Ensuring contracts perform to their full potential requires all parties deliver on their promises.
Yet identifying and extracting contract obligations at scale via manual contract management processes can be difficult if not impossible for large enterprises.
The repercussions of poor obligation management are not abstract. A McKinsey & Company study estimates leakage due to unfulfilled obligations at 2% in large enterprises. For an enterprise with $2 billion in annual spend, that adds up to $40 million a year.
A lack of insight and visibility into contract obligations can also create substantial legal risk, as missed obligations can lead to litigation. At very least, missed obligations can put a strain on important business relationships and cause reputational damage.
The benefits of obligation management
Leading companies are turning to contract management software to overcome these challenges.
Cloud-based contract management systems can automate obligation management by using artificial intelligence (AI) to extract the obligations enshrined in contracts, which can then be assigned to owners throughout the organization and tracked throughout the contract lifecycle. Users can document obligation fulfillment and set up automatic alerts to flag approaching milestones.
This allows enterprises to reduce the risk of missed obligations and optimize contract performance. Compliance becomes the default as tasks are assigned to obligation owners both within the company and without.
How the ICM Obligation Management application works
To help transform how organizations identify, create, manage and fulfill obligations previously hidden in complex contract language, we at Icertis recently announced the release of our new Obligation Management application.
The app, built on the Icertis Contract Management (ICM) platform, enables full lifecycle management of all contract obligations – leading to better business outcomes. The app identifies and extracts obligations using Icertis’ AI technology. It then displays those insights on a customizable dashboard, from which users can view obligation assignment, fulfillment, tracking and measurement.
Companies can create a unique obligation data model based on their specific needs for more effective lifecycle management and configure customized obligation workflows for user review and collaboration.
They can also track the obligations of contract counterparties to ensure they are getting full value out of the contract and recover full financial compensation if those obligations are not fulfilled.
In short, the ICM Obligation Management app allows enterprises to better manage risk and get the full value out of their contracts, turning the documents into strategic business assets.
If you’re interested in learning more about Icertis’ approach to obligation management, visit our Obligation Management page, which includes a demo video of the app.