Register for our upcoming webinar!

Security, Privacy, and Compliance in 2023: Predictions, Expectations, and Preparations for Data Management in a Post-Pandemic Environment

SEARCH BY:
Blog  |  April 28, 2022

The Contract Revolution – Part 2

In part one of our series, the contract revolution, we reviewed the slow progress that has plagued contract management. Thankfully, the contract management landscape is changing and being re-engineered thanks to AI and analytics. With a strong foundation of standardized new technology and solutions now available to the legal sector, there are critical factors for an organization’s success and challenges in implementing a successful digital contract transformation. In part two of this series, we explore some of the essential considerations of building a foundation that will enable lasting change.

1. An organization-wide cultural commitment to change.

As discussed in part one, the legal sector has often been perceived as more risk-averse to large-scale change. While the tide appears to be turning[1], initiatives can often be met internally within an organization with various resistance levels before they have even started. There are inevitably fears of upheaval and unknowns. With continuous waves of regulation-driven by regulatory scrutiny, organizations have typically focused on near-term survival strategies that often result in “safe option” solutions. These tactical, reactive solutions are often ill-conceived relative to the efficiencies of a proactive, well-considered strategy. The latter approach allows for shorter-term incremental improvements for contract lifecycle events that lead to better long-term outcomes by pivoting into the longer-term solution design. Inefficiencies in business operations, the client lifecycle, and the squeezing of margins necessitate more significant innovation and an end-to-end solution for contract analytics and lifecycle management.

Processes do not exist in a silo. Therefore, re-engineering needs to be undertaken end-to-end as an organization-wide strategic priority. An agile mindset, principles, and culture are vital to avoiding elongating the journey or being perceived as “boiling the ocean”.

Changing the culture from the top of the house to ensure end-to-end collaboration is essential in building a top-down digital culture and embedding that culture into the change program. The organizational structure must align with an organization’s digital contract transformation aspirations.

Effective buy-in always starts with the question ‘why?’. Ensuring that the broadest audience possible plays a part in that conversation is the key to ensuring the organization is with you on the journey rather than resisting or competing. But inefficiencies in business operations, the client lifecycle, and the squeezing of margins necessitate more significant innovation and an end-to-end solution for contract analytics and lifecycle management.

2. Getting back to basics – understanding the problems and how to improve them—rebuilding the foundation.

The best digital solutions are tailored to solve a specific problem, and it’s pointless to automate an inefficient or broken process. It’s therefore essential to get “back to basics” by ensuring that you and your organization fully understand how each issue is linked back to a particular process. A digital solution necessitates a detailed knowledge of the front-to-back processes and mandates a lean redesign of those processes utilizing tools such as continuous improvement to help identify and implement the best improvements and solutions.

Understanding and digitally solving smaller foundational problems enables pivoting and aligning the operating model to a longer-term strategic digital solution for processing and managing contracts.

3. Ensure that you understand the relationship between people and processes.

Similarly, people are your processes. Your people, the legal experts, know the work (whether internal or end-client based), and they also know the problems. Investment in a legal services provider (LSP) will help provide the capacity and skills necessary to simplify processes and eliminate redundancy. Simplification should be done ideally before automating contract processes with contract analytics. A simplified process will enable the analysis (for continuous improvement purposes) of the output of contract analytics and artificial intelligence (AI) models to be much more effective.

People are the key in the short to medium-term—from simplifying processes, eliminating redundancy, building the AI models, training, and refining the AI through an exceptions-based process.

4. Craft a clear and collaborative end-to-end integrated strategy.

Every successful digital transformation requires a cross-organizational strategy that anchors against specific use-cases. This should include a clear set of transformation goals that define “success” and map out how to get there.

5. The importance of establishing clear short, medium, and long-term goals.

A successful end-to-end digital contract transformation takes time. Still, smaller, incremental improvements often lead to better outcomes and more flexibility, setting the stage for the complete digital contract transformation.

Establishing short, medium, and long-term transformation goals with progress monitoring against outcomes, using meaningful data that measure success relative to an established baseline, allows the organization to see both immediate improvements and the consolidated impact of many small improvements. Effective monitoring is critical.

Many short-term deliverables in a digital transformation program focus on analysis, design, and identifying the right technologies to create a scalable contract lifecycle management solution. It’s essential to establish specific goals around these deliverables to ensure transparency and visibility to the organization.

Medium-term objectives are typically more budget hungry. They require investment in people to provide the capacity and skills necessary to automate contract processes, build AI models, and review output. It’s vital to demonstrate how the path to unlocking value is dependent on this medium-term investment and how once the benefits of automation are realized in the medium to long-term, you can then re-evaluate and optimize the balance of resources.

6. Understanding and capturing qualitative and quantitative return on investment (ROI) across the entirety of the transformation.

Monitoring progress versus goals and outcomes is very impactful, and while value is often measured quantitatively (the what: cost savings, headcount reduction etc.), qualitative metrics (the why: reduction of risk, accuracy, reduction in manual touchpoints, speed of access to data, improved client experience, the revelation of surprising insight, etc.) are also just as meaningful, and in some cases more so.

Organizations typically struggle to publish usable process data to enable them to qualify evidence-driven decisions. It’s therefore vitally important to define and agree upon both quantitative and qualitative metrics and data at the inception of a transformation project to establish the process for capturing and publishing such data for effective monitoring versus committed goals.

There is an essential balance in targeting long-term strategic goals and the necessary benefits realization versus the significant short to medium-term investment requirements while recognizing and celebrating minor, more immediate improvements, whether qualitative or quantitative. But an organization needs to focus equally on the criticality of implementing and adopting the solution versus the “roadshow” to socialize the capability.

To learn more about the CALMTM practice at Cimplifi and our expertise in contract analytics and lifecycle management click here. In case you missed part one of this blog, click here. #keepCALMandcontractonTM

[1] In the report recently released by Cimplifi, ‘Modern Legal Operations: At the Convergence of Law and Business’, 95% of surveyed participants agreed that there is an appetite for new technology to drive efficiency.

>