Industry executives and experts share their predictions for 2022.  Read them in this 14th annual VMblog.com series exclusive.

The Future of Enterprise Software, Conversational AI for Contracts and the Emergence of "ContractOps"

By Hiro Notaney, CMO of Agiloft

While 2021 marked another year of pandemic fueled uncertainty, it fostered incredible growth and innovation across many industry sectors, especially enterprise technology. One of the most critical (and often overlooked) back-end processes that delivered massive value to enterprises throughout the pandemic is contract lifecycle management (CLM), enabling enterprises to manage contracts remotely, as well as search and extract relevant business data.  Here's a roundup of predictions for 2022 from the Agiloft brain trust.

In 2021, the CLM market reached $1.7 billion. Most companies will continue to favor remote/hybrid work out of an abundance of caution in the year ahead, which will accelerate the growth of  CLM  even further. This continued rapid growth will lead to increased competition, new innovative technology capabilities, and strategic business deals throughout the industry. Given these factors, below are ten enterprise software predictions from the executive team at Agiloft to watch out for in 2022.

CLM Further Solidifies its Place in Top Five Most Critical Enterprise Software Functions

In 2022, contract lifecycle management (CLM) will solidify its place in the enterprise technology stack as one of the five key enterprise software functions alongside customer relationship management (CRM), enterprise resource planning (ERP), procurement and human capital management (HCM). Five years ago, CLM was viewed as an ancillary function,  not fundamental to business operations. Fast forward to today, it's heavily relied on throughout enterprises and became mission-critical when the pandemic and remote work accelerated digital initiatives.

With the CLM market evolving rapidly, it's time to rethink enterprises' approaches to contracts. Historically, organizations relied on contracts solely as a defensive shield, relegated to dead-end digital representations of paper. This is not the case anymore - contract data is a digital asset serving as the DNA of business relationships, which enterprises can analyze and act on across the business. CLM also helps to ensure the enterprise is protected from a financial standpoint. If CLM software is outdated or not configured properly, it can cost companies an average of 9% in annual revenue.  This revenue leakage is caused by missed contract deadlines, late renewals, compliance fines, etc. Therefore, CLM is now as important to a company's bottom line as managing customer relationships and sales. - Eric Laughlin, CEO of Agiloft

 In 2022, the Talent War Will Give Rise to the Career Field of  "ContractOps"

In 2021, we saw many consulting firms struggle to find and retain top talent with contract lifecycle management (CLM) process experience, as well as CLM customers trying to hire internal administrators to run their contract management software. Due to growing demand, 2022 will see the rise of "ContractOps" as a discipline and the beginning of a talent war to secure this experience. As CLM establishes itself as a business-critical function in the enterprise, a new breed of in-house professionals will be required to handle the processes and technology used to manage contracts since LegalOps teams will be focused on managing spend, maximizing productivity and streamlining legal processes.

As a result, ContractOps professionals will be highly sought after, with consulting firms, technology vendors and general counsels all vying for the best and brightest talent with the right experience.  ContractOps will also feed into the continued growth of no-code CLM platforms because it allows a single individual to make updates to CLM platforms without having to enlist software developers to add new processes by writing new code. - Eric Laughlin, CEO of Agiloft

For the Future of Enterprise Software, Connected Experiences are Essential

In 2022, enterprise software will go beyond simple integrations between applications and move toward more holistic, connected experiences. These "connected experiences" take traditional integrations a step further with added functionality and increased flexibility. For example, Agiloft CLM customers can interact with their contracts data and approval workflows while still remaining in Microsoft Teams or Salesforce. This new level of connectivity will be essential because it connects siloed data and workflows across the enterprise, allows better collaboration across apps and brings teams more value from the apps they use on a daily basis. - Andy Wishart, CPO of Agiloft

In the Highly Competitive Market, Repository-centric CLM Isn't Enough

Looking at the current CLM market landscape, there are now a ton of different players and many of their offerings are essentially contract repositories with rudimentary contract management functionality layered on top. This simplified approach can work for a smaller organization, but for a larger enterprise, a contract repository system simply isn't enough to manage hundreds of thousands of unique contracts and associated workflows.

