evolved, using and working with the actual practitioners and not just the backend IT team. Nothing against the backend IT team, but the actual user of a tool just wants to know, is it two clicks or three clicks for me to get somewhere? 

 
You see in the CLM tools now, the ones particularly that are doing well, it’s that usability. It’s that customer experience. It’s that user experience that design thinking around, how do I very quickly drag and drop? How do I move things around? How do I get information? That has been a great evolution. That’s helped adoption too. 

 

Allison: 
Yes, absolutely. It’s not just the initial implementation and getting over the hump of that change management piece, but really what is that long-term adoption and are the sales organization, is the finance organization, going to be able to, as you say, very easily get the access to the data that they need quickly and easily. And again, all so much beyond just what the attorneys are doing as they draft their contracts from within the legal organization. So, let’s talk a little bit about implementation. When an organization decides to move forward with this technology, what are some of the challenges that they might anticipate in putting in a program like a CLM system? 

 

Craig: 
It’s absolutely critical that you understand what you’re getting. I think oftentimes some organizations decide to do this and it could be from listening to a great webinar or a podcast or reading a lovely blog that tells them that digital transformation in legal is important and they should go do it. So, I think the challenge of understanding this is what are you buying? What is it you are trying to do? I worked with a client, this is another pharmaceutical client, who said, “Oh my God, I desperately need a CLM tool.” I said, “Well, what’s your actual problem? They responded, “It’s really trying to find the templates. It’s trying to find information. It’s data” Well what they’ve described to me is knowledge management. They already had Teams, SharePoint, and Salesforce.” I responded with “Well, you actually have a bunch of the things that you could use already. You’re thinking you’re getting CLM because someone said you need to get it.” Now, CLM has its own immense value, but you must understand why you’re buying it. Is your issue speed to contract? Is your issue self-service, as we talked about? Is your issue portfolio management? What happens after it’s signed? 

 
In most companies, after a contract is signed, it lives out there in the ether, on the ground, singing for its supper. Who is managing that large portfolio of contracts and CLM that can help with that? I think people understanding why they are getting a tool will help them in the actual implementation, because that will then tell you, well, why do I need this? Which user base? Who are the real stakeholders in this? Because I guarantee you, the stakeholders are not the IT department and the procurement person running the RFP, who are all smart people who know what they need. But really the user, is it going to be a bunch of lawyers? Is it going to be a bunch of contract managers? Is it the sales team who are very used to that powerful CRM that most people use, and very familiar with that look and feel? If that is the people, then you should really look for tools and look for things that solve that problem. 

 

Allison: 
Everyone is talking about artificial intelligence and AI. We know that AI can help with contract offerings. What else are you seeing around AI? This is an evolving technology. I think a lot of folks share different opinions or different ideas on the promise of AI. Where do you sit on AI with CLM right now, Craig? 

 

Craig: 
AI has never been better than it is now, but it is also about managing expectations. You still have some people who believe that AI has magic powers – it’s going to draft the contract for me, negotiate it for me, make dinner, teach my kids at home, and handle all that. That is not what AI is built for. AI is great for recognizing patterns. AI can help make suggestions. So, if you are drafting and if you have done this type of contract, a services agreement, a hundred times, AI is great for answering the following: where have you ended up on liability? Where have you ended up on payment terms? What’s your most used fallback position? 

 
And what exactly should be your first position? AI can analyze where you are ending up so that way you start closer to it. I mean, rather than the idea of old-school negotiation where you’re at 10, I’m at 1. We’re going to spend 15 iterations to get to five. AI can tell you the answer is most of the time you finish at five. So why don’t you, maybe in your first draft, use five? And that’s in the drafting part. Contracts breed like rabbits. They just have tons and tons of SOWs, change orders, etc. that happened there.  

And that’s great, but human memories are flawed. If you can match up and see, well look, most of the time our disputes are focused on, well, scope. Most of the time it’s focused on milestones and things like that. Very rarely do people lose money on IP, unless you are a record producer from the 1990s and Napster, you’re not going to lose money on IP. 

 

Allison: 
So every customer is different, and every customer would use the technology differently. What can customers be thinking about to be successful? We have talked about engaging various parts of the organization. We’ve talked about this, almost serving different masters, if you will. Providing value to sales, value to legal, value to finance, IT, etc. If you are head of digital transformation or legal operations, what do you need to be thinking about to be successful if you’re going to put in a new CLM? 

 

Craig: 
An important aspect of a new CLM is that it’s an event in your organization. It allows for self-reflection. Most of the time people are just doing their job, getting contracts done, or they’re doing a good job with it. They’re managing risks, they’re getting stuff done. But really when you’re going to implement contracts, it’s like moving house. When you’re moving house, you look at everything around there and say, “Well, you’re not going to move all the garbage are you?” And unless you are crazy, you’re not just going to take all your stuff from one closet and just throw it randomly into another closet. This is a terrific opportunity for you to look around and see, well, look, if I haven’t touched this in a year, I would throw it away. 

