The Forrester Wave Q1 2019 report states that Contract Lifecycle Market is facing incredible growth currently. With first-generation CLM(Contract Lifecycle Management) technology becoming increasingly outdated, organizations are now deploying disruptive AI (Artificial Intelligence) powered CLM solutions in order to improve business intelligence, vendor management, contract fulfillment, and negotiation.

CLM solutions that leverage AI employ Machine Learning, Robotic Process Automation, Natural Language Processing (NLP), and Text Analytics which transforms contracts into a powerhouse of operational excellence.

In this article, we will explore five ways on how an Artificial Intelligent (AI) infused CLM can bring value to the Contract Management process for businesses and drastically reduce associated risks:

  1. Smart Contract Authoring

    AI-enabled CLM solution helps deliver intelligent contract creation by automatically identifying and arranging contracts in the contract library. Machine Learning (ML) algorithms enable CLM solutions to automatically learn from track records of past contracts, identify patterns to suggest approved, suitable contract clauses and pre-defined key terminology.

    The salient feature of an AI-boosted CLM is its context-based analysis. This means that the CLM solution while drafting a contract can also identify the relevant clauses that should be used for particular types of contracts. For example, it will suggest to include a currency fluctuation clause while drafting a procurement contract, if the vendor is not within the same country and based across borders.

  2. Using Machine Learning (ML) for Contract Data Extraction from Legacy Contracts

    To extract the terms and clauses from the contracts, traditionally it was done manually. But with AI-based CLM solutions, all the information on contract terms and clauses can be extracted using advanced Machine Learning (ML) algorithms with unprecedented speed and accuracy.

    AI combines parsing with NLP, Text Analytics, Optical Character Recognition to change legacy contracts and third party papers into workable documents. It analyzes such contracts and classifies them into sections, clauses, and terms. Thus, it standardizes document language, minimizes negotiation time frame and boosts productivity.

    Thus, organizations can now extract information from contracts automatically such as names, organization and vendor information, contract signature date and renewal dates. Their huge volume of contracts can now be auto-tagged with the names of the right companies, right data, right deadlines, and automatic renewal alerts can also be set. This helps firms to transform their business contracting processes completely.

    Click here to read Three Trends that are Shaping the Future of Contract Management

  3. Advanced Analytics for risk assessment and mitigation

    AI-enabled solutions use natural language processing to parse through documents, classify clauses, and highlight differences between the document versions. This enables the system to read agreements and highlight sub-optimal terms or clauses that may not be in the interest of the organization. It can suggest alternative clauses that reduce the risk and safeguard the organization.

  4. Actionable insights on the obligations within the contracts

    AI-powered contract management solution gives organizations access to the insights it needs to derive the full value out of its negotiations. With its various advanced capabilities, it can help businesses to analyze large amounts of contracts and report on contractual data from the system across the contract database and across geographies and languages.

    User-defined dashboards can be generated as and when required to report key performance indicators (KPI), service level assurances (SLA), milestones and other parameters. For example, it is now possible to understand business payment obligations or to identify all contracts bound by a specific regulation like requisite quality assurance or contract condition.

    Higher visibility into contracts enables performance tracking, improves compliance and optimizes obligation management. Its customizable alerts, reminders and user-defined dashboards ensure higher visibility of contract terms as well as better implementation of negotiated terms.

  5. Optimizes contract review timelines

    It is estimated that average contract approval cycles take around 3 to 4 weeks according to the Forrester Research study. Significant time is lost in multiple reviews while contract signing and negotiation which involves many stakeholders. But with AI-based CLM solution, it integrates all involved functions into a single platform, highlighting changes in clauses, facilitates version comparisons and thus speeds up review and turnaround times. It also seamlessly assimilates third party contracts into the system. This helps give visibility where all contracts can be reviewed in a single platform, helps in implementing policies and compliance across the enterprise. Use of contract management AI solution enables firms to compress turnaround cycles considerably.

    Click here to read 5 sure ways to convince your Boss to invest in a Contract Management System

  6. Why use DocuCollab`s AI Contract Lifecycle Management Solution?

    DocuCollab`s AI-powered CLM Solution`s capabilities to read, extract and interpret critical business information from your large volumes of documents and unstructured data enables users to address previously intractable contract challenges. DocuCollab CLM Solution helps companies across the spectrum derive greater value from their contracts through its best workflow technology, comprehensive repository of contracts and clauses, digitization of legacy contracts, deep data visualization capabilities provide unprecedented visibility into contract relationships and performance.

    Thus it empowers enterprises to extract the maximum value out of contracts, boost productivity, reduce costs, save time, bring about streamlines processes, mitigate risks, and ensure regulatory compliance.

Click here to discover how you can automate every step of your contract management lifecycle through DocuCollab’s seamless contract lifecycle management tools.