This blog post was updated on August 26th, 2021.
Artificial intelligence (AI) is already sharpening professional methods across a variety of industries. However, advancements in AI can be particularly advantageous as they apply to contract management software systems - if contract intelligence engines built upon a foundation of machine learning are fed a nutritious diet of relevant contract data.
How AI is Changing Contract Management
Cast aside apocalyptic visions of malevolent androids. Artificial intelligence in contract management is designed to enable contract professionals to focus on strategizing and making informed decisions with an enhanced understanding of contract risk and the positive and negative relationships between data, contract language, and contract processes.
Do not worry; contract AI cannot replace contract management professionals; instead, it is designed to streamline data insertion, data extraction, data protection measures, and risk identification tasks with automated data entry and risk assessment mapping. AI-powered contract management software transforms static contract documents and contract data into dynamic building blocks that contract management professionals need for improved contract oversight, proactive opportunity identification, and risk mitigation.
Artificial Intelligence and Agreement Data
Contract management artificial intelligence users can select specific data points and configure rules based on contract types. This intelligent contract management software functionality is helpful because data is consolidated and easily digestible, allowing users to set rules regarding 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 - reducing the time wasted on tedious data import analysis so more time can be spent making data-driven decisions.
AI for Term, Clause, and Contract Data Extraction
AI-powered contract management software is a key player in data extraction functionality. Data extraction tools can also be beneficial to organizations that manage legacy contracts. If an organization has legacy agreements that need importing into contract management software but does not have a structured data spreadsheet with which to perform a bulk data import, said bulk data can be systematically extracted so that users do not have to manually key in individual fields. Consequently, contract clauses, contract terms, and contract data input are streamlined - providing the visibility and ease-of-use necessary to search, report, compare, and classify contracts and legal risks.
Contract Artificial Intelligence Streamlines Contract Workflows
In the interest of minimizing wasted time and money resulting from inefficient contract workflows, contract administrators should take note of the time frame in which individual tasks are completed, as well as which tasks are causing delays and prolonging cycle times. Reliable, AI-powered contract management software provides intelligent workflow automation that supports task performance monitoring. Contract managers can identify the number of days it took employees to complete assigned tasks, promoting accountability. From there, tasks can be quickly escalated to increase timeliness and keep the contract lifecycle moving.
In addition to ensuring task deadlines are met, contract management professionals armed with contract AI can easily keeps tabs on the number of days a given contract is sitting in each status or stage of the contract lifecycle. Visibility can drastically increase with easy-to-understand visual representations of workflow analytics and reports. Consequently, bottlenecks in the workflow process can be easily identified so inefficient contract lifecycle management practices can be eliminated.
With newfound insight into why their contracts are being delayed, contract managers can reassign roles, rotate task assignments, or escalate tasks - evolving their contract lifecycle management practices accordingly.
More Accountability with AI-Based Contract Management
Proper risk management is crucial in successful contract management. AI-powered contract management software makes risk analysis, risk assessment, and risk mitigation easy and efficient. Contract Management AI encourages robust risk mitigation by allowing users to fully leverage the features and functionality made available to them by their contract management software (such as tracking of counterparties, workflows, employees, tasks, records, etc.).
A risk score can be provided to users based on their usage of available tools. This feature holds contract management professionals accountable for how fastidiously they utilize tools to prevent risk.
Suppose, for example. out of all the tools and functions that contract management software provides, Sally's organization only uses 45% of them according to the tracked usage of risk mitigation tools. The users do not even leverage half of the software’s risk-relevant tools. As a contract management software system administrator, Sally is consequently prompted to improve risk mitigation practices with specific insight into what her organization's risk mitigation process is lacking.
For example, if Sally's organization's intelligent contract management software reveals to her that it is not putting enough time into tracking approval status, then the organization adjusts how it tracks approvals accordingly so that it is allocating the necessary effort to mitigate risks associated with counterparty activity. When contract management AI solutions establish checks and balances, risk mitigation practices are improved, and risk is reduced - streamlining the risk prevention process and minimizing losses.
Watch the video below to learn more about the benefits of AI-based contract management.
Contract Management and Risk Assessment
Contract management AI can provide further insight into contract risk with risk rating and mapping features. Contract risk profile ratings allow contract managers to visualize risk variables. Based on the tracking of risk, an AI-powered contract management software can provide a risk assessment matrix.
Not only can users see risk probability patterns for events within contracts, but they can also see the exposure that results from those contract risks. Insight into possible detrimental consequences of an event with potential risk can help contract managers decide how to proceed with a given contract. Visualizing the results of an action associated with risk inherently reduces risk and allows contract managers to move forward with risk management decisions quicker and more efficiently.
Artificial Intelligence in Contract Lifecycle Management
Contract management professionals need to make sure they are powered with the tools above so that they can prepare for better contract visibility and reduced risk. As such they should leverage the only solution on the market that offers all of these tools and more: CobbleStone®.
CobbleStone Contract Insight® is an advanced contract lifecycle management software backed by artificial intelligence that allows contract managers to manage, track, and draft contracts faster, and automate and streamline the entire contract lifecycle with flexible features such as contract authoring, workflow, version tracking, and so much more. It’s no wonder why Forrester names CobbleStone a Leader in CLM software!
Discover why thousands of contract managers trust CobbleStone Software with their contract management needs. To learn more about CobbleStone’s unparalleled contract management software, book a free demo with a Contract Insight expert today!