A whitepaper
The digital age is now
Artificial intelligence (AI) is already sharpening professional best practices across a variety of industries. However, revolutionary advancements in AI are particularly beneficial as they apply to contract management solutions – if corresponding AI tools are fed a nutritious diet of contract data.
Cast aside apocalyptic visions of malevolent androids usurping our throne. Artificial intelligence is designed to act as an efficient aid for certain tasks that were previously performed by decision-making humans. If a university professor were scouring students’ essays for plagiarism, for instance, it would be difficult to detect every traceable amount of stolen information in each essay in a reasonable amount of time. However, an artificially intelligent plagiarism detection service can check submitted documents against its database and the content of other websites in order to provide a detailed originality score in a matter of minutes or hours, allowing our collegiate example to focus exclusively on the content of those essays.
The point is this: AI does not replace the duties of employed human beings, rendering our workforce obsolete. Rather, it assists professionals in performing the myriad of demands of their roles so that their positions can be streamlined into more strategy-based ones.
Recent AI’s machine learning is fostered by the data fed into it by live, human coordinators. This applies to organisations leveraging contract management software as well. Artificial intelligence in contract management is designed to enable humans to focus on strategising and making informed decisions with an enhanced understanding of contract risk and the positive and negative relationships of both data and patterns.
Contract AI doesn’t replace contract management professionals; instead, it streamlines their data input, analysis, and risk identification tasks with automated data entry and risk assessment, mitigation and mapping. AI-based contract management software supplies the building blocks that contract management professionals require for improved contract oversight, proactive opportunity realisation, and advanced understanding of contract risk.
Artificial intelligence (AI) is already sharpening professional best practices across a variety of industries. However, revolutionary advancements in AI are particularly beneficial as they apply to contract management solutions – if corresponding AI tools are fed a nutritious diet of contract data.
Embracing smarter contract management
Intelligent tools: less work, more outcome
Contracts can be incredibly complex, and technology isn’t at a point where it can entirely understand an ambiguous or esoteric contract, agreement, or supporting document. However, artificial intelligence can enhance and support contract and legal professionals by enabling them to complete their jobs faster, more efficiently, and with greater ability to identify positive opportunities or negative outcomes. By using contract management system data, AI can help establish a contract management process unlike anything seen before.
Artificial intelligence for contract management can help users easily enter contract data into their software system and interact with said data in an expedited, transformative and goal-oriented manner.
Contract evaluation and risk identification tools are additional factors in a creditable AI solution that can help organisations to achieve better results. Contract artificial intelligence can help assist with many tasks including:
- Automated data extraction
- Data analysis and recommendations
- Risk identification and protection
- Better contract visibility.
As a society, we’ve evolved from basic AI that gave us a route toward success, and on to new technology that learns and adjusts based on history, trends, and real-time status updates.
AI-powered data identification and protection
Contract management artificial intelligence can help contract administrators select specific data points and define rules for the security and usage of those data points based on contract types. This intuitive contract management software function is useful because it consolidates and categorises data, allowing users to establish rules regarding key dates, locations, monetary values, personally identifiable information (PII), payment card information (PCI), and other forms of important data. Once they’re set, these rules are automatically followed by contract AI, reducing time wasted on tedious data import analysis.
Suppose an organisation would like to automatically have PII, routing numbers, credit card numbers, social security numbers, and employee data redacted or eliminated from certain contracts, agreements, or documents. An AI tool would identify and subsequently withhold this sensitive information based upon preset preferences, allowing the organisation to focus more time on making data-driven decisions.
AI for contract data extraction
AI -powered contract management software is key in allowing organisations to import contract record data into their system in a way that reduces time and instances of data entry errors. With leading contract management artificial intelligence, documents can easily be uploaded into the system. Once introduced, users can select the record type they want to create with their document (e.g. contracts, requests, purchase orders, vendor/customer records, employee records and eSourcing records).
For example, say an organisation has a consulting agreement from which they need key data intelligently extracted. They would choose their contract type and, once it is run through their artificially intelligent data extraction tool, see pieces of critical data such as dates, details, clauses, confidentiality notes, and renewal notes auto-extracted from their documents. This allows the organisation to reduce time on data entry and instead, focus on more client-facing aspects of contract management.
The benefits of data extraction tools also apply to organisations that manage legacy contracts. Suppose an organisation has legacy contracts that need to be imported into contract management software but does not have a standard data spreadsheet with which to execute a bulk data import. The data can still be extracted, eliminating the need for users to manually key in fields for active contracts created prior to the implementation of reputable, AI-based contract management software. Consequently, contract clause, key term, and data input are streamlined, providing the visibility necessary to search, report, compare, and classify contracts and legal risks for records that were retroactively imported into a newly-applied system.
