Last year, according to research firm Forrester Research, global sales of supplier contract management solutions increased 14% to $434 million. They are expected to exceed the 480 million mark in 2015.
Admittedly, the amount of these sales still represents only a modest share of the nearly $6 billion generated by the e-purchase market in 2014, according to the U.S. firm. However, the CLM market (Contract Lifecycle Management) undoubtedly has the wind in its sails. For several years, it has been showing steady double-digit growth, linked to an increasingly palpable need in the purchasing departments. As awareness of the risks associated with poor contract management increases, initiatives are multiplying, often as part of an upgrade of the purchasing information system or a more comprehensive approach to computerization of the function.
For purchasing managers, especially in large groups with a lot of organisation and geographical presence, the challenge is to facilitate and secure the contracting process. This, by consolidating and harmonizing practices. Specifically, the deployment of a dedicated tool aims to simplify the creation of contracts, centralize their retention, facilitate access to them and associated documents, verify legal compliance and compliance with negotiated conditions, anticipate milestones (rescission, renewal, etc.). The establishment of a contract management solution is also an opportunity to check information (supplier references, dates, etc.) or to identify possible synergies within the organization. With, generally, substantial gains.
In this movement, the players of the software have clearly understood their interest, starting with the publishers of solutions dedicated to functions where the concept of contract is fundamental, Purchases Lead the field. If the analysis proposed by Forrester limited to fifteen publishers, of which only a handful of them cover e-purchase (IBM-Emptoris, Ivalua, OpenText, Oracle, SAP, Sciquest, Selectica-Iasta), virtually all e-purchase suites now have a CLM module, more or less advanced. In conclusion to its report, the firm draws up a list of publishers that could have been integrated, including BravoSolution, GEP, Perfect Commerce and Zycus. On the other hand, Forrester found that CLM tools offered by other business specialists (Coupa, Capgemini-IBX, Pool4Tool, Proactis, Scanmarket, SynerTrade, Verian) could not be taken into account, due to overly basic features often limited to a contratheque.
If the contra-library is the indispensable basis, by ensuring centralized and secure storage of all contract information, in a logic of homogenization of formats and content, a CLM system must go further to bring real added value. Generally linked to supplier repository and document models, it must offer assistance in drafting contracts, supplemented by automatic verification mechanisms, as well as technical safeguards (safeguards, version tracking) and in terms of confidentiality management, access control, etc. Alerts on key events and dates, for their part, avoid oversights, and therefore potential disputes. As for the tools for monitoring execution, in connection with the'e-procurement and the financial system, they allow an automatic reconciliation between the contractual commitment (fixed price, volume, delivery time, etc.) and its application. Finally, the system sometimes provides a gateway to decision-making for statistical monitoring and supplier evaluation purposes.