More than 10% of a company’s contracts are missing or lost, according to Faulkner Information Services.
Today, the contract repository has come a long way from its initial form as a digitization enabler. Modern contract repositories rely on Artificial Intelligence (AI) and Natural Language Processing (NLP) to enhance Legal capabilities. Understanding this evolution is key to evaluate Contract Lifecycle Management (CLM) solutions.
Early in the day, CLM solutions used contract repository models that were hardly a step above basic digital storage. Mostly standalone systems in nature, the repository lacked access to contract data from CRM, sourcing apps, and ERP.
Legal teams frequently faced sub-optimal results from the rudimentary search capabilities in initial CLM implementations. Poorly implemented digitization features like Optical Character Recognition (OCR) introduced information integrity issues. Cumbersome, lengthy manual processes to consolidate and catalog contract data further aggravated usability.
Waves of change
The contract repository software used in CLM have evolved over time. Modern integrated CLM tools consolidate all contracts using a dedicated central contract repository. In addition to ensuring a single source of truth, these cloud-based solutions enable higher levels of benchmarking and analytics.
Advances in AI, Machine Learning (ML), and NLP drive this CLM transformation. The use of Al transforms unorganized contract documents into structured enterprise data that offers unlimited opportunities.
For example, new-age CLM systems use AI’s capabilities to import third-party contracts and automatically assign suitable metadata tags. These enable legal teams to discover data in seconds, as opposed to the hours of manual reviews earlier. Another example is that of AI-powered tabular data extraction. This data can be used to match contractual rate cards with vendor quotes and invoices for cost optimization.
An integral part of Legal Tech today, ‘Intelligent’ and smart CLM systems seamlessly integrate with enterprise apps like CRM, ERP, CPQ, and financial systems. This paves the way for detailed reporting, dashboards, and risk management.
Advanced repository capabilities found in SimpliContract’s Intelligent CLM tool include:
• Smart, contextual information retrieval using AI and NLP
• Automatic consolidation of contract data from disparate sources like Microsoft Excel spreadsheets, documents, images, emails, and other digital files
• Comprehensive digitization and archival of contract types
• Centralized storage of contracts along with a template and clause library
• End-to-end visibility of contract lifecycle stages
• Rapid retrieval of historic contract data
• Auto sorting based on contract types and status
• User-definable filtering capabilities
• Supplier data access for reviews and negotiations
• Advanced pattern detection and knowledge management possibilities
• Powerful OCR and Intelligent Character Recognition (ICR) features for paper contract digitization
• Access to contract data on the go using Cloud hosting models
• Granular, role-based user access controls
• Highly secure system compliant with global security standards
• Version controls to ensure up-to-date contract access
• Detailed, chronological audit trails for every contract
According to World Commerce & Contracting (WCC), the repository must-haves include dashboard view, contract view, and search. An overview of these essentials is available in Figure 1: Essential CLM documentary repository capabilities.
Document repositories make it possible to create highly customized dashboards for users. This leads to data-driven decisions that drive desired contract outcomes.
From tracking approvals to milestones, smart repositories enable immense possibilities like:
• Contract performance tracking
• 360-degree obligation tracking
• Compliance monitoring
• Establishment of benchmarks and KPIs for process transformation
• Legal team workload allocation
• Quality of work to identify repetitive tasks for automation
• Resource utilization measurements and planning
• Identify contractual risks due to exceptions, liabilities, and payment terms
• Contract approval stage previews
• Real-time MIS for insights like new MSAs and signed contract values per unit
• Proactive alerts for impending contract expiries
• Fulfilment-based customer and vendor insights
• SLA monitoring
Reporting features get a boost with the implementation of a contract repository. Comprehensive consumption reports that detail contract value utilization is a case in point. These capabilities help significantly during renewals, renegotiations, and cost optimization.
Modern contract repositories make it easier for users to customize reports as per their requirements. These can be used for requirements like status updates, contract performance, or even incoming tasks. Other options include scheduling, exporting, user-query-based report generation, drill-down action reports, and user action requests.
Intelligent CLM tools offer extensive insights for smarter business decisions. For instance, it can identify reasons behind delays and suggest optimization possibilities. The risk assessment matrix can anticipate contractual risks due to exceptions, payment terms, liabilities, and non-compete clauses. Such capabilities make it easier to manage relationships with counterparties. Intelligent CLM systems can even provide insights into the impact on contracts due to external events like supply chain disruptions or new regulatory developments.
Gear up for a Smarter Future
Ideal contract outcomes depend on proper aggregation and analysis of fragmented data points. The repository is your first step towards structured consolidation of the contract portfolio. Its integration with enterprise apps like CRM, procurement platforms, and ERP strengthens this initiative.
Increase in contract data and partner relationship visibility introduced by Intelligent CLM tools enable better decision making. It unlocks business performance and new opportunities using contract data.
Strong processes and workflows must be crystallized across the contractual lifecycle prior to creation of a repository. Stakeholder and partner onboarding are integral at this stage. Efficient contract information extraction workflows for error-free automated data capture come next. This is why the contract repository must be viewed as an aspect that is more than just a “technology rollout.”
An Intelligent CLM solution backed by an integrated repository ensures that your contract cycle automation journey goes beyond a plain vanilla digitization project. Zero in on an experienced CLM implementation partner as the first step towards creation of a powerful contract repository. This ensures that your business is on the right path to contract management transformation.
Ready to improve your contract management game? A centralized contract repository is a great place to begin! Reach out to us if you’d like to discover the possibilities of an AI-led CLM adoption in your business.