Where Do I Start with Contract Management Technology?

Published on: 1/27/21

 

 

In this episode of The Contract Lens Podcast, Dan Sloan, a Senior Account Executive at Malbek, talks with Craig Conte, Partner at Deloitte Legal about  where to start when selecting your contract management technology. With his signature good humor, Craig shares client experiences that can help guide you on your journey. 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 matters to 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 contracts!

 

 

Intro:
Welcome to the Contract Lens podcast brought to you by Malbek. In this podcast, we have conversations with contract management thought leaders and practitioners about everything contracts and its ecosystem. Today's episode addresses the question, where do I start with my contract management technology? The discussion is led by Dan Sloan, a senior account executive at Malbek, and he 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. So now it's time to relax, grab a glass of wine and let's talk contracts.

Dan:
Well, hello and welcome everyone. This is Dan Sloan with Malbek and what an absolute treat to welcome in Craig Conte, partner at Deloitte working with leading up the contracts and consulting practice at Deloitte Legal. And so Craig, a very warm welcome and a happy new year to you. How are you today?

Craig:
Hey Dan, thanks for having me and happy new year to you and everyone out there listening to this. Doing well, doing well. I mean, we may have passed 2020 and I think 2021 is going to get better, eventually.

Dan:
I agree. Well, thank you very much for sharing a few minutes of your day with us today. We really wanted to hear from you and some of your experience helping your clients over the years with this evolving technology. So I just thought I'd start with this question. What is it about this technology that just seems to be so critical these days?

Craig:
Sure. Yeah, I think CLM is really, I mean, it's a critical part of the world right now. I mean, the last 18 months or something has taught us is that we have to work on united platforms around the world. Teams are not sitting in altogether and even then, even before this, we were disparate all over the world anyway. How you connect the contracting activity is really key, particularly, because contracting and contract management is an activity that's touched by everyone, but owned by no one. So really, people are now really coming around to the idea that this is no longer a nice to have. Maybe 10 years ago, people thought it'd be nice to have a CLM system.

Craig:
But nowadays I think people are realizing that this is something that they absolutely must have. And I look at this really in two levels. 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 business case, if you would, of how do we make this faster? Everyone wants to make things faster. So that seems to be the easiest thing to say that this is. If it's faster, it's better. And so that does cut the cost of things, but really it's about business outcomes.

Craig:
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'm 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? I mean, we worked with a client who's a pharmaceutical. I think everyone has a new appreciation for the pharmaceutical and life sciences industry now. And they had a cancer drug. And the 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.

Craig:
And think about that on a number of levels that it's the idea that it's money... A, life-saving cancer drugs are getting out to the market better. 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, that's huge. That hits directly to the bottom line. So I think that people realize in that there's certain things you can do by paper and pencil, but technology is a good thing. And having that there for the business outcome, I think, is an absolute necessity.

Dan:
Excellent. So it's really what started out as operational efficiency, right? How can we do this faster? How can we lean the process out? How can we help the legal team support the organization? It now really supports the entire organization by providing access to the data, 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 offering, et cetera. It seems now that with CLM technology that integrating with sales, supporting the finance organization, integrating with IT, that affords an, I guess, an opportunity to integrate across the enterprise.

Craig:
Right. That's a great point, Dan. I mean, I think, I'm a lawyer by training myself and obviously all lawyers are magic. We're all wizards, hear us go. But the reality is to draft a contract that that is, it's a business document and sales has 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 the wizard to draft it, that you do need that. But lots of contracts, I think you see legal teams opening up to the idea that maybe I don't need to look at every NDA. Maybe I don't need to look at everything else like that.

Craig:
If I have a tool, if I have a process and I have a template that's correct, and my positions are there and 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, back when we were allowed to fly. I'm old enough to remember having to actually go to the ticket agent and get my ticket. Nowadays if I had to go to the ticket agent, I'd lose my mind.

Craig:
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 handle this myself. And that's where the business is. I think that legal has evolved to the point to realize 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'll always be the bet the company, hyper risk, very important ERP deal that they have to get signed or M and A deal that... And that's where you should use the magical lawyer, but that everyday BAU, maybe a CLM is better.

Dan:
So you bring up 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, that it doesn't require a lot of technical training. You can't 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 the example. So what have you seen from contract management tools through the years around the evolution of the UI?

