11 reasons why CLM implementations fail and how to avoid them

Implementing a contract lifecycle management (CLM) system is a significant investment and has the potential to transform the way organizations handle contracts, from streamlining processes to enhancing compliance and improving efficiency. But the risk is huge. Failure to implement can result in wasted resources, disrupted workflows, and even legal risks due to improper management of contracts.

For general counsel, these risks are of particular concern. In today's business world, GC is expected to go beyond simply being a cost center and prove its worth. Successful implementation of CLM will reveal how legal departments can advance strategic goals, improve efficiency, reduce risk, and add real value, providing a brilliant opportunity. On the other hand, failed implementations waste resources and make it more difficult for GC to secure support for future projects.

This article explains the 11 most common reasons why CLM implementations fail, broken down into pre-implementation, and post-implementation stages. By understanding these pitfalls, GCs and business leaders can proactively address them and spotlight the critical role legal teams play in driving the success of CLM initiatives and increasing business value.

Failure before implementation

Before implementation, it's all about laying a solid foundation for success. This includes the critical steps of planning and preparing the new system and aligning it with existing processes. However, if you don't pay close attention, it can easily become an obstacle. For GCs that already have high-stakes responsibilities, a poor start to the CLM initiative can waste resources, fail to meet expectations, and lead to friction that is difficult to overcome later.

1. Inadequate preparation and needs assessment

Embarking on CLM without fully understanding the existing contract process is like sailing without a map. Organizations often rush into implementation without analyzing current workflows, contract types, and approval processes. This lack of foundation leads to inconsistent solutions that fail to address actual challenges and inefficiencies.

Furthermore, without defining clear success indicators and key performance indicators (KPIs), it's impossible to measure progress or determine return on investment (ROI). Setting these benchmarks from the beginning provides a roadmap for implementation and a benchmark for success.

2. Unrealistic expectations and underestimation of complexity

The CLM system is a robust tool, but it's not a magic wand. Even if you expect immediate implementation results or immediate ROI, the required learning period and adaptation period will be ignored. Implementation takes time, resources, and patience. Underestimating the complexity of integrating CLM systems into existing operations can lead to frustration and project fatigue.

It's important to recognize that implementing CLM is a major organizational change. Allocating sufficient time, budget, and personnel will ensure that the project addresses challenges without cutting corners.

3. Strategic inconsistency with business goals

The CLM system isn't just new software; it must be a strategic asset that supports broader business goals. If there is a disconnect between CLM implementation and organizational goals, the potential of the system decreases.

If you don't set measurable goals that match both the company's strategy and user needs, the tool may not provide meaningful benefits. Engaging stakeholders across departments allows the CLM system to enhance processes in ways that matter to everyone involved.

4. Failure to engage stakeholders and understand their needs

Bringing CLM systems into silos is a source of resistance. Agreements relate to multiple departments such as legal, procurement, sales, and compliance, and each has unique needs and challenges. Removing these key stakeholders from the planning process could result in a system that doesn't fit anyone's needs.

Early and continuous communication with all stakeholders fosters buy-in and collaboration. By understanding each department's specific contract process, you can adjust your CLM system to address critical challenges and improve overall efficiency.

5. Proceed with work without expert guidance

Internal teams may be highly skilled, but implementing CLM requires specialized expertise. If you treat it like any other software purchase, the subtle differences in contract management will be overlooked. Without experienced guidance, organizations may miss best practices and system performance may degrade or fail to scale.

By involving experts who understand the intricacies of CLM, you can overcome challenges, streamline processes, and tap into industry insights that are often overlooked by other methods.

Failure during implementation

The implementation is where the rubber meets the road. This is the phase of making a well-designed plan and putting it into action. But even with proper preparation, implementation challenges can derail the entire project if not managed carefully. For GCs, a bumpy implementation can lead to missed opportunities, dissatisfied stakeholders, and the CLM system falling short of expectations.

6. Too much emphasis is placed on technology over people and processes

Technology is a powerful enabler, but it's only part of the equation. Focusing only on software features without considering the human factor may hinder adoption. Users need to understand not only how the system works, but also how it can help them in their daily work.

Failure to manage change—preparing staff for new processes and assisting with migrations—can result in resistance and reduced utilization. Remember, CLM systems are aimed at transforming not only technology, but also business processes.

7. Neglecting integration with existing systems

CLM systems do not operate in a vacuum. Failure to integrate with existing systems such as CRM, ERP, and document management platforms results in data silos and duplication of work. Without seamless integration, teams can end up entering the same data over and over, leading to errors and inefficient work.

Consolidation increases visibility and allows access to all relevant information when needed. Additionally, workflows are streamlined and the team's administrative burden is reduced.

8. Poor training and user support

Even the most intuitive CLM systems require training. Providing a one-off training session isn't enough for long-term success. Users need ongoing support to take full advantage of system functionality and adapt to updates and process changes.

Ignoring user feedback or failing to provide accessible help resources can lead to frustration and abandonment of the system. By investing in comprehensive, repetitive training, your team can feel confident and supported.

9. Lack of leadership support and cross-department collaboration

Strong leadership is essential to drive CLM adoption. Without it, establishing consistent processes and governance structures becomes difficult. If departments operate in a vertical manner, the use of the CLM system is inconsistent, its effectiveness may be impaired, and compliance risks may occur.

Leadership support fosters a culture of collaboration and encourages departments to work together to coordinate processes. This unity not only enhances the effectiveness of the CLM system, but also promotes organizational cohesion.

Failure after implementation

The actual testing begins after implementation. Once the system is up and running, it's all about continuously delivering value. But without ongoing care, even the best CLM implementations can lose momentum. For GCs, if attention isn't paid during this phase, optimization opportunities may be missed, challenges may not be addressed, and ultimately the system may not keep up with the organization's needs.

10. Neglect continuous improvement and adaptation

Adoption isn't the end of the CLM journey; it's the beginning. As we often tell our clients, “CLM isn't a sprint, it's a marathon.” Adopting the “set it and forget it” mentality eliminates the need for continuous optimization. Business needs are evolving, and CLM systems must evolve with them.

By regularly monitoring performance against KPIs, you can assess what's working and what's not. By updating the system based on performance data and user feedback, it can continue to be a valuable tool to meet organizational needs.

11. Data Integrity and Maintenance Challenges

The value of a CLM system is determined by the data it contains. When busy general counsel (GC) and legal departments have many responsibilities, keeping contract data up to date is a major challenge. When contracts are constantly being negotiated, amended, and updated, information can quickly become out of date if you don't pay close attention. This is not just an administrative inconvenience; it poses serious risks.

Outdated data can result in missed deadlines, failure to comply with contractual obligations, and flawed strategic decisions based on inaccurate information. Legal teams are often understaffed and can struggle to allocate the time needed for regular data updates and audits. This lack of bandwidth makes it difficult to ensure data integrity and compromises the effectiveness of the CLM system.

Maintaining data integrity requires consistent effort and dedicated resources. Partnering with a managed service provider like Execo can ease this burden. Execo's Contracts Catalyst provides ongoing and professional support to keep CLM system data accurate and up to date. It also helps with time-consuming tasks such as drafting and redlines, so legal teams can focus on higher-value tasks.