With that said, we're seeing CLM providers that only offer basic workflows secure massive Venture Capital investments and new competitors in that space popping up left and right. As a result, in 2022, there are going to be some failed companies in that market segment because there are so many competitors offering the same limited contract management capabilities. What will set the winners apart from the losers? Flexibility, connectivity and implementing cutting edge technology like AI for an accurate view of contract data across the enterprise. - Eric Laughlin, CEO of Agiloft

In 2022, AI Becomes Table Stakes for CLM Systems 

CLM-Lite solution vendors will struggle to survive in the medium term, and verbatim extraction of basic, line level data from contracts using AI will become table stakes for most types of contract-related systems. On the flip side, enterprise teams who implement fit for purpose AI-powered contract software will continue to see tangible benefits: utilizing functionality that goes way beyond basic extraction and enables them to connect dispersed concepts in their contracts and normalize their contractual data, while providing deeper insights into the trends that exist across their contract stack and connecting with external systems and sources to ensure regulatory compliance. At the same time, those enterprise teams' understanding of how AI can deliver ROI will increase, and they will demand self-service and no code solutions that they can customize themselves for speedy iteration and optimization. - Anne McNulty, Senior Director of AI Success, Agiloft

 In 2022, The CLM Market Will See a Flurry of Activity - Large Funding Rounds, M&A, IPOs and More Competition 

Building on the momentum from 2020 and 2021, there will be plenty of financing and dealmaking in the CLM market in 2022. Analyst research shows an increasing amount of M&A activity across the globe to improve product portfolios and expand business presence overseas is driving demand for CLM software. In the last six months alone, we've seen CLM company valuations climb and multiple acquisitions between CLM vendors.

In light of the market's growth and potential, there will also be even more new CLM vendors emerging, which will make the competition even stiffer. However, there will be different playing fields for small, repository-based CLM software versus enterprise-grade end-to-end CLM software providers that encompass procurement and organization-wide data. Even so, this flurry of activity in the market is likely to continue throughout 2022. - Colin Earl, founder and CTO of Agiloft

 Conversations with Your Contracts: Conversational AI Will Become a Common Practice

In 2022, modern conversational AI technology will allow us to start having conversations with our contracts, providing enterprises with actionable data, faster. Employees will be able to verbally ask the AI questions and the AI bot will respond immediately with a recommendation, while simultaneously pulling up all relevant data in the enterprise's database of documents. For example, someone can ask the bot which contracts have specific data about a recent sale, new hire or lawsuit and the bot will pull that data out based on that context. This can even go a step further where employees can ask the AI the most common clause language to use for creating a new contract.

For instance, in the sales department, sales team members can ask the system for language recommendations  when drafting up customer contracts. Then, the bot can review the content of the contract draft and share a rating based on how likely it is that the contract will get approval from the legal team . Conversational AI can also be  useful for negotiations because the bot can pull up all past similar sales transactions to compare the price and terms to compare against before the deal is made. - Colin Earl, founder and CTO of Agiloft

Strong Enterprise IT Infrastructure Will Be Equally as Critical to Success as Innovation

It's normal to get excited about new technology whether it be the Metaverse or a revolutionary new machine learning algorithm. However, with the rapid innovation occurring across industry sectors today, enterprises make sure to also invest in critical IT infrastructure to support these new systems. With innovations like these, there comes a whole new set of challenges ranging from regulations and compliance issues to security. The proper fundamental infrastructure and functions like CLM still need to be maintained for these companies to avoid added risk and legal liability. As we've seen with Facebook over and over again, ignoring best practices for legal and compliance can lead to massive government fines and damage brand regulation, regardless of the size of the company. - Colin Earl, founder and CTO of Agiloft

Appetite for No-code/Low-code Workflow Solutions Growing Faster than Anticipated

The appetite for no-code and low-code workflow solutions for contract lifecycle management (CLM) has grown faster than anticipated. This suggests that the LegalTech space is becoming even more sophisticated (e.g., being able to distinguish between configuration and customization). Additionally, no-code applications will be a game-changer for connecting contract data across departments in the enterprise. In 2022, the focus on automated workflows and interoperability materially will shift the window of what's possible and increase the enterprise capabilities of no-code CLM systems. - Danielle Haugland, Global Alliance Director at Agiloft

In 2022, Increases in Supply and Demand for Technology Enablement Leads to Increased Activity - and Greater Frustration

Today, enabling systems and automation necessary to deliver accurate data and analyses is critical for high-performing organizations. In 2022, the increases in supply and demand for technology enablement will lead to an increase in activity and also greater frustration in the industry. There will be increasing opportunity here, but also more options for technology enablement services makes navigating the ecosystem even more challenging. This will be a rewarding environment for sophisticated buyers looking to solve specific business challenges. At the same time, generalist buyers with broad problems will find themselves with too many choices and too much information on all those choices. As a result of the saturated market, trust will become increasingly scarce and even more valuable because it will enable buyers to move quickly with confidence. - Danielle Haugland, Global Alliance Director at Agiloft

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ABOUT THE AUTHOR

Hiro Notaney, CMO of Agiloft

A passionate advocate of customer experience as marketing, Hiro brings more than 20 years of technology marketing experience to Agiloft. Previously, Hiro held senior marketing positions at titans like Oracle and Deloitte as well as early-stage trailblazers like Infinera and Jasper (acquired by Cisco). He is focused on spreading the word about Agiloft's no-code customizable enterprise business applications. He has a business degree from the University of Wisconsin Green Bay.