Artificial intelligence (AI) has certainly changed the way various functions in an organization operate. And contracting is not left behind. Numerous decision-makers will vouch for the fact that AI has successfully been able to reduce inefficiencies as well as various challenges that organizations face right from request to renewal in the contracting process.
It’s common knowledge that computers read and process information much faster than humans, and this is especially helpful when it comes to dealing with complex documents like contracts. Add in a little help from AI, and you have a redefined contract management system that can: transform unorganized contract documentations into methodized, meticulous enterprise data, help enterprises identify business opportunities, reduce potential risks, and come up with performance analysis. Artificial intelligence reads clauses, extracts key terms in the contract and much more. It is what takes contract management from a disengaged contract repository to a strategic business tool – from a mere system of records to a system of intelligence.
Here’s how AI will be a game-changer in contract management for years to come.
Gone are the days when duplicating contracts and making negligible changes to their attributes were the only things AI was doing in contracting. Today, with the help of AI, you can draft an entirely new contract taking into consideration any special clauses based on the rest of the bond. Optical character recognition takes data provided in emails, PDFs, or even paper forms and converts it to text and scans them for key metrics like pricing, quality, quantity and more.
Organizing, classifying and data extraction made easy
Earlier, legal teams had to spend hours looking for specific information in contracts. This could lead to several hours of unproductive time, and the organizing and classifying exercise could take days, if not weeks. Now, AI algorithms power-driven by NLP based machine learning help you extract all important information such as signature dates, names, specific clauses, vendor information, and more with remarkable speed and precision. Organizations and vendors can be auto-tagged, you can send out pre-renewal notifications, and renewal alerts can be set from the beginning for each contract. This makes data discoverability uncomplicated – you can search, compare, and classify contracts like never before.
Streamlined Contract Workflows
Disorganized and ineffective contract workflows can lead to significant wasted time and money. A true-blue contract management software helps you monitor tasks and offers workflow automation that improves overall productivity. A reliable software will be able to tell how long it took for an individual to perform a certain task and at where the contract is stuck in the pre-signature stage. This gives contract managers newfound insights on what delays contracts, helps analyze whether each step is absolutely crucial, and identifies bottlenecks in the workflow process.
Diminishes Potential Risk
With the rise of the pandemic, we’ve seen that the market is now volatile, and the risk factor in businesses is high. Artificial intelligence in contracting can help reduce these potential risks by analyzing the language in your contract and responding appropriately to it. Get ready to see new clauses based on the context of the bond, the performance of these contracts (especially in cases of procurement), and the comparisons in the performance of similar contracts. With the help of AI, the system understands this data and can decide which clauses are necessary for a particular agreement.
At the end of a contract cycle, AI helps in analyzing the performance of that particular contract and helps you decide on whether you should renew it or not. It highlights the inconsistency in performances (if any) and recommends potential business partnerships that would be better for your enterprise. You could also use this information for evaluation purposes and help generate more efficiency. By doing this, AI saves time in renewing contracts anywhere between 25 to 50 per cent.
Modern-day contracts within organizations have seen a dramatic change since the intervention of AI. Thanks to various technological advancements, contract solutions today are being improved to not only make contracting an easy and smooth process but also to gain insights and have a significant positive impact on the business.