The exponential rise of LegalTech has taken the world by storm and contract management has taken center stage like never before. Contracts are the fulcrum for any business – fostering healthy relationships, sealing deals, safeguarding interests, and maximizing the bottom line.
Contract management has rapidly transformed over the last year with organizations investing in Generative AI and other leading technologies.
The increasing demand for agile contract management, the excitement for AI/ML technologies, and the need to prioritize contract compliance are fueling the need for AI-enabled contract lifecycle management solutions.
According to Goldman Sachs, contract lifecycle management solutions reduce erroneous payments by 75-90% and reduce operating & processing expenses by at least 10-30%.
The current contract management trends have become quite sophisticated compared to 2022. After witnessing significant results, businesses have realized the advantages of deploying a CLM solution over the last few months.
On that note, here are the top contract management trends to watch out for in 2023.
1. Sophistication of AI in Contract Analytics
The case with most organizations is that their contracts are stored across emails, drives, SharePoint folders, or any other offline space. The lack of a contract repository contributes to missed milestones, SLA obligations, old payment terms, and so on. This results in revenue leakage and poor vendor relationships.
The need for AI-powered contract analytics has become much more prominent in the absence of a central repository. Organizations are expecting to derive actionable insights through real-time visual dashboards.
According to World Commerce & Contracting, AI-based contract analytics are 98% accurate compared to 92% for manual analysis.
2. Automating Clause Analysis
Clause analysis is one of the most crucial activities in legal operations. A vaguely drafted contractual clause could lead to serious implications during post-contract management. From request to negotiation, standardizing clauses across the contract lifecycle makes for a streamlined contract management process to avoid compliance risks in both vendor and client contracts.
A comprehensive clause analysis is no longer a good-to-have for legal teams as it accelerates contract review and signature while ensuring compliance. A robust AI-powered contract lifecycle management (CLM) solution that identifies and extracts critical data from the clauses in the contracts has become a necessity.
Some of the key metrics include key dates, contract value, contract types, names of the vendors, and the relevant departments.
65% of legal professionals lose time on administrative activities, according to Global Legal.
3. Integrations and Customizations
With most organizations facing challenges to manage multiple software applications including CRMs, ERPs, and many others, the siloes of data created and stored becomes a cause of concern. Hence, there is a dire need for all business applications to be directed to a technology that provides a bird’s-eye view of all contracts and other legal operations.
CLM providers are aware of this concern and have improved the flexibility of their platforms to have different kinds of applications integrated. From payment platforms and e-signature platforms to vendor management platforms, a CLM solution’s integration capability will improve the efficiency of legal ops professionals.
4. In-built Collaboration Tools
The lengthy cycle times to complete an administrative task, inefficient negotiation process, and limited visibility into various stages of the contract lifecycle are some of the basic problems that arise out of the traditional contracting process.
An in-built collaboration tool is the need of the hour for legal professionals to communicate with internal and external stakeholders.
This accelerates contract negotiation, review, and signature processes to reduce the average cycle time of a contract.
70% of suppliers claim more than half of their customers don’t have a collaboration tool in place and still rely on emails.
5. Visibility into Compliance Management
Contract compliance failures are a serious risk to any organization as they directly affect your bottom line and lose out on opportunities. This happens mainly due to the lack of visibility or accessibility of contractual data including dates, terms and conditions, SLA obligations, and payment mechanisms.
To improve compliance in contract management, legal ops professionals are relying on AI-powered CLM solutions to track contract performance and derive actionable insights based on real-time data.
According to World Commerce & Contracting, poor visibility into contract compliance has consumed 9% of an organization’s revenue.
What’s next in Contract Management?
Contract automation and real-time analytics – with the introduction of Generative AI – will produce better success in 2023 than ever before.
Watch out for more such trends around contract management and implement a robust, AI-powered CLM solution to stay ahead of your competition.
Discover how SimpliContract can help fast-forward your contract management efforts!