Craig:
I mean, I think you see a lot of different tools. Where they came from. Software engineers, God bless them, built a lot of the tools, et cetera. And it's being built in a vacuum a lot of times. The functionality was there perhaps, but necessarily the usability wasn't always there. You see some of the companies that just anything that you'd have out there in the world. How we use our smartphones or how we use our TVs or even how we drive cars. Usability and that sort of user experience has become critical. And the same thing with the CLM tools, they evolved, started, I think, using and working with the actual practitioners and not just the backend IT team. Nothing against the backend IT team, but it's not just... APIs are great and how things interact are great, how data moves, but the actual user of a tool just wants to know, is it two clicks or three clicks for me to get somewhere?

Craig:
I think 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. I think that's helped adoption too.

Dan:
Yeah, 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 makes a decision 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:
Yes. I think putting in a CLM system, I think, it's very critical that you understand what you're getting. I think oftentimes some organizations decide to do this and it could be from they listened to a great webinar or a podcast or whatever, or read a lovely blog that tells them that digital transformation in legal is important and they should go do it. Or some sort of thing happened that's driving them towards that. So I think the challenge is the first... And you should always understand this, what are you buying? What is it you're trying to do? I worked with a client, this is another pharmaceutical client, who said, "Oh my God, I desperately need a CLM tool."

Craig:
I go, "Well, what's your actual problem? It's really trying to find the templates. It's trying to find information. It's data. What you've described to me is knowledge management. What tools do you have on the shelf already?" And they're like, "Well, we have Teams, we have SharePoint, we have Salesforce." I'm like, "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 great value, but you have to 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?

Craig:
Most companies, after a contract is signed, it's like an orphan. The contract lives out there in the ether, on the ground, singing for its supper. Who's managing that large portfolio of the contracts and CLM can help with that. So I think people understanding why they're 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 really 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 very, very powerful CRM that most people use, and very familiar with that look and feel? If that's the people, then you should really look for tools and look for things that solve that problem.

Dan:
A lot of folks are talking about artificial intelligence and AI. We know that AI can help with contract offering. 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:
Well, I think AI, it's never been better than it is now, but I think it's also, it's about expectations. You still have some people who believe that AI, it has artificial intelligence, right? So it's going to draft the contract for me, negotiate it for me, make dinner, teach my kids at home and handle that. That's not what AI is built for. AI is great to... AI recognizes patterns. AI can help you do suggestions. So if you're doing drafting and if you have done this type of contract, a services agreement, a hundred times, AI is great to tell you where have you ended up on liability? Where have you ended up on payment terms? What's your most used fallback position?

Craig:
What actually should be your first position? AI can analyze where you're 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 one. 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. AI on the backend, just gives you just... Contracts breed like rabbits. They just have tons and tons of SOWs, change orders, et cetera, that happened on there. And really understanding where is the problem? AI, in that case of the post award management, is terrific because everyone has anecdotal evidence of the one time we lost money based upon this clause.

Craig:
Well, that's great, but human memories are flawed. If you actually are able to 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, things like that. Very rarely do people lose money on IP, unless you're a record producer from the 1990s and [inaudible 00:16:10] Napster, you're not going to lose money on IP.

Dan:
Right. Yeah. So, all right, well, so every customer is different, right? As we're talking, every customer would use the technology differently. What can customers be thinking about to be successful? We've talked about engaging different 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, et cetera. If you're head of digital transformation or legal operations, what do you need to be thinking about to be successful if you're going out to put in a new CLM?

Craig:
Yeah. So I think the great thing about a new CLM is that it's an event in your organization. It allows for a self-reflection. I mean, 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 you're certainly, unless you're 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 great opportunity for you to look around and see, well, look, if I haven't touched this in a year, I would throw it away.

Craig:
I would get rid of it. So getting a new CLM is a great 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, we could just maybe turn into a purchase order and it doesn't require a full-on, quote unquote, contract? What are things that we can now say, we have this CLM with this new technology, can we look at our templates to make those more business friendly, more customer friendly? Can we make this more self-service friendly? Can we use all these things that we put it on our list every single year and say I'll get around to it, but then suddenly vacations come, Easter comes. Something happens and we never do it.

