When Should You Consider a Contract Lifecycle Management Solution?

A workforce management program can be assembled and rolled out in numerous ways – VMS only, MSP only, MSP/VMS together, etc. The different pieces can be implemented at different times. An organization might begin with a VMS tool and after a year or two, add MSP services and vice-versa. However, with the rising popularity of SOW contractors as a labor category, there is growing interest in contract lifecycle management (CLM) solutions. CLM solutions are far more adept at managing complex SOW contracts from inception to completion, but getting capital approval for yet another tech implementation (as always) is a heavy lift. So it makes sense to weigh whether or not your operations are truly in need of CLM or if your existing array of solutions (MSP/VMS) can accommodate your SOW needs adequately enough.

First, a bit more clarification on what a CLM solution is specifically designed to accomplish. The CLM solution is intended to automate and provide control over SOW sourcing, contract development, engagement management – essentially, the complete SOW lifecycle. These tools are also adept at handling contract budget monitoring and management functions such as contract compliance and SOW amendments. In addition to this, they’re also useful for proactive management of the SOW contracts including monitoring expiry dates, ensuring proper SOW vendor off-boarding, contract close-outs, and the inevitable contract/engagement extensions. Centralizing control over SOW lifecycle management is crucial to ensuring alignment between an array of SOWs and vendor master agreements.

For most workforce management operations, a well-conceived MSP/VMS solution should be able to effectively meet with most of these key requirements for effective contract lifecycle management. However there are a few CLM requirements that a VMS/MSP solution regimen does not fully address. Chief among them are contract archiving and term search/discovery functionality. Only the most robust VMS tools are equipped to accommodate contract archiving needs and we know of none that deliver term search and discovery.

So if you’re deliberating over whether to engage a CLM solution or an MSP/VMS solution, and if cost is a concern (when isn’t it), an organization must weigh which solution to implement first.  nextSource recommends bringing unmanaged (or under-managed) spend under control first with a variant on the MSP/VMS combo. As noted, the MSP/VMS can deliver a significant value in terms of contract lifecycle management capability. Design your MSP/VMS solution with a mind towards CLM strategies. The robust spend controls delivered by the MSP/VMS model yields quicker ROI than the pure-play CLM solution. Once the cost savings and efficiency-boosting effects of the MSP/VMS are realized, the appetite for engaging a CLM tool will be more significant among the finance department and it should be easier to find support for implementation.

In the interim, a workforce management operation can bridge the gaps in contract archiving using less complex, easier-to-achieve, in-house storage systems. As for term search and discovery features, all but the largest users of SOW as a labor type will not necessarily be hampered by their absence. In short, it is our position that the MSP/VMS solution is sufficient enough to ensure satisfactory control over SOW lifecycle management for all but the largest organizations. And leaning on MSP/VMS options may enable you to hold off on pulling the trigger on a CLM investment for several years until a program’s maturity rises to the point of justifying a separate CLM implementation.