As technology around us has evolved exponentially, so have solutions that help organizations leverage technology as an enabler. One such category of solutions is contract lifecycle management solutions. Since the early days of manually drafting contracts that went through several review cycles, contract lifecycle management has come a long way, thanks to technology. SAPinsider invited John Karagozian, General Manager, Partner Business Development at Icertis, a leading contract intelligence solutions provider to discuss this category of solutions, that is rapidly emerging as a strategic solution, and to discuss the role these solutions can play in the digital transformation journeys of organizations. You can watch the full video of the discussion here.

Key Drivers for the Evolution of CLM Solutions

Contract lifecycle management (CLM) solutions have been around for a while now. These solutions leverage technology to help manage, automate, and organize the contract process through all stages of the contract lifecycle, like contract initiation, development, negotiation, compliance, and contract renewal. These solutions not only streamline the process by standardizing the process steps, like core templates but also help provide visibility into aspects like spending and supplier performance. As John correctly highlighted: “And now CLM is kind of becoming that next big movement inside of corporate America because it's really the last archaic piece of the way that organizations are doing business. If you think about it, in many circumstances, contracts are still in paper format, or PDF formats, you know, filed away in Outlook files, or more, often still in file cabinets and in different disparate systems in many circumstances around the world.” competitive. Contract intelligence solutions are the modern-day evolution of CLM systems, that leverage advanced technologies, like AI, to take CLM platforms to the next stage, a cutting-edge level of value. Not only do these tools increase the efficiency of CLM platforms by enhancing features like automated data extraction, dashboarding, and reporting, but also help procurement professionals leverage the power of contract analysis, focus on strategic sourcing, by using insights that only an AI solution can generate at scale. These solutions also help organizations in cross-functional collaboration. As John quoted: “We have seen the evolution of CLM solutions going from simple repository to some basic redlining capability to speed up the process of creating contracts, into what we have today, which is a true AI engine running in the background, basically reading contracts 24/7.” Many different aspects have contributed to the evolution of CLM systems. The evolution of technology has certainly played a big role. Artificial Intelligence (AI), Machine Learning (ML) and rapid digitalization of supply chains are some drivers behind the evolution. This has led to the need to a new, advanced, and intelligent type of contract management platform. Modern contract intelligence tools like Icertis leverage these AI capabilities extensively to deliver features and functionalities that did not exist in conventional CLM solutions.

Using Contract Intelligence to Maximize Value from SAP investments

SAP ERP users will agree that SAP tools are major investments for most organizations. When organizations make that kind of investment, they are looking for ways to maximize the value of their investment as well. They are actively looking for solutions that can help them extract the immense value opportunities that systems like S/4HANA embed within. And CLM solutions are no exception. While there are multiple perspectives to analyze the value CLM solutions deliver, one perspective is their role in maximizing value from SAP investments. SAPinsiders are consistently looking for solutions that can enhance the existing capabilities of SAP solutions, like SAP Ariba. Contract Intelligence solutions, which are the modern-day evolution of CLM solutions help maximize the value from SAP investments in multiple ways. A few ways contract intelligence tools can help generate maximize value from SAP investments are:

• A comprehensive contract management interface – Provides a contract management platform that is seamlessly integrated with spend management solutions like SAP Ariba and hence, helps unlock the value of supplier networks by leveraging workflows within the contract management functionalities.
• Increase adoption and drive efficiency – By leveraging one single platform that provides a holistic view on supplier relationships, aspects like data re-entry and application switching get reduced significantly. This not only drives efficiency but also helps improve adoption.
• Synchronize data – Synchronization of supplier data from tools like SAP Ariba, reporting capabilities that leverage intelligent algorithms, ongoing monitoring and risk management, all help create a centralized “smart” view of supplier and contract data.
• Infuses advanced algorithms – An AI-powered contract Intelligence platform can help turn contracts within existing systems, from static documents into strategic advantage by structuring and connecting the critical contract information. These tools not only help manage the contracts better but also help generate critical insights from information embedded within these contracts.

While these benefits are not comprehensive, there is no doubt that contract intelligence solutions have the capability to help SAPinsiders maximize the value from their SAP investments. The value of these solutions is evident from the close partnerships solution providers like Icertis have formed with SAP and this partnership is expected to only deepen with time.

An Example of Value Delivered

While it may not be easy to convince organizations about the value these solutions bring, since this is mostly “soft” spend, the value that can be delivered through these tools is very real.. But once organizations start taking a hard look and learn to identify opportunities as well as learn how to translate those opportunities into cost savings, contract intelligence tools will provide them plenty of opportunities that can help them realize millions of dollars in cost savings. An example of the value these solutions can create was shared by John during the discussion. A large organization creates an average of 10,000 contracts per year, carrying about a billion dollars worth of revenue associated with those contracts. It typically takes an organization 10 hours to make that contract happen in just contract creation. So across 10,000 contracts, you're looking at 100,000 hours in just contract creation time alone. Most organizations aren't looking at these numbers and associated costs because it is a cost inside their organization, and they consider it a soft cost. But a contract intelligence solution has the capability to reduce the contract creation time by at least 50%. In some cases, it may go as high as 70%. So, the opportunity embedded just in the time it takes to create contracts is huge for organizations that deal with a massive number of contracts. And contract creation is just one element of the contract lifecycle. Picture the entire lifecycle and opportunities increase exponentially. As John highlighted: “When you tie in and analytics, settlements renewals and of course compliance, which we're all dealing with compliance issues, we have to pay our taxes, we have to deal with government entities across the board, we can cut time off all of that. So in a 10,000 contract environment with about a billion dollars worth of revenue associated with those contracts, Icertis believes we can cut 3% off the benefit value of contracts, meaning about a $30 million savings in just 12 months.” What Does This Mean for SAPinsiders? Decision intelligence solutions seem to be the answer to the challenges that SAPinsiders have long identified with legacy BI solutions. However, as SAPinsiders embark on their journey to build decision intelligence capabilities, there are certain key aspects that they need to keep in perspective

• Pay attention to CLM solutions. John nailed it when he quoted:” A key aspect is that CLM solutions are still not on the forefront of everybody's mind. And the reality is, that customers don't know what they don't know, but the value is tremendous. John highlighted an example where organizations with a sizable number of suppliers can save millions of Dollars just in the supplier onboarding process, specifically in contract creation
• Integration capabilities are critical. Integration is one of the essential aspects of any analytics solution, so it is crucial to understand what type of integration capabilities a solution provides. Integration aspects are two-pronged. On one hand, the integration needs to be with other business applications, and on the other hand, the tool should be able to integrate seamlessly with varied data sources
• Leverage the power of advanced analytics. While one aspect is certainly automation of many contract lifecycle aspects, a tremendous value lies in insights generated. This is one of the key features that led to the evolution of CLM solutions into contract intelligence solutions. Analytics can help you identify contract bottlenecks and allows you to draw meaningful insights from the high volume of contract