How CLM Maturity Assessment Transforms Contracts

Ever had a question about the maturity level of your organization regarding CLM? Do you ever feel that you are running after contracts, approvals, or signatures? 

It's time for a CLM Maturity Assessment - an essential tool in determining how well your contract management system is operating and what steps you must take to future-proof your processes. 

Contracts are no longer paper trails and manual workflows. The efficiency of a CLM process can make or break an organization today. For the legal, procurement, and sales professionals, this is our daily reality. 

So, what is CLM maturity? Why should you care? Let me walk you through the essence of things and explain how learning your CLM maturity can make a big difference in your business. 

Understanding CLM Maturity 

CLM Maturity really measures how well your contract management process is doing. It's essentially about understanding where you are now and how far you can go.  

While some organizations are still in the dark ages, handling contracts on paper or by using a variety of "bits and pieces" type systems, it is possible to have a totally optimized, fully automated CLM system driving business growth. 

We see an evaluation of these five stages typically enacted while assessing the maturity of CLM:  

Ad Hoc: Here, more than half the processes are reactive and manual. In this case, contracts are manually searched from emails and scattered on local drives.  

Basic: At this stage, slight automation is applied, but little use of digital tools exists. 

Defined: Workflow processes take standard definitions, and some contract automation comes into the picture.  

Managed: A centralized CLM system is put in place using dashboards, tracking, and automated workflows.  

Optimized: All this is optimized by applying artificial intelligence-driven insights, predictive analytics, and full cycle automation with real-time reporting. 

As a contract management professional, your target is to optimize your processes up to the "Optimized" level. Do you know where you are? And where must you get to? That is what the CLM maturity assessment will tell you.  

Why Do You Need a CLM Maturity Assessment? 

The benefits of a CLM maturity assessment are much more than just discovering inefficiencies; it can give you a roadmap for growth. There's a reason why this tool is indispensable—the following reasons explain why.  

1. Inefficient Process Improvement

An inefficient contract process can be a nightmare. Soon you will have an indication of where bottlenecks are with the help of the CLM maturity assessment. Approvals are taking too much time to complete, and there is too much manual data entry going on in the organization, or maybe contracts are piling up while waiting for signatures. A maturity assessment will bring out such pain points and enable you to simplify workflows so that eventually efficiency is improved across the board. 

2. Risk Management

Contracts carry much risk. It could be missing clauses, non-compliance, or contractual disputes; low-maturity CLM systems simply are not very effective in monitoring and minimizing these risks. A maturity assessment will give you a very clear picture of where your organization might be vulnerable. 

An advanced CLM system would automatically flag all the risks and maintain all compliance while employing pre-approved templates and workflows. This is the bottom line of enhancing error margin and keeping your business covered. 

3. Collaboration and Communication

In an organization with low CLM maturity, coordination and communication among the legal, procurement, sales, and other departments would be a headache. Files would be passed back and forth via email, and slow feedback loops are common.  

A CLM maturity assessment will uncover opportunities to enhance the speed and effectiveness with which you are able to collaborate.  

Implement your CLM solution in conjunction with a Microsoft 365 system, for example, to provide real-time team collaboration through Teams, simultaneous document coauthoring with Word, and auto approvals with Outlook.  

This kind of deep integration significantly improves the workflow flow of teamwork and makes it altogether smoother and more cohesive. 

4. Better Use of Technology

A maturity assessment demonstrates how well your organization is leveraging available technology. Are you using contract automation and integrating with other business tools? 

At higher maturity, CLM solutions are integrated within platforms such as Microsoft 365, which centrally drive and consolidate all activities pertaining to contracts. Be it SharePoint for contract management or Power Automate to automate workflow, the right technology is what makes a difference. 

How to Conduct a CLM Maturity Self-Assessment 

Assess Current Contract Processes  

Your first task in self-assessment is to map out and evaluate your current contract processes from source to target. Begin by documenting the contract lifecycle from creation through approval, negotiation, execution, storage, and renewal. Here are some questions you may want to ask yourself: 

1. Are templates being used, or are contracts drafted manually each time? 
2. Are you still in spreadsheets, email, and paper-based workflows, or have you moved to any digital solutions? 
3. Are there bottlenecks in certain stages, be it approvals or negotiations? 
4. Are real-time status updates for contracts accessible to the stakeholders or are they hidden? 

Assess the Use of Technology and Automation 

This should be one of the critical aspects of any self-review-to know if your business effectively uses technology to make the management of contracts flow more seamlessly. Consider the following questions:  

1. Are contract creation and approvals automated, or is this completed manually? 
2. Are you leveraging an integrated CLM platform such as Microsoft 365 which comes with automated workflows and live collaboration? 
3. Do you have a database of all contracts stored electronically, organized, and easily searchable? 
4. How do renewals operate? 

Identify Compliance and Risk Management Gaps 

At this review stage, focus on your ability to enforce compliance policies and lessen contractual risks. Here are the main points to consider during the review: 

1. Do you use standardized contract templates containing all the required legal and regulatory clauses? 
2. Do you have an automated alert from your CLM system regarding the risk factors such as non-standard terms or clauses? 
3. Is the process of tracking compliance obligations formalized as part of the contract? 
4. Are compliance milestones tracked manually or using an automatic alert? 

Analyze Collaboration and Communication 

A CLM maturity self-assessment should look at how well your teams collaborate and communicate along the entire contract lifecycle. Ask these questions:  

1. Different teams working independently, or across departments, in real-time? 
2. Feedback on contracts being passed quickly through different departments or was it somewhat delayed because communication was inadequate? 
3. Are all parties using a central platform for communication and contract management, for example Microsoft Teams or SharePoint? 

Visibility into and Reporting on Contracts 

Visibility allows stakeholders to have easy access to all the information required, and leadership can decide based on real-time contract data. Consider the following: 

1. Do you have a dashboard or reporting system that tracks the status of your contracts, approval workflows, and key performance indicators (KPIs)? 
2. Are you able to easily and quickly generate reports on the contract's compliance, performance, or exposure to risk? 
3. Is it easy to search for specific contracts, terms, or clauses within your system, or is the process of finding information very laborious? 
4. How do you store contracts? Are they kept in a central, secure repository with proper access controls, or spread across a variety of drives and folders? 

Move Up the CLM Maturity Curve 

So, you have done your CLM maturity assessment. Now, what should you do? How do you move up the maturity curve? 

Invest in Automation 

You start out by investing in tools and platforms that allow the automation of various processes. This means your CLM system should integrate with Microsoft 365, automatically create contracts, and approval workflows, and even run compliance checks. Automated workflows would truly take into account reducing routine task time, and more importantly, free up your team's time to focus more on high-value activities, perhaps risk management and negotiation-which result in business. 

Standardize Processes Across Departments  

Standardization is what takes an organization up the maturity curve. Ensure that, be it sales, procurement, or HR, all departments use the same contract templates and approval workflows. This reduces errors, increases compliance, and accelerates the contract lifecycle.  

Train Your Teams 

The good quality of technology is just the users themselves; ensure your teams are trained to make the most out of your CLM system. A well-trained team will move you from the "Managed" stage to the "Optimized" stage, where contracts are created, managed, and executed with very little friction. 

The first step in transforming your contract management process is a CLM maturity self-assessment. This will help you determine areas of weakness in your processes, technology, and collaboration and make informed decisions regarding improvements needed to optimize your CLM system.  

And remember, the right tools, like Dock 365 built on top of Microsoft 365, make transitioning to a higher maturity level simple. Get started now with a demo and see how Dock 365 will help elevate your CLM processes and take your business forward. 

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