Craig:
Getting a CLM is a great opportunity to actually clean house a bit and to really be organized yourself, both people, process and technology. And I think also too, if you ask your lawyers, you ask your contract people. I still 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."

Dan:
So, if I'm hearing you right, it's a little bit more than just a [inaudible 00:18:59] 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. But so 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 of the critical success factors? What would clients really want to consider as they embark on a successful implementation?

Craig:
Yeah. I think the biggest factor you have to say from the get go, is adoption. And you have to take a steps to improve adoption. And you can start that change management adoption journey in the selection of the tool, but also the configuration, how you'd design it and what's going into it. Again, if you get your user groups up there early, 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, that they feel invested. It's surprisingly all those-

Dan:
[crosstalk 00:20:20].

Craig:
Exactly. It's surprisingly all those reality shows where Married at first Sight, they don't work?

Dan:
Surprise, surprise.

Craig:
There should be a one like CLM at first sight. Oh, guess what? We bought you a new tool, have fun. And the lawyers reject it. 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. I said this story a bunch of times, my mother got, I love her to death, she's 77. She has an iPhone and she uses it like a rotary phone. So we're not getting all those cool business case things that the consultants or whoever puts in there as to why you get the CLM, all that presupposes that people are actually going to use it. That, to me, is the first metric you have to do is actually adoption.

Craig:
And then the tools are really good. 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 actually remembering now to terminate contracts versus before? So I think the first thing is adoption. Second thing though, everything else like that, is just what are you doing to go in that value chain, to actually get deeper and better use of the tool?

Dan:
Right. Part of that early socialization, to your part, the dating before the marriage, probably needs to take into account 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, eliminating waste. But the sales organization might be looking for something different. They might be looking for speeding to the green, deal [inaudible 00:22:22] and removing 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 to really cool statistics and KPIs, like total cost of contract. So like world commerce and contracting in other organizations you have, they can quantify and you can do this yourself. Quantify how much time does it actually take for your organization to spend time contracting on something. So looking at lawyer time, but then also risk time, approval time. Almost like the AR of contracting, of how you're doing this. That goes into your value because, at the end of the day, going back to my first one, that pharmaceutical company. They didn't even realize the money they could gain off of just... You think all contracts, it's a pain in the neck. I wish this was faster. But if you actually look at it, it being faster does turn into all sorts of great benefits.

Dan:
Yeah, absolutely. So I know we're coming up a little bit on time and this has been extremely helpful. I know for me and for our listeners, maybe we could sum up just some of the tips, some of the ideas that we've shared today. 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 as it supports adoption, as it supports the implementation, as it supports the 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... The analogy I would say is you would never just go to a restaurant and order food.

Dan:
I'll take the food.

Craig:
I'll have some food and liquid, please. Keep the liquid coming. You would never say that. There's a whole reason for that. But like 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 maybe start small. I think, if it is the sales team and procurement team, if it is you probably have needs on both sides of buy and sell, but maybe where do you want to start?

Craig:
So that way you focus and build success because success has a thousand fathers and failure is an orphan. Figure out necessarily where's the immediate pain point 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 understand 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.

Dan:
I know that listeners of this podcast are aware that we have published a number of white papers around this topic. We have an unbiased CLM buyer's guide that really talks about identifying those business pain points, the objectives as you go out and engage with the different opportunities, the different vendors that are out there. Tell me a little bit about your work at Deloitte. Do we have any events or anything that we might be able to look forward to here in the new year?

Craig:
Yeah, definitely. Definitely some events. I think we're solidifying that right now. We'll probably be doing some things with the Economist again, but also we will be doing some stuff. I think there's a report that should be coming out sometime, I think in Q1 here, that we're doing a joint report with the world commerce and contracting on a topic similar to this. I think, look forward and remember to look out for that to come. We'll also probably be doing the virtual circuit around there, some more webinars and always feel free to read my blog, which probably comes out once a month on Deloitte.com.

Dan:
Well, thank you, Craig. From all of us at Malbek and our CLM team, absolutely thrilled to have the opportunity to spend some time with you today. Want to thank you and wish you the very best for a safe and healthy 2021. We look forward to continuing to work with you and your associates here in the new year.

Craig:
Great. Thank you so much, Dan. Thanks for having me and thanks to all you and please be safe out there too. And hopefully we'll all see each other again soon.