In our last blog, we looked at a few of the more important concepts IT departments need to understand about contract management software.
We discussed how contract lifecycle management (CLM) is increasingly becoming a must-have for businesses in a modern market that faces seemingly relentless disruptions, forcing a need for ever greater efficiency, increased revenue, and cost savings. But as contract volume and complexity continue to increase dramatically in today’s business landscape, contract management solutions must evolve to meet a growing challenge.
Enter contract intelligence, a revolutionary approach to contract management that taps into the power of AI to extract structured data out of unstructured contract clauses and connect the organization to the rich business insights hidden within them. In this second post in our blog series for IT professionals, we’ll look at what you need to know about this exciting technology.
Insights at scale through AI
In today’s connected global environment, contracts are becoming more complex, and the volume of contracts all along the value chain is growing exponentially. Simple CLM software does well to automate workflows, making this volume more manageable, but they miss the big picture.
This is because CLM is focused on the contract itself, reducing time spent on the contract and helping to manage clauses better, generating value during contract creation. On the other hand, contract intelligence is focused on the business and the outcomes the organization is trying to achieve. Like CLM, it similarly shortens turnaround time through automation, but it goes much further -- boosting revenue, saving and compliance throughout the contract’s lifecycle resulting in higher revenue and smarter operations.
And organizations are in dire need of it. According to World Commerce & Contracting, 8 percent of a contract’s value goes unrealized because of missed delivery and other management oversights.
That’s what makes AI-powered contract intelligence so game-changing. The volume and complexity of contracts today make it almost impossible to extract and analyze data manually.
AI trained on a sufficient quality, quantity, and variety of contracts can “learn” to recognize specific clauses, understand what an “obligation” looks like, or identify pricing terms, even when they’re weaved into blocks of text. With the rise of generative AI, accessing this structured information can be as easy as asking a question in chatbot (e.g., “How many contracts do we have expiring this month?”)
When exploring contract AI options, ask about the data set the AI has been trained on. Bigger data pools mean better AI out of the box.
AI unlocks a massive new store of enterprise data that’s never been available before.
Organizations gain critical visibility into contract clauses, so issues like missed delivery obligations can be recognized and quickly remedied, taking advantage of opportunities like volume discounts.
Connecting contract data across the enterprise
With contract data structured, the next step to gain value from it is to connect it to the systems it powers.
Contracts are often associated with the legal department, and contract management software is often assumed to be “legaltech.” However, since contracts define every commercial relationship from suppliers to customers, for a contract management solution to drive the greatest business value it must also serve departments beyond the legal team.
This means extending contract data beyond the CLM itself.
If sales users can access contract data and processes from within Salesforce, they are far more likely to use the system than if they have to log into a separate interface. The same goes for procurement users who live in SAP Ariba. Even legal users, for whom many contract management solutions are built, would rather stay in Microsoft Word.
From an IT perspective, seamless integration with existing systems is of vital importance. An enterprise-wide implementation helps ensure compliance and avoid shadow contract management solution deployments.