Contracts Aren't Owned By One Department. Your Contract Management System Shouldn't Be, Either

By Viji Doraiswamy

Contracting is a team sport.

A contract might be spun up by the marketing department for a service it needs; go to procurement for price negotiation; then to legal for review. After execution, finance might want to review the contract for payment terms to make sure it’s not releasing cash too soon, and of course, marketing will want to track the contract to make sure they’re getting full value from the vendor. 

So who “owns” contracting in this scenario?

It’s a question that has perplexed more than one organization. Too often, one department, be it procurement, legal, or finance, stands up a process—with technology to support it—that works great for their part of the contracting workflow, but doesn’t take into account what other departments need. 

The result is a solution that is siloed to one department—limiting both the value of the contract management software and the value realized from the contracts the software supports. 

 A new report from Gartner®, “Critical Capabilities for Contract Life Cycle Management,” provides important insights into this dynamic. According to Gartner, “Legal is often critically focused on the presignature use cases, but has a need for postsignature capabilities as well. Procurement and sales teams often prioritize postsignature capabilities.” 

So which is the right approach? Focus on pre-signature or post-signature? 

The answer is, “both.” Each goal is valid and can deliver enormous value to an organization. However, unless the needs of the entire organization are taken into account, companies are missing an opportunity to maximize the value they get from a contract management solution. 

As Gartner puts it: “A mature CLM process requires alignment between legal and its stakeholder groups that management contract relationships before and after the contract is signed.” 

Just as contracting isn’t owned by one department, the CLM shouldn’t be either. 

This doesn’t mean that a CLM system has to serve all purposes for everyone on day one of deployment. In a future post we’ll discuss how companies can take a “start smart, scale fast” approach to realizing incremental CLM value.  

But it does mean that companies should keep an eye on the long term when selecting a contract management solution. Here are a few questions to consider to ensure your organization gets maximum value from your CLM solution: 

• If you are thinking about purchasing a new contract management system, who’s on the buying committee? Just people from your department, or are you including other voices? 
• If you have a CLM in place, how are you measuring success? Are all the KPIs limited to your function, or do they take a holistic approach to contracting outcomes? 
• If you could expand access to your CLM to another department today, which department would it be? Would your CLM support their needs? 

Contracts define a business—what they buy, what they sell, how they run. The right technology can transform these critical assets into strategic advantage.  

To learn more about how CLM can impact your business, access Gartner’s Critical Capabilities report here. 

Gartner, Critical Capabilities for Contract Life Cycle Management, 17 October 2022, By Kaitlynn Sommers, Patrick Connaughton, Micky Keck 

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