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NOTE: This is the second article in this series. Here is the first article in the series: CLM Health Check Pillar 1

Marshfield’s CLM Health Check service, a systemized, holistic evaluation to identify inefficiencies, gaps, and improvement opportunities, is designed to turn your CLM software into a maximized tool to deliver the most business value it possibly can. This blog series takes the 10 pillars of the Marshfield Method, briefly defines and describes each pillar, and then walks you through evaluating the health of your CLM system as it relates to each individual pillar.

The second pillar: Contract Review. What is it, and how can you tell if this pillar in your process is in good shape?

The Contract Review pillar entails engaging all necessary stakeholders in the review process, like legal, procurement, and sales. Including all necessary stakeholders is crucial for maintaining contract integrity, but who those stakeholders are depends on the contract itself.

There are reviews that are always required, but also times when certain sets of reviewers should be engaged automatically, or on-demand, based on information available about the contract (e.g. value, payment terms, security terms, etc.). There are also contracts which may require additional specialized reviews by Senior Leaders or by specialists from areas like Finance, IT/Info Sec, Compliance, or others.

Here are factors to consider in evaluating the health of the Contract Review pillar:

  • Indicators of Good Health across the contract lifecycle management process:
    • The process works as expected:
      • All data points and document names are configured as part of the process
      • All workflows function as expected
      • All parts of the process are streamlined
      • The contract process model is appropriate for the business use case – hub and spoke versus more linear
      • All contract review patterns are configured and automated
    • The content and actors are included in the process
      • Completeness and accuracy
      • There are no process gaps and all necessary stakeholders are included in each review cycle
      • The counterparty review process is included and optimized
  • Indicators of Poor Health for a contract lifecycle management system:
    • The process does not work as expected
    • There are unresolved bugs since day 1 or that have occurred over time due to updates, etc
    • The contract is going outside of the system at certain points in time
    • The counterparty review process is an outside process

Moving on, the third pillar is Contract Approval, which immediately follows Contract Review. Streamlined approvals should be tailored to contract specifics like value and departmental requirements, ensuring compliance and governance. Approvals imply a responsibility and accountability, and function as a way to manifest corporate policies and procedures within the CLM solution. These business rules should automatically leverage variables like Amount, Division/Department, Contract Type, etc. to drive the proper approvals and ensure compliance to policy.

Here are factors to consider in evaluating the health of the Contract Approval pillar:

  • Indicators of Good Health across the contract lifecycle management process:
    • The approval process is completely automated
    • All approvals are going to the correct users and groups for each type of agreement, criteria of request, dollar amounts, types, etc.
    • Approvals are completed in a timely manner
    • All necessary data is configured for the process as well as an audit trail
    • Necessary reminders are built into the process to keep it moving in a timely manner
  • Indicators of Poor Health for a contract lifecycle management system:
    • Manual intervention is required during the contract approval process
    • The contract approval process is not automated or only partially automated because it’s too complicated
    • There are blockers in the approval process, it gets hung up at a certain level of the business and department. Improvement for consistency, efficiency and timing.
    • The approval process takes too long

We believe that a healthy and fully optimized CLM system is critical. Our CLM Health Check service is a systemized, holistic evaluation to identify inefficiencies, gaps, and improvement opportunities, turning your CLM software into a maximized tool to deliver the most business value it possibly can.

We welcome the opportunity to help you optimize your CLM system. Contact us here to get started. 

Click here for the next article in this series.

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