By: Jason Busch, Founder & CEO, Spend Matters
As a young consultant, when I first encountered the Kraljic Matrix, it struck me as a logical way of thinking about how to create a sourcing and procurement strategy based on a portfolio of different spend types and suppliers. After all, when spend is high dollar, strategic and potentially high-risk (the upper right quadrant) it makes sense to take a partnering approach with suppliers and to engage the overall supplier market with a heightened sense of emphasis and awareness. This is where you really invest your time.
Of course, it also makes sense to create leverage and aggressively source/negotiate categories where the dollars at stake are high but there is less supply market consolidation, vendors are more fungible and partnerships matter less (the upper left quadrant). This was and always will be the “reverse auction” quadrant. And let us not forget the “automate” or “efficient” bucket for spend where there is a high SKU/spend mix but not significant leverage. Think of this as “guided sourcing” or the eProcurement quadrant.
Companies (and technology providers) have very much leveraged Kraljic’s thinking in leveraging and designing tailored sourcing and P2P technologies. But not so much CLM. At least not yet.
A New CLM Calling. In London.
Last week, I dropped in on the the eWorld conference in London. It’s very rare for me these days – age breeds cynicism in this space – when I see a technology provider that is new, with an entirely novel value proposition and approach to tackling a particular procurement business challenge, for it to just make sense instantly. But I found just such a provider in LawGeex, a vendor taking a tiny booth at the show. LawGeex appears to have found an entirely different way to tackle contract management for procurement by providing a clever solution to the bottom left quadrant in the Kraljic Matrix.
In short, LawGeex tosses out the notion that contracts all need to be on “your paper”. Rather, the entire solution, driven off of an artificial intelligence (AI) engine that processes inbound contracts from suppliers or third parties, is based on the notion of telling the contract receiver whether they can sign “right away” or not based on the company’s own legal standards in every clause area. And if a contract is not signature-ready, it gives the procurement (or business) user the precise language to go back with to bring it into a procurement standard based on what ‘legal’ has defined as being acceptable, including both updates to proposed clauses and additional clauses, if missing or required.
One of the “Geex” told me the underlying AI has only been trained on English language contracts to date. We did not get into the AI approaches they are taking. But stay tuned for that.
I’m Sold on the Concept. But I still Need to Double Click.
I won’t get into all the nuances of the solution or attempt to review it here (I spent less than 10 minutes actually looking at it). But in that very short period of time that I saw it, LawGeex struck me as a killer app for contract management for mundane (everyday) as opposed to strategic contracting. It represents a new philosophy that personifies the spirit of the “automate” quadrant in Kraljic’s matrix.
In contrast to the dozens of legacy CLM tools that, for the most part, have sat on the shelf or only been partially leveraged by procurement for buy-side contracting over the years, I can see why LawGeex’s solution (or a competitor with a similar approach) can and should become the standard for 80%+ of contracts procurement must process. After all, why should we care about “our paper” if we can make others do the work and still achieve a compliant contract faster for high-volume (less strategic) CLM?
Ultimately, it’s still “our paper” if it’s 100% compliant with our legal guidance in everything from indemnities to insurance requirements to payment terms to jurisdictions.