Contract management as we've historically looked at it has been a stand-alone sector of the procurement market. It's also been stand-alone of procurement, for that matter. When focused on legal and/or sales as the target users, it requires a number of key areas of capability coverage in terms of vendors. In our own analyses for clients in contract lifecycle management (CLM) evaluations, these have included discrete capabilities in areas like authoring/drafting, clause scoring/clause libraries, clause analytics, workflow and recommendations, broader analytics, basic negotiations, approvals/workflow, compliance, monitoring, administration and broader systems integration. Systems integration alone, especially for P2P, direct and services procurement, has been a major area of integration in some of the more customized instances of CLM software we've seen.
Yet the definition and focus of contract management is changing. In fact, with SciQuest snapping up one of the best known (and most capable) CLM vendors earlier this summer, Upside Software, one could argue the stand-alone contract management market is rapidly diminishing, especially given past acquisitions in the sector and the relatively conservative growth of most of the independent providers that are left (or are part of broader suite providers or software roll-ups with contract management capability). Taking this perspective a step further, one could even argue that the contract management market is now reaching a level of identity crisis as to render the historic definition (and focus) on CLM somewhat moot as the core focus area for procurement organizations, at least outside of a broader suite context.
Looking at the market today, there are really three or four classes of providers as we see it. First, you have the pure-play CLM vendors that specialize. Certainly SciQuest (Upside), Emptoris, Selectica, Symfact and others fall into this camp (one might even toss Ariba in as well, depending on your own product perspective and which Ariba contracts product you're looking at, not to mention which platform). Second, of course, you have the other suite and ERP vendors going after the market with varying degrees of product depth. These include SAP, Oracle, BravoSolution, Iasta, Zycus and others. Some of these providers are stronger at offering repositories and integration (as opposed to authoring and clause management) while others do provide broader coverage.
While these two segments of the market have existed for some time, the areas that are generating some of the most buzz at the moment are, in fact, relatively new. These include contract discovery, a fascinating area with specialist providers such as Seal Software as well as legal/e-discovery vendors including Clearwell. Contract discovery providers focus on helping companies understand and act on contract exposure across their organization, not to mention when externally (e.g., in M&A situations). We'll be covering this sector, including an e-discovery look at contract management, more closely, as we believe 2013 will be the year where procurement organizations really join legal, finance and other groups in making more investments in this area.
The fourth area of the market we see emerging is what we might term "purchasing compliance-driven contract management" (other forms of contract compliance include those directed at regulatory compliance, from recent conflict minerals legislation to SOX). Here, the target is less on the repository itself, let alone authoring. Rather, it's on active systems and contract compliance, tying end-user buying activity to the contract itself. Coupa's recently announced Smart Contracts product is one we'll be taking a closer look at in the coming weeks, given their recent product announcement (we also hope to share more of what the ERPs are up to this fall, as well as Ariba and SciQuest).
The ability, for example, to easily leverage tiered pricing arrangements based on contracts themselves both within P2P systems and other purchasing environments for direct and services spend is one example. Implementation success in this area requires integration to the front-end purchasing/shopping environment as well as the back-end contract terms/conditions (and/or the meta-data associated with the contract) if an organization does not deploy a single purchasing/contract management solution.
It's clear to us that the historic focus on CLM, at least within procurement, is shrinking in favor of a broader market definition and distinct contract management capabilities both independently and as part of broader suite-based value propositions. In the coming months on Spend Matters, we hope to provide a range of perspectives and voices around contract management and its broader and ever-increasing role as part of an expanding arsenal of solution capabilities.