Top 5 Benefits of CLM in IT Services Industry

CLM in IT services plays an important role as it helps streamline the contractual processes efficiently. IT companies usually struggle with the manual contract management process which leads to compliance issues and missed opportunities.

IT companies with a traditional approach to contract management might miss out on potential revenue-generating streams. Automating contractual workflows is necessary for efficiency and risk mitigation. Read this article to learn more about CLM in the IT industry.   

What is CLM?

CLM stands for Contract Lifecycle Management. CLM in IT services helps technological organisations to efficiently manage contracts throughout their lifecycle. The contract lifecycle includes the following phases:

• Creation: This phase is about drafting the initial contract by outlining the terms, conditions and obligations of the involved parties.  

• Negotiation: Businesses collaborate with involved parties in an agreement to negotiate terms, conditions and pricing. 

• Review and approval: The stakeholders thoroughly review the agreements and come to a mutual decision to approve the contract. 

• Execution: Once a contract is approved, companies start to deliver products or services on the mutually agreed terms.   

• Renewal or terminations: When the expiration date of an existing contract is near, businesses decide whether to renew or terminate it. 

5 Benefits of CLM in IT Services

Here you can find the diverse range of benefits helping IT companies to manage contracts:

1. Helps in Optimising Operations

Contract management software for IT services eliminates the complexities of creating and approving contract drafts. Such software comes with prebuilt templates, and automated clause addition and allows collaborative editing.  

Thus, CLM software helps companies to secure deals faster than a traditional approach. Functions like procurement and HR also become efficient due to CLM applications.  

2. Improved Compliance 

CLM is equipped with a central repository that stores all the agreement-related documents required for compliance. It automates the periodic compliance check process and provides a detailed audit trail of contractual changes. 

CLM in IT services sets up alerts to notify about potential privacy concerns such as missing contractual clauses. Thus, CLM helps IT companies to steer clear of compliance risks. 

3. Increases Contract Visibility

CLM software provides comprehensive visibility to the lifecycles of an agreement to the key stakeholders. This software is a platform to track all agreements and to keep the decision-makers familiar with their statuses.  

Such visibility helps companies to stay updated about deadlines and ensures they don't miss out on opportunities.

4. Reporting and Analytics

IT companies should monitor KPIs like renewal rates, approval delays and contract cycle times to identify areas of improvement. CLM in IT services analyses these metrics including other metrics like contract value and compliance status to locate gaps.  

CLM also creates custom reports focusing on specific business needs. It generates milestone tracking reports to monitor the progress against key milestones and identify delays.   

5. Increases Security

Data security is one of the important requirements for IT industries to protect sensitive contractual information for compliance. CLM software comes with built-in security features that safeguard sensitive information. 

It comes with features like data encryption to protect agreements in local storage drives. Such software offers multifactor authentication and data backup for utmost data security.

Disadvantages of Not Having CLM in IT Services

Here are the consequences that your business might suffer without CLM software:

• Inefficiency in contract drafting: Drafting agreements manually can be prone to error as companies can miss out on important opportunities.

• Workflow issues: Still taking the traditional approach to CLM can result in inefficient workflows which results in time consumption and errors. 

• Inefficient legal team: Without robust CLM software the legal departments of the IT companies might lack visibility to the contractual information. 

• Incurred costs: Handling contracts manually can increase the overall costs as companies need to hire additional staff. 

Conclusion

CLM in the IT services industry plays a crucial role in efficiently managing agreements. Such software increases visibility to track the performance and identify gaps. IT companies are rapidly adapting AI-powered CLM software for more efficiency and a lower rate of errors.