The Hackett Group, Inc. released the first Digital World Class Matrix focused on the contract life-cycle management (CLM) and intelligence software market – a core component of the upstream procurement tools within the source-to-pay (S2P) technology landscape driven by rapid artificial intelligence (AI) innovation and increasingly complex business requirements.
CLM spans the life of a contract from initiation through award, compliance, tracking and renewal. Optimizing and aligning CLM with processes like sourcing and risk management is critical to the successful operation of businesses of all sizes. With 28% of companies planning to pilot CLM technology and increasing investments in AI-driven solutions in 2024, the market is projected to grow by 11% this year according to recent research from The Hackett Group.
The potential value for a $5 billion to $10 billion organization is transformative. By implementing a CLM solution, the Digital World Class Matrix™ report revealed these companies can achieve 45% in operational efficiency gains in the negotiation and supplier contract creation process, reduce contract cycle times by 35%, and cut noncompliance-related losses fivefold. These outcomes underscore the critical role of CLM in optimizing procurement processes and unlocking significant financial benefits for large enterprises.
“Contract life-cycle management offers an unparalleled opportunity for organizations to realize significant value through streamlined processes and better compliance,” said Chris Sawchuk, principal and Global Procurement Executive Advisory practice leader at The Hackett Group. “Selecting the right CLM partner can unlock substantial benefits – from reduced cycle times to improved risk management – ultimately strengthening their competitive position.”
The CLM Digital World Class Matrix™ is a comprehensive guide for understanding the evolving aspects of the CLM market, analyzing providers’ differentiated capabilities and the value that organizations can expect. Offering insights for buyers and vendors, the report draws on extensive interviews and 18 criteria to evaluate 21 AI-enabled providers, including S2P suites, CLM specialists, document automation specialists, and legal information solution suites.
The Hackett Group’s 2024 study of procurement executives found that generative artificial intelligence (Gen AI) has the most potential in three key areas: spend analytics, category management and CLM. Leading CLM solution providers differentiate themselves by integrating advanced AI capabilities across their platforms. From AI-driven contract creation, risk management and enhanced search functionalities, to data analysis and intelligent obligation management, these providers are leveraging AI to offer more robust and efficient contract management solutions.
The results from the CLM Digital World Class Matrix™ demonstrate the significant benefits of adopting or upgrading CLM systems:
- Customer satisfaction: 89% of customers were very satisfied or extremely satisfied with their CLM solution and felt it was worth the investment.
- Contract management: After implementing CLM solutions, 81% of contracts were successfully managed through the system.
- Faster contracts: On average, contract completion times improved by 35%, thanks to smart automation, better workflows, and enhanced visibility into contract status, risks, and critical milestones.
- Business improvements: About 80% of companies achieved their business improvement goals after implementing CLM and redesigning their processes.
- Efficiency improvement: CLM implementations led to a 63% improvement in contracting efficiency and automation.
“As companies evolve, they quickly move beyond the basic needs of contract standardization, extraction, workflow automation, electronic signature and retrieval,” said Richard Gardner, senior director of Market Intelligence at The Hackett Group. “Companies are seeking and expecting AI-enabled capabilities such as contract interaction, assisted contract reviews, automated scoring of contracts, negotiation intelligence, obligation management and predictive analytics.”
By leveraging this comprehensive analysis and a deep understanding of stakeholders and requirements, procurement and legal professionals can make informed decisions to optimize operations, deliver competitive advantages, and fully realize the potential of next-generation CLM technologies. Service providers, in turn, can gain valuable insights into market trends and client needs, enabling them to enhance their offerings and strengthen their market position.
SOURCE: BusinessWire