Welcome to The Margin, a newsletter designed to keep you on the leading edge of monetization.

In business, the difference between being ahead of the curve or slow to adapt is anything but marginal. The Margin aims to be the most useful, timely, and incisive ping that hits your inbox all week. It includes critical research and analyst insights to inform short and long-term decision making.

 

Here’s what you need to know:

Research Spotlight | The Six Stages of Contract Lifecycle Management (CLM)

A research note we published in 2019 outlines a six-stage model to evaluate Contract Lifecycle Management (CLM) product maturity.

  • Most CLM providers are stuck in stages 1-4.
  • Get the report to find out if your CLM solution has room to grow or if it’s time to start looking for something new.

A Story You Can’t Afford to Miss | The CLM market is growing, fast.

Our TAM model estimates the CLM market is growing fast – at a CAGR of 18.3%, to be exact. Read on for MGI’s CLM market forecast and analysis of key growth drivers.

Tune Into MGI | AI and the Future of CLM: Webinar w/ Grant Peterson, CPO of Conga

MGI is hosting a webinar with Grant Peterson, CPO of Conga, to discuss innovation in CLM, the litmus test for “real” generative AI, and Conga’s strategy for AI innovation and implementation. Register now to reserve your spot.

On the Horizon | CLM Ratings, Use Case Notes, and Buyer’s Guide Underway

Coming soon – a new batch of MGI 360 Ratings™ and Use Case Notes™ in CLM, as well as a comprehensive buyer’s guide to the CLM market.

  • We’ve already begun evaluating top CLM suppliers, and we’ll update you with early insights as the rating process progresses.
  • We expect to publish the full buyer’s guide and all accompanying materials in Q1 2024.

 

Now let’s dive a bit deeper.

Research Spotlight

Six wedges that break down the stages of CLM

The Six Stages of CLM

Originally, contract management was centered around document handling. The first wave of automation targeted the elimination of paper and the streamlining of approval processes, culminating in the digitization of contract documents and electronic signatures. This MGI Research note describes how Contract Lifecycle Management (CLM) has since transitioned from simple document management to an emphasis on data orientation, information management, and the full lifecycle of contractual agreements.

This shift signifies a move toward an Internet of Knowledge, where all data is programmatically accessible irrespective of storage location. MGI has identified and defined six distinct stages that represent the evolving nature of CLM, each contributing significantly to improved productivity, accuracy, and compliance within organizations.

The Six Stages of CLM are defined as follows:

1. Contract e-Document: allows for the conversion of paper documents into electronic copies, enabling remote access and sharing.

2. Contract e-Signature: facilitates remote signing by all parties, eliminating the need for physical paperwork.

3. Contract Workflow Automation: ensures contract review processes align with organizational requirements, with monitoring for completeness, timing, and compliance.

4. Contract Authoring Automation: streamlines the contract creation and maintenance process by utilizing pre-defined templates, document variables, and external data elements.

5. Contract Intelligence: provides analysis tools for comparing document and clause versions, enabling the identification of non-standard language and aiding legacy contract ingestion and conversion.

6. Contract Execution: abstracts the economic and legal relationships documented in a contract, allowing for programmable access to data elements across the enterprise.

While organizations typically begin at Stages 1-3 and gradually progress, the industry is witnessing a shift towards the adoption of Stages 5 and 6 capabilities – this trend has been underway for several years, and is accelerating with the advent of generative AI.

  • The impact of these stages spans various functional areas within an organization, enhancing processes from legal and compliance to finance and HR.
  • The focus on process automation is pivotal, transforming legacy contract data search endeavors into repeatable business processes that continuously deliver value.

The bottom line | CLM adoption is on the rise, extending beyond the realms of legal and procurement to encompass sales operations, finance, customer service, and compliance. We encourage organizations to evaluate their current CLM capabilities and compare their functionality with the Six-Stage CLM Model. Think critically – could contract intelligence transform your business?

A Story You Can't Afford to Miss

A bar graph demonstrating the Total Addressable Market

CLM Is Growing Fast

MGI published a five-year forecast projecting the CLM total addressable market (TAM) will grow from $4.12 billion in 2022 to $8.06 billion in 2026, representing a compound annual growth rate (CAGR) of 18.3%. The report details size and growth trends by country and by industry.

The report identifies key CLM growth drivers such as:

  • The rapid adoption of recurring and usage-based pricing, adoption of the IoT, and consumerization of the B2B domain
  • The growing demand for mass customization delivered at scale
  • Rapid advances in AI, which make it possible for modestly-sized CLM suppliers to add advanced capabilities for contract capture, construction, and other routine tasks that previously required human intervention. We have already seen some vendors who invested early and aggressively in AI capture mindshare.
  • The digitization of supply and sales/distribution value chains – structured digital contracts have become critical data and process elements
  • Increased pressure from regulators and tax authorities
  • Growth in e-commerce and in global trade overall – electronic contracts and robust CLM systems allow trading partners to dramatically accelerate speed, reduce fraud, and grow revenues.
  • Growth in global M&A and legal activity – contract enforcement, IP-related claims, et al drive the need for full digitization of contracts.

