Best Practices for Managing the Contract Life Cycle

  • by Rajesh Ray, Senior Managing Consultant and SCM Product Lead, IBM Global Business Services
  • May 16, 2013
/Project Management
Contract life cycle management (CLM) is an application category that is increasingly gaining popularity among business users. SAP offers three solutions. Understand the strengths and weaknesses of each solution and learn which one is suitable for which business requirements.
Key Concept

In simple terms, a contract can be considered a set of documents, governed and restricted by law, that establishes the boundaries and extent of the executing parties’ relationship, along with the rights and responsibilities of all the entities involved. Contracts can differ in complexity from a very simple rent contract of two pages between two individuals to extremely complex multiyear trade contracts between two organizations that can run into thousands of pages.

Contract life cycle management (CLM) applications help you manage the entire life cycle of customer and supplier contracts — starting from creating contracts to archiving them when they are no longer needed. There are two categories of these applications: buy-side CLM applications that manage supplier contracts and sell-side CLM applications that manage customer contracts. I focus on the following aspects of buy-side applications:

  • The contract and contract life cycle
  • Typical pain points of managing this life cycle
  • How to develop a business case for a CLM application (i.e., identifying the areas in which an organization can expect benefits)
  • The features a CLM application should have to manage the entire contract life cycle
  • Three different contract management solutions that SAP offers

Rajesh Ray

Rajesh Ray currently leads the SAP SCM product area at IBM Global Business Services. He has worked with SAP SE and SAP India prior to joining IBM. He is the author of two books on ERP and retail supply chain published by McGraw-Hill, and has contributed more than 52 articles in 16 international journals. Rajesh is a frequent speaker at different SCM forums and is an honorary member of the CII Logistics Council, APICS India chapter and the SCOR Society. 

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