While Artificial Intelligence has been reshaping the business landscape for quite some time now, there is a rapid acceleration in the adoption and acceptance of AI as a viable business tool – combining multiple related fields of data capture, big data analytics, and machine learning into a comprehensive ecosystem of next-generation technologies. All of these systems combined together, show a promise of having profound implications in business models, economic systems – and the society at large. As per the insights gathered from over 2500 U.S. consumers and business leaders at a 2017 event for AI experts by PwC, over 63% of consumers believe that AI will be an essential tool that can help to solve complex problems that are plaguing the society at large; and 58% of the respondents stated that within the next five years, they would use AI as an assistant in their day-to-day lives.
The same technology that is being used to power autonomous vehicles and envisions cashier-less retail stores, has wide applications in the field of Contract Lifecycle Management (CLM). The current state of contract management in corporations worldwide is plagued by unstructured documentation spanning a variety of purposes, formats and sources. Some of the largest challenges being faced by them are:
- Accumulation of existing legacy contracts
- New relationship contracts across suppliers, partners and customers
- Upon a merger/acquisition, integrating the existing contracts system to the systems of acquired/merged entity
Considering the complexities associated with a contract management, most of the ERP-based systems are woefully inadequate in handling it effectively. With the progression of artificial intelligence, it is only logical that the best step is to envisage a contract management system that can perform the following tasks:-
- Store all the data associated with contracts in a single repository
- Agile retrieval of required information through keyword search
- Analyse textual data to create objectives and milestones as well as understand risks involved & mitigate them
- Compare contracts in-process with past contracts to identify legal obligations & improve compliance
- Automate renewal contracts after proactive scrutiny to identify missed revenue and opportunities
Benefits of AI Enabled Contract Management
The benefits associated with an AI-enabled CLM solution can be grouped under Data Storage or Data Analysis & Prediction based on the underlying functionality delivering the benefit. Some of the key benefits are:
- Data Storage: With the proliferation of cloud computing and cutting-edge data mining techniques, an AI-based Contract Management solution can be tailored to store and retrieve an innumerable number of contracts across a vast network of interconnected data storage systems. Thereby, helping enterprises build a contextual repository which can be utilized to assess the commercial health of the company
- Data Analysis & Prediction: Advanced analytics & Machine Learning can be leveraged to carry out a comparison across all previous contracts, as well as use legal documents as a point of reference. Each clause and related information can be cross-referenced individually across all possible contract clauses stored in the system – providing organizations with precise analysis of all related data points. Thus the analyzed data, coupled with past execution data can be used to predict the benefits and risks of each and every clause present in a specific contract or a wide range of contracts simultaneously
AI & Human Interaction
While the techniques and practices discussed seek to reduce human intervention, it’s critical that the human element is kept intact. The idea shouldn’t be to ignore individuals, but to channelize their efforts to areas that require action and thereby enhance productivity. Today, AI enabled chatbots are quickly befriending Sales & Legal teams with their contextual interactions and personalized action recommendations. The wait is not long before, chatbots become an integral part of CLM.
While the functionalities are ground-breaking and benefits are umpteen, envisioning an AI based CLM system requires strategic business transformations and complex technological implementations. We at Standav, have always believed in helping enterprises leverage technological revolutions and thrive in fast-changing business scenarios.
How do you think AI would transform your contracts management? Do share your thoughts with us.