So, how should you frame the conversation? How do you build a business case your leadership team won’t be able to ignore?
In this article, we’ll take a deep dive into the topic, and by the end, you’ll have some pointers to help you steer the conversation in your favor.
Why leadership can hesitate on CLM Investments
Let’s get it from the start: although LegalTech has gained popularity in the past 10 years, and there has been overall growth in the market, not all leadership teams view this tech as a key business solution. Moreover, company size and digital maturity have a direct impact on how high or low a CLM will be prioritized.
Some common objections or hesitations include:
On top of these hesitations, legal teams are also aware of the work required to implement the solution, another step that makes it challenging to convince your leadership team. How long will it take? How long will we pause operations to implement the tool? The list can go on forever, but it serves to show why it’s so important to build a strong case. And to do so, there’s a keyword: ROI.
Building a financial case on ROI
Executives are used to evaluating investments through numbers. A CLM case built on ROI shows that it’s more than just a legal tool, it can improve and enhance business performance. As obvious as this may sound, the true challenge oftentimes isn’t so much about adopting an ROI mindset to build our CLM case, but rather deciding what exactly should be measured and how.
Internal teams know the challenge well and can identify the main points, which is a great start. We can categorize pains into different sections:
General efficiency
This refers to things such as contract lifecycle duration and admin work. Compare how long it takes to draft, negotiate, and finalize contracts before vs. after CLM. Faster cycles mean faster revenue recognition.
Working capital
This refers to human and tech capital spent on contract management. Contracts affect teams beyond legal, for instance, when sales teams need to close agreements. A CLM reduces the number of manual hours spent on admin tasks, cutting costs per agreement.
Value leakage
This refers to missed renewal or expiry deadlines. You would be surprised by how much money is spent on unwanted automated renewals… with automated alerts there’s less room for financial penalties.
Then, of course, teams will want impactful numbers. For instance, research has shown that poor contract management can lead to a loss of up to 9% of annual revenue. This kind of data creates perfect opportunities to build a case. And to calculate it today, there are different ways.
ROI calculators are game changers in this matter: they allow you to visualize, in a clear and concise way, the actual amount of dollars and time saved.
Discover your savings
Get a realistic ROI based on industry standards when you partner with DiliTrust on CLM.
Tips to pitch your case
Once you have collected your data, whether internally or through an ROI calculator, it’s time to prepare the pitch. Below are three steps you can take to plan ahead.
- The CLM tool must be framed as an investment rather than an expense. Opening with a strong fact or insight will help, with the most impactful one usually being the money saved with a CLM vs. the expenses without a CLM.
- Make sure every data point you present aligns with business objectives. To do so, you may want to pick the biggest pain points and place them next to your company goals. If leadership is focused on growth, emphasize faster deal closures. If cost control is the goal, highlight efficiency savings.
- Show commitment from future users. All transformation projects need internal sponsors to push for change, whether it is the final user or someone higher up in the hierarchy ladder, showing there’s an interested crowd will be game changer.
With this approach, the investment feels justified: your team shows interest, commitment, a clear rationale for adoption (“this isn’t just for legal, it’s going to serve other business units”), and alignment with overall business objectives.
Go the extra mile
Support your arguments with industry benchmarks and case studies.
Example: A competitor of ours cut contract processing time from 1 month to 48 hours, accelerating revenue flow.
Show you’ve considered all the challenges, such as the implementation process.
Example: “With this service provider, we can roll out the CLM in under 4 months, without disrupting operations during implementation.”
It’s all about the ROI
The key to making your case lies in demonstrating business impact, and nothing is more effective than presenting a realistic ROI forecast. Start with hard numbers that prove your point, from revenue leakage to dollars lost through admin work and delays. Then, connect these pain points to the company’s top priorities and show that not only is ROI measurable, but so are the KPIs.
With this approach, the CLM solution you choose will no longer be viewed as a cost, but as an investment to keep the company’s growth on track.
