Contract lifecycle management is gaining traction
Contract lifecycle management (CLM) has been gaining interest from enterprises as well as investors for some time now.
Gartner defines CLM as “a solution and process for managing the life cycle of contracts created and/or administered by or impacting the company.”
In this fortnightly, we discuss about growth drivers of the CLM software market and its characteristics.
Historically, CLM was used by enterprises to essentially create and negotiate contracts. However, with the digital transformation of organizations, CLM software is helping organizations in the methodical management of contracts – from initiation through negotiation, approval, storage, compliance and renewal – with customers, suppliers, partners, and key employees.
The CLM software market is expected to grow from $1.5bn in 2020 to $3bn in 2026, representing a CAGR of c.12% from 2021 through 2026.
The rapid gain in traction that CLM software is seeing is largely driven by the need of organizations to comply with regulations, coupled with faster drafting, negotiation and execution of contracts for increased organizational efficiency.
Additionally, CLM software suites have developed risk identification and analytics capabilities which are being leveraged by chief financial officers and chief risk officers to foresee financial and business impacts their companies’ contracts may bring along and adopt measures to mitigate such impacts.
CLM software vendors are also using AI to be able to offer advanced risk identification capabilities, intelligent contract drafting capabilities and chatbots, for engagement with users.
The CLM market is led by Icertis, SpringCM, Agiloft, SirionLabs, CobbleStone Software, and Ironclad, closely followed by Apptus, Coupa’s subsidiary, Exari and SAP Ariba Contracts.
The strategic importance of contracts to run businesses efficiently and the nascent stage of the CLM market has caught the attention of PE investors. Recently, Icertis, whose clientele includes Apple, Microsoft, Airbus, Daimler, and Best Buy, raised c.$80m in its Series F round of funding led by existing investor B Capital Group, with participation from Greycroft, Meritech Capital Partners, Premji Invest, PSP Growth, and e.ventures. The company’s post-money valuation stands at $2.8bn.
With market leader, Icertis having SaaS as its delivery model coupled with Wipro and Infosys as implementation partners and plans to work with Accenture and Deloitte to develop customized solutions for different verticals, the CLM industry is clearly adopting the very successful partner ecosystem model followed in the CRM and the ITSM industries.