Latest / The Leading Edge / Transforming Contracts at Scale: Seth Claus & Mike Stetz on CLM for Federal Primes

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Transforming Contracts at Scale: Seth Claus & Mike Stetz on CLM for Federal Primes · The Leading Edge

• 0:03
  SPEAKER_02: Well, hello, and welcome back to the Leading Edge, a series offering in-depth insights into the key challenges, innovations, and evolving dynamics of the contract and commerce landscape.
• 0:15
  SPEAKER_02: I'm your host, Nikki Mackay, Chief Development Officer of the Commerce and Contract Management Institute.
• 0:22
  SPEAKER_02: Now, today's conversation is coming to you live from the exhibition hall at NC May's World Congress.
• 0:29
  SPEAKER_02: And we're going to bring you the perspective of the advisors sitting alongside some of the largest federal crimes as they modernize how they manage contracts.
• 0:40
  SPEAKER_02: Our guests lead PWC's contract lifecycle management practice, working directly with US federal crimes on the strategy, technology, and process decisions behind large-scale CLM implementations.
• 0:55
  SPEAKER_02: So I'm joined by Seth Laws and Mike Stepp, partners and CLM leaders at PWC.
• 1:01
  SPEAKER_02: Seth and Mike work with clients across vendor selection, implementation, policy and process design, and change management, helping large organizations reduce complexity across the contract lifecycle and turn contract data into real business intelligence.
• 1:20
  SPEAKER_02: So with that, Seth and Mike, welcome.
• 1:22
  SPEAKER_01: Hi, great to be here, Nanke.
• 1:23
  SPEAKER_01: Great to be here.
• 1:24
  SPEAKER_01: Thanks for having us.
• 1:25
  SPEAKER_02: Wonderful.
• 1:26
  SPEAKER_02: Well, let's dive straight in, and I'm gonna come to you first because I want to talk about the misconceptions about CLM transformations.
• 1:33
  SPEAKER_02: You work with some of the largest federal primes on this CLM transformation.
• 1:38
  SPEAKER_02: What do you think is the most common misconception that these organizations have when they go into a transformation project about how hard or how easy it's gonna be?
• 1:48
  SPEAKER_02: Seth, what what's your thoughts?
• 1:51
  SPEAKER_00: Yeah, uh immediately I think of the saying an ounce of prevention prevents a pound of cure.
• 1:57
  SPEAKER_00: And really what I mean when I say that is being ready for a CLM implementation, there are some key activities you can do before you buy the software, before you get rolling on day one of implementation that make a tremendous difference for paving that road to having a smooth implementation.
• 2:13
  SPEAKER_00: And those are some of the classic activities, like, hey, do I actually know where all my contracts are?
• 2:18
  SPEAKER_00: And have I gathered them up?
• 2:20
  SPEAKER_00: And so some of those classic activities, being um aware of what templates do I actually want to use?
• 2:27
  SPEAKER_00: Do I have preferred templates?
• 2:28
  SPEAKER_00: Have I done the work to really clean out and rationalize the templates that I'll be utilizing in these implementations?
• 2:35
  SPEAKER_00: Those types of good housekeeping activities really help them the implementation to actually work very smoothly.
• 2:42
  SPEAKER_02: Yeah, absolutely.
• 2:43
  SPEAKER_02: Will you add to that, Mike?
• 2:45
  SPEAKER_01: Sure.
• 2:45
  SPEAKER_01: Just one area that I also think needs to have a little bit of foresight is scoping the project appropriately.
• 2:51
  SPEAKER_01: A lot of companies are sometimes wowed by what these vendors offer from a software perspective.
• 2:57
  SPEAKER_01: And fitting CLM, we'll talk about it later, into the architecture with all the other enterprise applications, I think is key because you don't want to have too much of an ambitious project to where you don't get value early on, and people are two, three, four years down the road and they feel like they don't have anything coming out of the program.
• 3:15
  SPEAKER_02: Yeah, absolutely.
• 3:16
  SPEAKER_02: So so let's go back to Seth and look at the kind of change that it can bring beyond uh efficiency alone, because a lot of CLM implementation gets justified on efficiency and risk reduction, right?
• 3:29
  SPEAKER_02: Where have you seen Seth it actually change the bigger picture?