Increased accountability with AI
Proper risk management is instrumental in successful contract management. AI-driven contract management software simplifies and makes more accurate risk analysis, assessment, and mitigation. Contract management AI promotes risk mitigation by making sure that system users are utilising all of the features and components made available (such as workflow, searching and reporting, employee performance, counterparty tracking, tasks, records, etc.).
Next, a risk score is provided to users based on their organisation’s usage of available tools. This feature holds contract management professionals accountable and encourages regular usage of risk prevention tools.
Suppose, for example, out of all the tools and functions that contract management software provides, ABC Company only uses 80% of them according to the tracked usage of risk mitigation tools. This means that 20% of the risk-relevant utilities available to the organisation are not being leveraged. Thus, system administrators and users are prompted to improve risk mitigation practices, now equipped with specific insight into what their organisation’s risk mitigation process is lacking.
If ABC Company’s CobbleStone Contract Insight software system reveals to them that the organisation is not putting sufficient time into tracking approval status, then they adjust how they track approvals accordingly so that they are allocating the necessary effort to mitigate risks associated with counterparty activity. With contract management AI solutions that establish checks and balances, risk mitigation practices are improved and risk is reduced – structuring the risk prevention process and minimising losses.
Be aware of contract-associated risk from the beginning. A leading solution with advanced capabilities can offer enhanced contract oversight, proactive risk identification, and continuous risk prevention.
Visualising risk with AI
Contract management AI can provide further insight into risk with graphic-based risk rating and mapping features.
Contract risk profile ratings allow contract managers to recognise risk in an eye-catching way. Based on the tracking of risk, AI-driven contract management software can produce a risk assessment matrix. In addition to seeing risk probability patterns for events within contracts, users can also view the exposure that results from those risks.
Say, for example, XYZ Company wants to assess confidentiality exposure as it applies to a consulting agreement that they have in place with ABC Supplier. They would estimate the risk probability and exposure on a percentage scale, easily input that information with their user-friendly risk profiler, and view the data on a grid that categorises the confidentiality exposure as unlikely, likely, or anywhere in between. Additionally, users can add risk descriptions and possible mitigation efforts to be taken – further specifying risk assessment.
Insight into potentially detrimental consequences of an event with possible risk can help contract managers determine how to proceed with a contract. Visualising the outcome of an action associated with risk inherently reduces risk, allowing contract managers to move forward with risk management decisions for their organisation more quickly and efficiently.
What is Visdom AI?
Contract management professionals must empower themselves with the tools mentioned previously so that they can prepare for better contract transparency and reduced risk. Contract Insight’s VISDOM contract artificial intelligence and machine learning is an innovative feature of Contract Insight Enterprise Software that simplifies contract administration and facilitates better contract processes for legal, risk, and procurement professionals.
Automated data entry: Reduce the time it takes to enter new contracts in your system. Don’t waste time manually importing field data when VISDOM AI can extract document data for you.
Data sensitivity analysis: VISDOM AI can help identify key data within a contract such as locations, dates, monetary values, emails, phone numbers, counterparties, and bank routing numbers and choose whether or not it wants to redact that data. Keep in mind, locating personally identifiable information (PII) is important, especially if your organisation cannot store this information in the system due to compliance limitations.
Risk assessment mapping: When adding a new contract to Contract Insight, VISDOM AI helps identify potential risk by analysing document text and usage of risk tools, allowing the system to identify both good and bad language in a contract based on rules-based sentiment, as well as how often tools were used.
Statistical data analysis: Determine positive, negative, or neutral facts about each contract in your system to help with visibility and strategy. If a contract has a value that is X% greater than the average contract value in your system, it can trigger an automated alert as well as an intelligent contract workflow process.
Immediate recommendations based on real-time data: VISDOM AI can provide you with recurring on-screen recommendations and reports that give teams overall contract visibility. The system can automatically send notification alerts and present visualisation tools based on assessments that VISDOM AI performs.
VISDOM AI systematically analyses contracts, giving Contract Insight users improved contract oversight, proactive opportunity, and risk mitigation. Essentially, it does hours of manual work at the few clicks of a button.
Try Contract Insight for your own organisation
Contract Insight – the leading enterprise contract lifecycle management platform – has integrated VISDOM AI and machine learning, enabling users to convert static contract documents into dynamic assets to leverage for improved opportunity identification and risk mitigation.
Contract Insight provides contract and vendor tracking, configurable email alerts, calendar notifications, contract workflow management, robust security options, authoring of contract templates with dynamic clauses, revenue/cost management, full-text indexing and searching, vendor/client ratings, document version control, custom reports, electronic signatures, smarter contracts with artificial intelligence and machine learning.
To find out how you can leverage the power of AI for your organisation, book a free demo today with a Contract Insight® expert from Four today.
Contact John O’Brien, CEO at Four Business Solutions – global business consultants and software integrators specialising in business process improvement.