Buy-Side vs Sell-Side Contract Management - CLM Fundamentals Blog Series - Post I

Are you planning to buy a contract lifecycle management software for your organization and are feeling a little overwhelmed due to long and complex lists of vendors available across various research portals? If yes, you've come to the right place. 

This is our first blog post in the contract lifecycle management (CLM) fundamentals series. The aim of this blog series is twofold:

1. Plug the gaps in the general understanding of contract lifecycle management
2. Make it easy for you to identify the right contract management system for your requirements

What problem are you trying to solve?

Any good purchase decision goes back to answering one simple question - what problem are you trying to solve?

Would you buy a pair of sports shoes when planning to attend a formal business conference?

Wish software purchase decisions were as easy as that. In most cases, they aren't. 

They are like buying a pair of running shoes that not only fit you well and offer good cushioning but should be suitable for basic training, light sports, walking, cycling, and whatnot.

Corporate purchase decisions being group purchase decisions, many a times businesses end-up asking for a wide range of features (at times unrelated features) to meet the requirements of various stakeholders.

This happens in the case of contract lifecycle management software purchases when a chief procurement office (CPO) and a chief sales officer (CSO) both get involved in the purchase decision with significantly different objectives.

Buy-Side vs Sell-Side Contract Management 

Depending on the industry you are in, the majority of your contracts are likely to be buy-side contracts (procurement-related) or sell-side contracts (sales-related).

Buy-side contracting is focussed on buying or procuring goods and/or services from various suppliers. 

Sell-side contracting is focussed on selling goods and/or services to various customers.

Common CLM features that business look for in both these scenarios include:

• A centralized contract repository 
• Contract search and retrieval
• Contract authoring
• Contract negotiation and approvals
• Reporting and analytics (metrics may vary depending on buy-side vs sell-side focus)
• Contract amendments, renewals, and/or termination management

Features expected in buy-side CLM systems: 

Buy-side contract management software are aimed at enabling procurement professionals to effectively manage their relationships with good and services suppliers in both pre-contract and post-contract phases. 

• This translates into the ability to negotiate better prices with suppliers, manage supplier evaluation and selection processes, ensure that contracted goods and services are delivered and paid for as per the contracted terms and conditions, manage overall expenses, and track, assess, benchmark and improve supplier performance. 
• Integrations with supplier networks, e-sourcing, spend management, supplier management, ERP, supply chain management, etc. are desired in buy-side CLM systems. 

Features expected in sell-side CLM systems: 

Sell-side CLM systems are aimed at streamlining the contracting processes for sales and delivery of goods and services. It helps sales teams to ensure consistency in contract clauses across various clients, and speed up the contracting process by reducing contracting delays. 

• This translates into the ability to create compliant contracts quickly using template libraries, etc.
• Ensure that sold goods and services are delivered and paid for as per the contract terms 
• Avoid revenue leakage that may occur due to under billing 
• Integrations with CRM systems, Configure Price Quote (CPQ) systems, and revenue management systems are desired in sell-side CLM systems.

Can a single software serve CLM requirements of both the buy-side and the sell-side stakeholders?

Clearly, CLM vendors have an incentive in selling to both sides. And given the amount of overlap in the requirements, it makes sense for the buyers as well to go with a single system. 

But the question is whether it's a good idea to do so, and what are the pros and cons of using a common system vs a dedicated system for the two sets of requirements. Well, that's a topic for another blog post.

For now, if you are looking for CLM systems that serve your requirements, you can use this tool from World Commerce and Contracting (formerly IACCM).