• 3:33
  SPEAKER_02: You know, how a prime negotiates, manage, sub manages subcontractors, or competes for work beyond that speeding up of paperwork.
• 3:42
  SPEAKER_02: What is the bigger change you've seen?
• 3:44
  SPEAKER_00: Yeah, I think a big part of that comes from the fact that you now have that data at your fingertips about your existing contracts.
• 3:51
  SPEAKER_00: So, number one is when you're going through any mod process, when you're going through any of your active management of a contract over its life cycle, that structural foundation makes a tremendous difference for our practitioners out there who today often are really dealing with not the right technology to enable them to do their job.
• 4:12
  SPEAKER_00: So it takes off a lot of that low value headache type work, and you get to the higher value activity.
• 4:18
  SPEAKER_00: Yeah.
• 4:18
  SPEAKER_00: Now, I think in terms of things that are real sea change type capabilities, AI, I know it's on everybody's tongue these days, but in a very real way, AI is very relevant to contracts.
• 4:30
  SPEAKER_00: Now, we talk about the right use cases for AI and how to maximize it.
• 4:34
  SPEAKER_00: One great example is you think about some of the RFPs that these clients have to respond to.
• 4:40
  SPEAKER_00: They are massive documents, and you've got thousands of clans sitting in there with a bunch of data buried in it.
• 4:46
  SPEAKER_00: And so using AI to ingest some of that information, which then goes into the actual contracting process, gets flowed downstream in that digital thread, if you will.
• 4:56
  SPEAKER_00: Uh, that's some of those capabilities where, hey, this fundamentally changes the level of effort that we have to apply, which means that we can respond to this quicker.
• 5:06
  SPEAKER_00: It means that we can be operationally more effective at getting to the objectives that we have.
• 5:11
  SPEAKER_02: Yeah.
• 5:12
  SPEAKER_02: Yeah.
• 5:12
  SPEAKER_02: Mike, what would you say?
• 5:14
  SPEAKER_01: I'll maybe do an example on the supply chain and procurement side.
• 5:17
  SPEAKER_01: Yeah.
• 5:18
  SPEAKER_01: I really think having, as Seth mentioned, that centralized repository enables organizations now to have better negotiations with their vendors and suppliers.
• 5:27
  SPEAKER_01: So many of these large multinationals have many sites that work with the same company, right?
• 5:31
  SPEAKER_01: You may have 20 sites that work with Boeing, and they all may have their own contracts drafted, right?
• 5:36
  SPEAKER_01: With their own language, their own pricing.
• 5:38
  SPEAKER_01: This really gives, I feel, the vendor and supply chain team that common repository of terms, pricing structures.
• 5:44
  SPEAKER_01: How have we negotiated with them in the past to get our supply chain side of the house to consistent pricing, consistent terms with proper escalations so that we're set up for success and not every time we want to issue an RFP, we're starting from scratch?
• 5:58
  SPEAKER_02: Yeah, that's a great example.
• 6:00
  SPEAKER_02: So I want to think about the broader enterprise tech stack now.
• 6:05
  SPEAKER_02: And I'm going to come to you, Seth.
• 6:06
  SPEAKER_02: What are you seeing on how CLM fits in within that broader enterprise tech stack?
• 6:12
  SPEAKER_02: And what are the appropriate boundaries for CLM?
• 6:17
  SPEAKER_00: Yeah, and that's such an important question because if you went back five or 10 years, CLM was often a very siloed repository.
• 6:24
  SPEAKER_00: It wasn't connected to the broader enterprise, but that's completely different now, where they have a ton of upstream integrations, a ton of downstream integrations.
• 6:33
  SPEAKER_00: And one of the things that's really important to get right is what do you do within CLM?
• 6:39
  SPEAKER_00: And we're big believers that, hey, you want to use CLM for what it's for, but you don't want to use it for what it's not for.
• 6:46
  SPEAKER_00: So it's not a pricing tool, for example.
• 6:49
  SPEAKER_00: Um, you don't want to use it as your pricing.
• 6:51
  SPEAKER_00: Nope.
• 6:52
  SPEAKER_00: You want to get your pricing aligned and then have that get pushed into the actual contract.
• 6:57
  SPEAKER_00: Uh, equally, there's been questions that we've had to work through before of, hey, once that contract is executed and it's handed off to operationalize it, there are a lot of elements of how you transition that legal document into an operational finance construct.
