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Inefficient contract management in companies have resulted in organizations losing up to 40% of the value from the deals they made. Inefficiencies in the traditional contract management process have caused several problems, such as missed renewal dates, missed negotiation terms, compliance violations, difficulty in organizing contracts, and many other liabilities.
According to Harvard Business Review, many organizations have been unable to recognize the complexity in outsourcing agreements. The way those agreements and certain clauses were written across different divisions at times don’t have a strong central base. This can lead to emerging contract management issues in the future.
It would take a high amount of manpower for a company in order to create, review, and finalize their contracts. Therefore, by utilizing today’s advanced technology in AI contract review, companies can overcome the challenges in managing their contracts.
The adoption of data centric and AI-focused contract software is predicted to steadily rise in the future years. Gartner have reported that companies will cut down the amount of manual manpower needed in contract management by 50% in 2024. Another research from Zion Market research also reported that the global contract management software market will be worth approximately $37.9 billions by 2026. Now, we will discuss deeper market trends for contract software in 2021.
Many business people have started using Contract Life Management (CLM) software to do automation in their businesses’ contract management. But, they usually only implement those software to only some specific company divisions.
The fragmented implementation of the solution can lead to inefficient workflows and might create frustration among its users. Therefore, to obtain the maximum advantages form digital transformation in CLM, a company should have a reliable AI contract review software that can manage and analyze the contracting process in the company holistically.
Deploying CLM software in the enterprise-level will allow companies to manage all contracts into just a single platform. Every single one of the company’s division, HR, legal, procurement, etc., will have the ability to gain a complete view across every division.
By putting those contracts into a single AI contract review platform, different divisions can review and compare themselves with other divisions in terms of their contracting process. Therefore, by doing this they can improve their workflow, reduce any risk, and reach enhanced analytic.
Artificial intelligence can help companies in Contract Life Management in many ways. First, it can help in the form of voice activated technology. Scientists and technicians have developed voice assistants technology to be the primary interface system for business purposes.
This voice activated technology can be applied in many aspects. From doing simple tasks, like listing the deadline of all active contracts to the more complex ones.
AI contract review software can also help in doing contract analytic. By using AI, companies can see whether the clauses and policies in the contracts are being followed or not. AI can also identify inconsistency, in terms of performance, achievements, objectives, etc., easily. This would really save contract managers from wasting time doing all of those things.
Companies can also use AI to assist them in making a contract. Contract managers can automatically make a contract just by flagging an email. The AI system will then pull any data from the email, such as numbers and language. From the data collected, AI will interpret it and start to group the contract into appropriate clauses.
Of course, using AI in the contract making process will need a period of learning and development. But, as the time goes by, AI will be a significant help for contract managers in making contracts.
AI contract management can also contribute to the CLM risk scoring process. The evolution in technology has allowed AI to be able to scan contracts and troubleshoot them. AI will flags any words or terms that can lead to a risk for the companies. Not only that, AI can also give suggestions for alternative clauses in order to reduce the risk and keep the organization away from any trouble. This will absolutely help contract managers and legal advisors in their job a lot.
Speaking of legal advisors, data centric and AI-focused contract software can bring advantages for companies in their legal space. The use of AI learning for legal research and litigation outcome prediction is predicted to increase.
AI can help legal advisors in doing simple tasks, like drafting lower-liability contracts and agreements. It will also help legal advisors in being more effective in their work by utilizing its ability to search and filter relevant data and documents.
All the help brought by data centric and AI-focused contract software will benefit contract managers and legal advisors in many companies. It will increase their performance and therefore it will make companies more effective and productive.
The presence of AI contract review should not be intimidating for you, human workers. It was not made to replace a valuable employee like you. Instead, it was made to enhance the contract management process in a company.
Data centric and AI-focused contract software can automate the data entry process, make a more streamlined data processing, and identify potential problems for the company. Thus, by using contract software, companies can free their employees from energy and time consuming tasks.
Contract managers must think that Data centric and AI-focused contract software is a tool to improve their performance. With it, contract managers can do better contract management and do risk mitigation for their company.
Not only for contract managers, AI contract review will also help companies’ legal advisors in reviewing contracts. This will decrease the time needed to choose and review, and help them in identifying loopholes in their contract management.
The room for growth for the contract management software market is still very big. The more companies realize that the use of contract management software can bring many benefits to them, the bigger the increase will be.