Business automation is already sharpening professional methods across a variety of industries. However, advancements in AI (artificial intelligence) can be particularly advantageous as they apply to contract management software systems. Contract intelligence engines built upon a foundation of machine learning just need to be 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 can support strategizing and making informed decisions. Legal teams can better understand contract risk and the positive and negative relationships between data, language, and contract processes.
Do not worry. Contract AI cannot replace contract management professionals. It is designed to streamline processes. AI-powered contract management software transforms static contract documents and contract data into dynamic building blocks. These building blocks improve oversight, opportunity identification, and risk mitigation.
Artificial Intelligence 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:
- 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. As such, 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.
Sometimes an organization has legacy agreements that need importing into contract management software. However, they do not 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 do not 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 organizations better prepare contracts. This tool can near-automatically identify clauses in important contracts that can be replaced with preferred clauses. As such, 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 Artificial Intelligence Streamlines Contract Workflows
Contract administrators should be keen on minimizing 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-Based Contract Management
Proper risk management is crucial in successful contract management. 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 organization only uses 45% of them. This fact is made evident with the tracked usage of risk mitigation tools. The users do not even leverage half of their risk-relevant tools. Sally is consequently prompted to improve risk mitigation practices with new insight into what her process is lacking.
Say Sally's organization's contract AI reveals to her that it is not putting enough time into tracking approvals. In this case, the organization adjusts accordingly so that it is allocating the necessary effort to mitigate risk from counterparty activity.
When contract management AI solutions establish checks and balances, risk mitigation practices are improved, and risk is reduced. This results in streamlining the risk prevention process and minimizing losses.
Contract Management and Risk Assessment
Contract 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 tracked risk, contract intelligence can provide a risk assessment matrix.
Users see risk probability patterns for events within contracts; they can also see the exposure that results from those risks. Visualizing risk inherently reduces risk and allows contract managers to move forward with risk decisions quicker and more efficiently.
Artificial Intelligence in Contract Lifecycle Management
The only solution that features all of the user-friendly contract AI tools and more is CobbleStone Software’s VISDOM® AI. To see VISDOM contract intelligence in action, book your free demo.
This blog was updated on January 26th, 2023. It was originally published in October 2019.
Legal Disclaimer: This article is not legal advice. The content of this article is for general information and educational purposes only. The information on this website may not present the most up-to-date legal information. Readers should contact their attorneys for legal advice regarding any particular legal matter.