• 7:14
  SPEAKER_00: And usually we're gonna say, hey, guess what?
• 7:16
  SPEAKER_00: We shouldn't try to make CLM a financial system.
• 7:19
  SPEAKER_00: Yeah, we should push that data from the CLM downstream to an ERP or to a billing solution where you can do the right work around that contract data.
• 7:29
  SPEAKER_00: Um, but so how we set up that digital thread end-to-end is really important.
• 7:33
  SPEAKER_00: And CLM is best at doing what it does, which is handle contracts.
• 7:37
  SPEAKER_00: And so passing that off in the proper process really helps to get that right digital thread end-to-end.
• 7:42
  SPEAKER_02: Yeah, absolutely.
• 7:44
  SPEAKER_02: Mike, let's hear from you.
• 7:46
  SPEAKER_01: I think what I'll maybe just add is around the timing of how you fit it into the tech stack.
• 7:50
  SPEAKER_01: A lot of times clients want to connect CLM, as Seth mentioned, to pricing tools, accounting systems, billing engines.
• 7:58
  SPEAKER_01: There's value to be had in the CLM itself early on.
• 8:02
  SPEAKER_01: And so structuring your rollouts and your integrations to those systems logically, so you don't try to accomplish too much because that'll delay the value to ultimately it's a contracting solution.
• 8:13
  SPEAKER_01: Contracts professionals, supply chain professionals really is who you're serving.
• 8:17
  SPEAKER_01: So you want that to be, I'll say, the first top of mind release, and then ultimately, guess fit it into the broader tech stack in the right way, as Seth described.
• 8:25
  SPEAKER_02: Yeah.
• 8:26
  SPEAKER_02: So I mean, we've already touched on a little bit.
• 8:29
  SPEAKER_02: We couldn't possibly have this conversation today without talking about AI and its influence.
• 8:33
  SPEAKER_02: Um Seth, from your seat advising these transformations, where is AI genuinely changing outcomes for federal crimes today?
• 8:43
  SPEAKER_02: And where are expectations still running way ahead of what the technology reliably delivers?
• 8:50
  SPEAKER_00: Yeah, absolutely.
• 8:51
  SPEAKER_00: And we always talk about AI in terms of use cases because how you apply AI to extract structured data out of a contract is very different than how you'd apply AI to suggest red lines in a negotiation, for example.
• 9:05
  SPEAKER_00: Right.
• 9:05
  SPEAKER_00: Um, so number one, and this is the most tried and true, 99.9% of our customers are using AI to extract structured data.
• 9:14
  SPEAKER_00: So I mentioned earlier the example of hey, reams of cleanse and a PDF document, and how do you pull out that table-based data and have that in a meaningful structured format internally in that CLM?
• 9:25
  SPEAKER_00: AI is great for those use cases.
• 9:27
  SPEAKER_00: Not perfect, you know.
• 9:28
  SPEAKER_00: Don't get me wrong, not perfect, but great and a very significant accelerator.
• 9:33
  SPEAKER_02: Yeah.
• 9:33
  SPEAKER_00: Now I think one of the most fascinating things, and this is an easy thing for AI to do, is in the last couple years, the advent of those Frontier AI models, LLMs, Gen AI, one of the great things that has happened about that, and where a lot of our customers are seeing real true value, is just that plain English ability to query all your contract data now.
• 9:57
  SPEAKER_00: So it's as simple as saying when the whenever, whatever the newest one-time issue is, when it's a change of regulation or it's a change in your business, being able to quickly say, Hey, where do I have exposure to tariffs in my contracts?
• 10:13
  SPEAKER_00: Or being able to say, hey, here's this new regulation change around data privacy.
• 10:18
  SPEAKER_00: Where do I have data privacy clauses in my contracts?
• 10:21
  SPEAKER_00: That type of ability to quickly get insight across the entire contract corpus is really powerful.
• 10:27
  SPEAKER_00: Now, don't get me wrong, there's other things, such as redlining, risk identification that are all really powerful.
• 10:33
  SPEAKER_00: Um, the ability to pull out obligations, compliance obligations, and track those also very hot.
