Modern CLM solutions increase productivity of enterprise applications

However, one can clearly see that all these solutions are linked by a common basis: contracts - with suppliers, with customers, with partner companies, with employees and, of course, with the owners of the company. Ultimately, the entire enterprise is defined by contracts. However, not all organizations are ready to exploit the full value of their legal basis of existence. Modern Con-tract Lifecycle Management (CLM) provides valuable support here, especially through integration with ERP and CRM.

The first thing to realize is that the electronic processing, filing and archiving of contracts is nothing more than digitally mapping a previously non-integrated business process more or less unchanged and unproductive. Whereas in the past, a thick file folder was sifted through in search of a specific contract, today exactly the same thing is done in the electronic directory. Companies have invested in appropriate DMS solutions for the multitude of documents. But there is no integrated use of the document in terms of content as part of a business process. 

CLM is significantly more powerful in the area of contracts than a DMS. Modern solutions such as Icertis Contract Intelligence (ICI) consider the contract, or more precisely the contract contents, as an elementary part of the business processes. The contents of the contract - prices, quality agreements, discounts, delivery quantities and deadlines - flow directly into the business processes. This eliminates the need for manual transfer of contractual agreements.

In addition, powerful CLM solutions serve as a central source of all contracts in the company. This by no means only includes fully formulated contract documents, but is implemented at clause level. New contracts can thus always be drawn up on the basis of individual current, valid clauses. Conversely, this also means that in the event of a necessary change or deletion of one (or more) clause(s), it is possible to immediately trace which contracts with which partner, customer and/or supplier are affected. This may be necessary, for example, due to a new legal situation, as was the case this year with the Supply Chain Act. This in turn means that at this point alone, a modern CLM system makes an important contribution to minimizing risk.

However, the contribution of contract management is not only reactive. The aforementioned automated integration into business processes also facilitates the tracking of obligations and rights arising from contracts. In the case of a supplier, this makes it easy to map and control the consideration of discounts and special promotions in the system via the line-of-business applications - SAP, for example - without much effort. 

The aforementioned ICI offers such an integration between CLM and SAP Ariba. This solution from the US manufacturer Icertis is already in widespread use at a number of companies in Germany, including Daimler, Datev, Porsche and Rentschler. A major advantage here is that existing contracts in paper form can also be integrated into the systems. The CLM solution can automatically read scanned contracts via OCR. Using machine learning, the system can then identify attributes and analyze and assign clauses. These can then also be searched.

The content digitized in this way is then compared with the data stored in SAP Ariba for purchasing. In this way, even old contracts become an integral part of the business processes within a very short time. This integration is carried out taking into account a check of the clauses to ensure that they are still valid. However, if the clauses are outdated or obsolete, CLM can point this out directly. 

Incidentally, this also applies to the sales side. Here, too, it is important to present contracts to customers in an up-to-date, accurate and consistent manner - no customer wants to renegotiate contracts because the seller has fallen back on old, invalid clauses. Moreover, this does not necessarily generate trust on the part of the customer. And every salesperson has a great interest in ensuring that little time has to be spent on the process of drawing up a contract. After all, the time saved can be used more efficiently for better advice to the customer or a greater number of consultations.

In addition, the integration of the contracts and thus the faster creation also means that the formalities of the sale are completed more quickly and thus the turnover with this customer can be realized more quickly.

It therefore makes sense for a CLM solution to support integration not only with SAP Ariba, but also with sales solutions such as SAP CX, so that sales staff can spend less time on contracts and more time with customers.