Enterprise technology predictions from Agiloft
|Freeman Lightner in Enterprise Friday, January 7, 2022|
Eric Laughlin and Colin Earl from Agiloft discuss their 2022 enterprise technology predictions including the rise of ContractOps, why a CLM is a critical software function, how strong IT infrastructure is critical to success, and that conversational AI will become a common practice.
While 2021 marked another year of uncertainty due to the pandemic, the circumstances this year fostered incredible growth and innovation in many industry sectors, especially enterprise technology. One critical back-end process that delivered massive value to enterprises throughout the pandemic is contract lifecycle management (CLM).
2022 Enterprise Technology Predictions
Eric Laughlin, CEO, and Colin Earl, founder, and CTO from Agiloft share their 2022 enterprise technology predictions about conversational AI, the rise of ContractOps, and a lot more. Eric Laughlin, CEO of Agiloft:
1) CLM Further Solidifies its Place in Top Five Most Critical Enterprise Software Functions
In 2022, contract lifecycle management (CLM) will solidify its place in the enterprise technology stack as one of the five key enterprise software functions alongside customer relationship management (CRM), enterprise resource planning (ERP), procurement, and human capital management (HCM). Five years ago, CLM was viewed as an ancillary function, but not fundamental to business operations. Fast forward to today, it’s heavily relied on throughout enterprises and became mission-critical when the pandemic and remote work accelerated digital initiatives.
With the CLM market evolving rapidly, it’s time to rethink enterprises’ approaches to contracts. Historically, organizations relied on contracts solely as a defensive shield, relegated to dead-end digital representations of paper. This is not the case anymore - contract data is a digital asset serving as the DNA of business relationships, which enterprises can analyze and act on across the business. CLM also helps to ensure the enterprise is protected from a financial standpoint. If CLM software is outdated or not configured properly, it can cost companies an average of 9% in annual revenue. This revenue leakage is caused by missed contract deadlines, late renewals, compliance fines, etc. Therefore, CLM is now equally important to a company’s bottom line as managing customer relationships and sales.
2) In 2022, the Talent War Will Give Rise to the Career Field of “ContractOps”
In 2021, we saw many consulting firms struggle to find and retain top talent with contract lifecycle management (CLM) process experience, as well as CLM customers trying to hire internal administrators to run their contract management software. Due to growing demand, 2022 will see the rise of “ContractOps” and the beginning of a talent war to secure their services. As CLM establishes itself as a business-critical function in the enterprise, a new breed of in-house professionals will be required to handle the processes and technology used to manage contracts since LegalOps teams will be focused on managing spending, maximizing productivity, and streamlining legal processes.
As a result, ContractOps professionals will be highly sought after, with consulting firms, technology vendors, and general counsel all vying for the best and brightest talent with the right experience. ContractOps will also feed into the continued growth of no-code CLM platforms because it allows one person to make updates to CLM platforms without having to enlist software developers to add new processes by writing new code.
3) For the Future of Enterprise Software, Connected Experiences are Essential
In 2022, enterprise software will go beyond simple integrations between applications and move toward more holistic, connected experiences. These “connected experiences” take traditional integrations a step further with added functionality and increased flexibility. For example, Agiloft CLM customers can interact with their contracts data and approval workflows while still remaining in Microsoft Teams or Salesforce. This new level of connectivity will be essential because it connects siloed data and workflows across the enterprise, allows better collaboration across apps, and brings teams more value from the apps they use on a daily basis.
4) In the Highly Competitive Market, Repository-centric CLM Isn’t Enough
Looking at the current CLM market landscape, there are now a ton of different players and many of their offerings are essentially contract repositories with contract management software layered on top. This simplified approach can work for a smaller company, but for a larger enterprise, a contract repository system simply isn’t enough to manage hundreds of thousands of unique contracts and associated workflows.
With that said, we’re seeing CLM providers that only offer basic workflows secure massive Venture Capital investments and new competitors in that space popping up left and right. As a result, in 2022, there are going to be some failed companies in that market segment because there are so many competitors offering the same limited contract management capabilities. What will set the winners apart from the losers? Flexibility, connectivity, and implementing cutting-edge technology like AI for an accurate view of contract data across the enterprise.
Colin Earl, founder, and CTO of Agiloft:
1) In 2022, The CLM Market Will See a Flurry of Activity - Large Funding Rounds, M&A, IPOs, and More Competition
Building on the momentum from 2020 and 2021, there will be a great deal of financing and industry movement in the CLM market in 2022. Analyst research shows that an increasing amount of M&Q activity across the globe to improve product portfolios and expand business presence overseas is driving demand for CLM software. In the last six months alone, we’ve seen CLM company valuations climb and multiple acquisitions between CLM vendors.
In light of the market’s growth and potential, there will also be even more new CLM vendors emerging, which will make the competition even stiffer. However, there will be different playing fields for small, repository-based CLM software versus enterprise-grade end-to-end CLM software providers that encompass procurement and organization-wide data. Even so, this flurry of activity in the market is likely to continue throughout 2022.
2) Conversations with Your Contracts: Conversational AI Will Become a Common Practice
In 2022, modern conversational AI technology will allow us to start having conversations with our contracts, providing enterprises with actionable data, faster. Employees can verbally ask the AI questions and the AI bot will respond immediately with a recommendation, while simultaneously pulling up all relevant data in the enterprise’s database of documents. For example, someone can ask the bot which contracts have specific data about a recent sale, new hire, or lawsuit and the bot will pull that data out based on that context. This can even go a step further where employees can ask the AI the most common clause language to use for creating a new contract.
For instance, in the sales department, sales team members can ask the system which language they should use for drafting up customer contracts. Then, the bot can review the content of the contract draft and share a rating based on how likely it is that the contract will get approval from the legal team or not. Conversational AI can also be highly useful for negotiations because the bot can pull up all past similar sales transactions to compare the price and terms to compare against before the deal is made.
3) Strong Enterprise IT Infrastructure Will Be Equally as Critical to Success as Innovation
It’s normal to get excited about new technology whether it be the Metaverse or a revolutionary new machine learning algorithm. However, with the rapid innovation occurring across industry sectors today, enterprises make sure to also invest in critical IT infrastructure to support these new systems. With innovations like these, there comes a whole new set of challenges ranging from regulations and compliance issues to security. The proper fundamental infrastructure and functions like CLM still need to be maintained for these companies to avoid added risk and legal liability. As we’ve seen with Facebook over and over again, ignoring best practices for legal and compliance can lead to massive government fines and damage brand regulation, regardless of the size of the company.
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