Business automation is already sharpening professional methods across a variety of industries. However, advancements in artificial intelligence (AI) can be particularly advantageous as they apply to contract management software systems. Contract intelligence engines built upon a foundation of machine learning jneed to be fed a nutritious diet of relevant contract data.
Let’s explore AI contract management in more detail and learn how to increase accuracy and minimise human error in contract lifecycle management (CLM).
How contract AI is changing CLM
AI can support strategising and making informed decisions while automating time-consuming tasks. Legal teams can better understand contract risk and the positive and negative relationships between data, contract language, and contract processes.
Contract AI can’t replace contract management professionals. AI in contract management is designed to streamline processes. AI contract management software transforms static contract documents and contract data into dynamic building blocks. These building blocks improve oversight, opportunity identification, and risk mitigation.
Contract AI and agreement data
Contract management artificial intelligence users can select data points and configure rules based on contract types. This intelligent functionality is helpful because data is consolidated and easily digestible. As such, users can set rules regarding contract:
- locations
- dates
- monetary values
- personally identifiable information (PII)
- payment card information (PCI)
- and other subsets of key data for a given contract.
Once configured, these processes are automated by contract intelligence. This automation reduces the time wasted on tedious data import analysis. So more time can be spent making data-driven decisions.
Contract AI for term, clause and contract data extraction
AI contract management software is a key player in data extraction functionality. Data extraction tools can also be beneficial to organisations that manage legacy contracts.
Sometimes an organisation has legacy agreements that need importing into contract management software. However, they don’t have a structured data spreadsheet with which to perform a bulk data import. With contract AI, said data can be systematically extracted so that users don’t have to manually key in fields.
Consequently, clauses, terms and data input are streamlined. Teams can enjoy the visibility and ease of use necessary to search, compare,and classify contracts and legal risks. Natural language processing and fuzzy logic matching are the backbones of these helpful processes for legal teams.
Auto-redline functionality can help organisations better prepare contracts. This tool can near-automatically identify clauses in important contracts that can be replaced with preferred clauses. So teams can help ensure intelligent drafting and enter the process of reviewing contracts with confidence. This functionality can work for Microsoft Word documents as well.
Contract intelligence streamlines contract workflows
Contract administrators should be keen on minimising wasted time and money resulting from inefficiency. As such, they should take note of turnaround times, as well as which tasks are causing lifecycle delays.
Reliable contract AI provides intelligent workflow automation that supports task performance monitoring. Contract managers can identify employee task completion turnaround, promoting accountability. If needed, tasks can be quickly escalated to increase timeliness and keep things moving.
Contract AI can help keep tabs on how long a contract remains halted by one delayed task. Consequently, bottlenecks in the workflow process can be easily identified and eliminated.
Teams can gain newfound insight into why their contracts are being delayed. From there, contract managers can reassign roles, rotate task assignments, escalate tasks, and evolve processes.
More accountability with AI in contract management
Proper risk management is crucial in successful contract management processes. Contract AI makes risk analysis, risk assessment, and risk mitigation easy and efficient.
A risk score can be provided to users based on their usage of available tools. This feature holds teams accountable for how fastidiously they utilize tools to prevent risk.
Let’s look at an example. Out of all the tools and functions that contract management software provides, Sally’s organisation only uses 45% of them. This fact is made evident with the tracked usage of risk mitigation tools. The users don’t even leverage half of their risk-relevant tools. Consequently, Sally’s prompted to improve risk mitigation practices with new insight into what her process lacks.
Say Sally’s organisation’s contract AI reveals to her that not enough time is going into tracking approvals. In this case, the organisation adjusts accordingly so that it’s allocating the necessary effort to mitigate risk from counterparty activity.
When contract AI solutions establish checks and balances, risk mitigation practices are improved, and risk is reduced. This results in streamlining the risk prevention process and minimising losses.
Contract intelligence and risk assessment
Contract AI can provide further insight into contract risk with real-time risk rating and mapping features. Contract risk profile ratings allow contract managers to visualise risk variables. Based on tracked risk, contract intelligence can provide a risk assessment matrix.
Users can leverage AI to see risk probability patterns for events within contracts and analyse contract risk; they can also see the exposurethat results from those risks. Visualising risk inherently reduces it and allows contract managers to move forward with risk decisions more quickly and efficiently so that contracts perform better.
Generative AI: next-level CLM innovation
Users can take powerful contract AI backed by machine learning to the next level with generative AI and other helpful functionality.
They can enjoy a helpful and engaging chatbot to answer questions they have about their contract intelligence system. They can ask the chatbot ‘how to create a ___’ (Contract, request, vendor, employee, sourcing, purchase order) while also easily searching through reports. In addition to the feature mentioned above, users can ask system-related questions and receive chatbot answers built on OpenAI, the makers of ChatGPT. Additionally, they can ask about applicable laws and compliance regulations such as GDPR, CCPA, and OFAC.
In addition to the abovementioned chatbot functionality, AI contract management software allows users to create a contract clause. For example, they can tell the chatbot, ‘Draft a clause for indemnification’. They can then centralise these generated clauses by sending them to their pre-approved clause library for a united process.
At the click of a button, generative AI in contract management allows users to easily review high contract risk findings, generative AI-powered suggestions, and confirmed matches between the new contract and their pre-approved clause library. They can also easily allow AI to determine positive, negative, or neutral facts about newly introduced contracts to help with visibility and strategy. Users can trust a system that can recognise positive and negative relationships of data and patterns powered by AI.
AI in Contract Management
To find out more about how contract management software leverages AI why not contact John O’Brien, CEO at Four Business Solutions – global business consultants and software integrators specialising in business process improvement.