 

Getting a new CLM is a terrific opportunity to look at and say, well, wait a minute, we’re implementing this. We’re making self-service. What are the things we could stop doing completely? What are the things that are so basic, that we could just maybe turn into a purchase order, and it doesn’t require a full-on, “contract”? What are the things that we can now say, we have this CLM with this modern technology, can we look at our templates to make those more business-friendly, and more customer-friendly? Can we make this more self-service friendly? Can we use all these things that we put on our list every year and say I’ll get around to it, but then suddenly vacations come, and Easter comes? Something happens and we never do it. 

 
Getting a CLM is a great time to actually clean house a bit and to really be organized yourself, both people, processes, and technology. And I think also too, if you ask your lawyers, you ask your contract people. I have yet to meet the lawyer or contract person who says to me, “You know what I like to do? I really like to look at 10-page NDAs. That’s my jam. That’s where I’m at.” 

 

Allison: 
So, if I am hearing you right, it’s a little bit more than just a walk, looking for waste. And it’s really an opportunity to improve the process from the start. And, again, I’m talking on the pre-execution side, you’ve selected a CLM vendor and it’s time to implement. I know that you’ve been a part of many implementations throughout your career. What are some of the lessons learned, I guess? What are some critical success factors? What would clients really want to consider as they embark on a successful implementation? 

 

Craig: 
I think the biggest factor you have to say from the get-go, is adoption. And you must take steps to improve adoption. You can start that change management adoption journey in the selection of the tool, but also the configuration, how you would design it, and what’s going into it. Again, if you get your user groups up there early it is helpful because people react very well when they’re part of something, as opposed to it being done to them. They want to be part of the dating process so that when they do get married, they feel invested.  

 
Exactly. Is it surprising that all those couples from those reality shows like Married at First Sight, don’t work? 

 

Allison: 
Surprise, surprise. 

 

Craig: 
There should be one like CLM at first sight. Oh, guess what? We bought you a new tool, have fun. It’s getting that team involved in it, understanding their needs because, no matter how great the AI, blockchain, whatever it is you’re going to be building into your CLM system. If no one’s using it, it doesn’t matter. So, we are not getting all those cool business case things that the consultants or whoever put in there as to why you get the CLM, all that presupposes that people are going to use it. That, to me, is the first metric you must do, adoption. 

 
You can start to see, well, how often am I using this template? How often are we checking obligations? How often are these obligations met? How often are we remembering now to terminate contracts versus before? So, the first thing is adoption. The second thing is just what are you doing to go in that value chain, to get deeper and better use of the tool? 

 

Allison: 
Right. Part of that early socialization, to your point, the dating before the marriage, needs to consider the critical success factors of your partners throughout the organization. So obviously the legal team is looking at improved efficiencies, access to data, streamlining the process, and eliminating waste. But the sales organization might be looking for something different. They might be looking to speed to the green, deal, and remove some of that friction. And so maybe quantifying that with some metrics early in the process, setting them out there as targets so that, as you socialize and as you implement, and as you’re seeking that critical buy-in and support throughout the process, that they know in measurable terms, what they can expect from this investment of time and resources and so forth. 

 

Craig: 
Exactly. And I think, as you do that, you can get cool statistics and KPIs, like the total cost of the contract. You can track how much time it takes for your organization to spend time contracting on something. So, looking at lawyer time, but then also risk time, and approval time. Almost like the AR of contracting, of how you are doing this. That goes into your value because, at the end of the day, I am going back to my first example, that pharmaceutical company. They did not even realize the money they could earn and all the benefits they could reap. 

 

Allison: 
Absolutely, I feel like we could go on for a few hours, but let’s talk just a little bit in summary, in hindsight. So, this idea of socialization supports adoption, as it supports implementation, as it supports effectiveness. What else might you wrap up around the implementation of CLM? 

 

Craig: 
Yeah. So, I think it’s knowing what you want and knowing what you don’t want. The analogy I would say is you would never just go to a restaurant and order food. 

 

Allison: 
I’ll take the food. 

 

Craig: 
I’ll have some food and liquid, please. Keep the liquid coming. You would never say that. There is a whole reason for that. But for some reason, people say, “I need a tool.” CLM technology is a must-have, but understanding what part of it? Because most platforms have different use cases along the way. And understand really what your pain point is in your organization. And start small. If it is the sales team and procurement team, you have needs on both sides of buy and sell, but where do you want to start? 

 
Figure out where the immediate pain point is today. And that’s going to drive your selections, it’s going to drive your user group, it’s going to drive the things you were measuring. So, understanding exactly what you need is probably the biggest thing I tell people. What problem are we trying to solve? And that will get to the right tool that you get and the right use case of that tool. 

 

 
Thank you for your time, Craig. Check out our unbiased CLM buyer’s guide to identify business pain points and objectives as you go out and engage with the different CLM vendors out there.