Despite the buzz around contract lifecycle management (CLM) software in recent years, a survey uncovers interesting findings about its usage in the corporate sector. An overwhelming majority of companies do not employ any CLM software, and those that do, employ it sparingly.
Rather than CLM systems, enterprises mostly use document management systems (DMS) for storing and managing their contracts. These platforms vary from SharePoint, Google Drive, local drives, and commercial DMS products.
The survey, carried out by legal technology firm Zuva, not a vendor of CLM or DMS software, was titled Do You Need A CLM to Manage Your Contracts?.
Zuva explains the motivation behind conducting this survey was to dispel the widespread belief that any reputable company uses dedicated CLM tools. Contrary to this belief, the study found that a large number of companies who do not employ a CLM or do not employ it across the enterprise have a pessimistic outlook about their contract management.
The survey involved interviews with 80 varying-industry companies, 32 having over 10,000 and 48 having fewer than 10,000 employees.
- Document management tools prevail: A significant 86% of surveyed companies depend on document management tools for their contract storage and management. Of these, 60% don’t leverage a CLM system at all.
- CLM adoption lags: Only 36% of surveyed enterprises use a dedicated CLM system and of these, a mere quarter (28%) use the software across the enterprise.
- Contract management is not one-size-fits-all: Companies surveyed all demonstrated unique approaches to contract management, cherry-picking their tools and customising their utilisation.
The survey found that the top challenges with CLM software include difficulty tracking contract obligations due to poor CLM metadata extraction capabilities, difficulty identifying relationships between related documents, and inconsistent adoption and change-management challenges. In contrast, legal teams expressed preference for DMS due to its ease of use, storage capacity, search capabilities, and ability to manage access.
However, despite these preferences, managing contracts with a DMS also has its own set of challenges, including manual and error-prone metadata extraction, lack of consolidation of contract management processes across departments, and limited collaboration capabilities.
The survey’s results indicate a situation where no one solution is perfect, but suggests companies can combine the best of both worlds. For example, companies might use workflow automation for contract processes, explore hybrid solutions of a DMS with a tool like CLM, or use third-party data extraction and visualization tools for enhanced contract understanding.
However, Zuva does offer a tool called DocAI that uses API-driven technology to extract critical data from contracts. Despite this, the overarching sentiment from Zuva’s survey is an encouragement for companies to celebrate their successes, irrespective of size or the state of their contract management, and stop comparing themselves unfavourably to their peers, as a number of their counterparts are managing contracts manually or at best using spreadsheets. They also encourage organisations to confidently explore solutions that are complementary to their existing workflows.
More details of this survey can be found here.