• 10:38
  SPEAKER_00: But I'd say the the age-old one is extracting structured data, yeah, and then the really powerful one is just that ability to very nimbly understand what's across your contract corpus, things that you didn't necessarily plan to track before, but now you can access that easily.
• 10:53
  SPEAKER_02: Oh yeah, it's powerful, isn't it?
• 10:56
  SPEAKER_02: Mike, what's your perspective on the AI?
• 10:58
  SPEAKER_01: I think maybe I'll hit on an area that I think is still evolving, and it's around the use of agentic AI.
• 11:03
  SPEAKER_01: Yeah.
• 11:04
  SPEAKER_01: And I, if you think about this industry, right, it's so regulated with so many controls, compliance checkpoints that I still think the industry is figuring out how do I let an agent work along this process to where ultimately you're you're committing the company to taxpayer funds, right?
• 11:21
  SPEAKER_01: And so in the past, there's a ton of reviews and business processes that's been built around that.
• 11:25
  SPEAKER_01: I think industry is still figuring out what's the right injection point for agents.
• 11:30
  SPEAKER_01: So we're getting the right outcomes, getting things faster, but also getting things correct like we would have done before we had AI available to us.
• 11:37
  SPEAKER_02: Yeah, yeah, absolutely.
• 11:39
  SPEAKER_02: So I'm gonna come to our final question to both of you.
• 11:42
  SPEAKER_02: Um Mike, we might start with you, go back to you.
• 11:45
  SPEAKER_02: Um if you had to advise a federal crime just starting to think really seriously about CLM transformations, what's the one decision early on that determines whether the whole effort succeeds or stalls?
• 12:00
  SPEAKER_02: I know that's a big question, but what are your thoughts?
• 12:02
  SPEAKER_01: I'll maybe hit to like a business side of this where to me, appointing a strong business owner to lead the program is critical, right?
• 12:10
  SPEAKER_01: Whether they be in contracts, supply chain, both, you want someone who runs the people who execute these processes to drive the change because a lot of CLM is adopting something new, right?
• 12:22
  SPEAKER_01: The technology, the AI.
• 12:23
  SPEAKER_01: And if you don't have a strong business owner who's gonna force their organization and related organizations to change, you're gonna get to a spot where you implement a technology and no one wants to adopt it.
• 12:34
  SPEAKER_02: Yeah, yeah, absolutely.
• 12:35
  SPEAKER_02: What about you, Seth?
• 12:36
  SPEAKER_02: What's what's the one thing for you?
• 12:38
  SPEAKER_00: Actually, quite similar to Mike, but a slightly different expression of that.
• 12:42
  SPEAKER_00: Yeah, knowing what the North Star of that stakeholder is, that person who's gonna be the executive sponsor, because there are a lot of side quests that you could do in a CLM implementation.
• 12:53
  SPEAKER_00: There are a lot of capabilities, but understanding what that really mission number one is, and going and executing against that mission helps to really drive the speed and effectiveness of the implementation.
• 13:07
  SPEAKER_00: The thing that we always talk about is hey, you want to go live and you want to get that value.
• 13:11
  SPEAKER_00: You can always evolve the system afterwards, you can always add additional capability, additional methodology afterwards.
• 13:18
  SPEAKER_00: But having that North Star that guides all your decisions means you don't get caught up and start spinning on things.
• 13:24
  SPEAKER_02: Yeah.
• 13:24
  SPEAKER_02: Yeah, that is a fantastic place to leave it.
• 13:27
  SPEAKER_02: Seth, Mike, thank you so much for such a thoughtful conversation.
• 13:31
  SPEAKER_02: Bringing the advisors' view into this discussion really gives our listeners a genuinely practical sense of what large-scale contract transformation actually takes to get right.
• 13:42
  SPEAKER_02: Um so thank you to both of you.
• 13:44
  SPEAKER_00: Thank you so much, Nikki.
• 13:46
  SPEAKER_00: Yeah, really appreciate it.
• 13:47
  SPEAKER_02: Thank you, and thanks for listening to the leading edge.
• 13:50
  SPEAKER_02: If you like what you heard, stay tuned for our next episode where we will continue to explore the ideas, innovations, and leadership shifts shaping the future of commerce and contracting.
• 14:01
  SPEAKER_02: Until then, keep challenging, keep adapting, and keep leading.