The report also identifies three major headwinds restricting the CLM growth opportunity:

  • Product maturity: the vast majority of CLM solutions fall between stages 1-4 in MGI’s Six Stages of CLM.
  • Limited concentration of sales and marketing spend: relatively few CLM vendors have passed $100M in revenues, the requisite threshold to break through the noise and attain broader brand visibility.
  • Narrow product visions: too many buyers and suppliers still view CLM from a narrow buy-side or sell-side perspective, despite the meaningful opportunity for integrations with sales, revenue management, billing, customer support, and other core business areas.

Under the hood | IT is projected to be the highest-spending sector in CLM, growing at a CAGR of 22.1% over the next five years.

  • East Asia is expected to spend the most on CLM over the next five years compared with other geographic regions. We project East Asian CLM spend alone will exceed $10 billion in the five-year period between 2022 and 2026.
    • The US will be the top-spending country, followed by Japan, South Korea, and China.
  • Legacy, on-prem CLM spend is expected to shrink at a rate of -0.21% – indicating that cloud-based CLM growth will be driven primarily by new business, rather than by migration to the cloud.

Download the full report to dissect the CLM market and growth rate by company size, industry, sector, region, in-house vs. commercial spend, impact of major industry trends, and more.

Want to learn more about the future of CLM, its key growth drivers, and the impact of AI? Keep reading.

Tune In to MGI

AI and the Future of CLM: Webinar w/ Grant Peterson, CPO of Conga

Join us for an exclusive webinar with Conga CPO (and former DocuSign CTO) Grant Peterson on Thursday, October 26 at 8am PT / 11am ET / 5pm CET.

In this session, we’ll explore the transformative potential of AI within the CLM landscape and discuss the litmus test for determining genuine AI advancements in this field.

  • Generative AI has the power to redefine the very fabric of CLM, reshaping traditional approaches and paving the way for new, innovative strategies – but will it deliver?
  • What questions should every GC ask of their CLM vendors?

We will also discuss the penalties of abstaining from the Gen AI hype cycle and the potential risks and challenges legal and business professionals might face by watching from the sidelines. In addition, Grant Peterson will shed light on where the budget for Gen AI initiatives might come from.

The intrigue | This conversation will provide insights into how Conga is organizing itself to harness the power of Gen AI, as well as a firsthand account of the most significant positive and negative surprises that have emerged so far.

Don’t miss this opportunity to explore the evolution of CLM and the risks and rewards associated with its convergence with next-gen AI technologies. Reserve your spot now.

On the Horizon

The MGI Research logo

CLM Ratings, Use Case Notes, and Buyer’s Guide Underway

The next cycle of MGI 360 Ratings™ has officially begun! We conducted our first in-depth company briefing and product demo with a CLM supplier earlier this week.

Expect updated 360 Ratings, Use Case Notes™, and MarketLens™ reports on 25+ leading CLM suppliers, plus a comprehensive buyer’s guide to the contract lifecycle management market, all coming your way in Q1 2024.

If you’re a CLM supplier and you’ve received an invitation from us to participate in the ratings process, don’t forget to book a timeslot for your briefing.

In the meantime, here’s a recent 360 Rating of Icertis in CLM – they scored a 62 and received a positive analyst outlook.

And in case you missed it, you can download our Agile Billing Top 50 buyers guide from earlier this year here.

So What Have I Missed?

The Topical 20 | Our most recent and relevant research that will help you keep your finger on the pulse of AMP disciplines.

1. Going Global With E-Commerce

2. Tech Trends: Mapping the Software Industry

3. Configure-Price-Quote (CPQ) TAM Forecast 2022–2026

4. The Future of CLM Is Data-1st

5. Declouding: Will Curiosity Inspire Action?

6. Dirty Data Kills!

7. Q2C Success: What Does It Take To Achieve Excellence?

8. 2024 Tech Budgets Preview — Webinar

9. Here Comes Usage! Adopting & Optimizing Consumption Business Models — Webinar

10. The Agile Billing Top 50 Webinar

11. The Agile Billing Top 50: A Buyer’s Guide

12. MGI Forecasts: Service-as-a-Business (SaaB) Software Global TAM Forecast 2022–2026

13. MGI Forecasts: Finance Automation for Services Organizations (FASO) Software Global TAM Forecast 2022–2026

14. Survival of the Fittest: Managing Extreme Economic Uncertainty

15. The Global Tech Market Is Bigger Than You Think

16. Is Software Still Eating the World?

17. Not a Typical Recession: Making Sense of the Global Economy

18. Use Case Note™: Opencell in Agile Billing

19. 360 Rating™: Icertis in CLM

20. The 13 Deadly Sins of Agile Monetization

and 32 other Use Case Notes!

 

The Evergreen Archives | Curated past research that is still pertinent today.

1. Quote-to-Cash Is Dead; Long Live Prospect-to-Disclosure

2. What Every CEO Needs to Know About Subscription Business

3. Evolution of MoR into Monetization as a Service

4. Mediation 2.0: Taking on the Data Challenge in Agile Billing

5. The Six Stages of CLM

6. Headless eCommerce Architecture: Is eCommerce Losing Its Head?

7. How to Scale Monetization Globally

8. Ten Digital Payment Trends Every CEO Must Understand

That’s all for this issue of The Margin. If you’ve made it this far, we’ll certainly see you next time.

Warm Wishes, MGI Research

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