How Contract Management Software Solutions & Artificial Intelligence Are Changing Business
Contract lifecycle management is a process inherently difficult for businesses to execute effectively.
When you consider how complex legal documents are becoming (due to factors like technology licensing) and the fact that the volume of contracts we deal with on a day-to-day basis is increasing as well… it makes sense.
But, thanks to artificial intelligence and CLM software solutions, organizations can now store all legal documents within a contract database and manage contracts online more effectively than ever possible before.
In recent years, artificial intelligence (AI) has been used to help with contract management. AI can be used to automate contract creation and negotiation. AI can also be used to automate contract execution and management.
One of the benefits of using AI for contract management is that it can help to reduce the amount of time spent on contract administration tasks. AI can also help to improve compliance with contractual obligations.
What Is Artificial Intelligence?
Artificial intelligence (AI) is a sector of computer science that focuses on building machines and computers to perform actions that require a human level of intelligence.
In other words, AI is machine-learning – a technology intended to execute tasks that were once only able to be done by us people.
At one time or another, you might have heard someone joke about ‘the robots replacing us. While this is meant in good humor, it is becoming more and more real as technology continues to evolve rapidly and become able to take on surprisingly complex actions.
What Does AI Have to Do With Contract Monitoring Tools?
While most people still think of AI as robots and talking computers, what you might not realize is that you likely interact with some form of AI on an almost daily basis.
Yes – AI is very much already ingrained in our culture. And, we can only assume, will only continue to become more mainstream as time goes on.
AI is a very broad term; according to Techopedia, it refers to “any type of computer software that engages in humanlike activities”.
With Facebook, they openly discuss how they use machine learning for their ad program – that is a great example of Artificial Intelligence in action.
And, with Tesla, their vehicle’s self-driving features qualify as AI.
There are so many examples of this technology already being used by companies. As you can expect, it is and will continue to change the modern business landscape by shortening our learning curve and completing jobs that used to be required us to do manually.
Traditional Contract Management Methods vs AI-Driven Solutions
Contract management is a critical aspect of business operations, as it involves the creation, negotiation, execution, and analysis of contracts to ensure that they meet the necessary requirements and are legally enforceable. Traditional contract management methods have served organizations for many years, but with the advent of artificial intelligence (AI), new solutions are emerging that promise to revolutionize the way contracts are managed. This comparison will explore the key differences between traditional contract management methods and AI-driven solutions.
- Efficiency and Speed: Traditional contract management methods often involve manual processes, which can be time-consuming and prone to errors. In contrast, AI-driven solutions can automate many aspects of contract management, significantly reducing the time spent on tasks such as data entry, contract review, and negotiation. This increased efficiency can result in cost savings and allow organizations to focus on other important business activities.
- Accuracy and Risk Mitigation: Manual contract management methods can be susceptible to human error, which may lead to inaccurate contract terms or failure to identify potential risks. AI-driven solutions can minimize these risks by utilizing machine learning algorithms to accurately identify key terms, clauses, and inconsistencies. This improved accuracy helps organizations avoid potential legal disputes and ensures that contracts are aligned with their business goals.
- Contract Analytics: Traditional contract management methods often lack comprehensive analytical capabilities, making it difficult for organizations to gain insights from their contracts. AI-driven solutions, on the other hand, can analyze large volumes of contracts and extract valuable information such as performance metrics, pricing data, and risk factors. These insights can be used to inform decision-making and drive improvements in contract management processes.
- Personalization and Adaptability: AI-driven contract management solutions can be customized to suit the specific needs of an organization, allowing for more tailored contract templates and terms. In addition, machine learning algorithms can learn from previous contracts and adapt over time to improve their performance. This adaptability can result in more effective contract management, as AI-driven solutions continually improve their understanding of an organization’s unique requirements.
- Scalability: Traditional contract management methods can struggle to keep up with the increasing volume and complexity of contracts, particularly for large organizations with a global presence. AI-driven solutions can easily scale to handle large volumes of contracts, regardless of their complexity, enabling organizations to manage their contracts more effectively as they grow.
- Integration: AI-driven contract management solutions can be integrated with other business systems, such as customer relationship management (CRM) and enterprise resource planning (ERP) software. This integration enables organizations to streamline their contract management processes and ensure that all relevant information is easily accessible to stakeholders.
In conclusion, AI-driven contract management solutions offer significant advantages over traditional contract management methods in terms of efficiency, accuracy, analytics, personalization, scalability, and integration. By adopting these innovative solutions, organizations can improve their contract management processes, reduce risks, and ultimately achieve better business outcomes.
How Is AI Revolutionizing Agreement Management Practices?
The software allows businesses the privilege to manage agreements online using Artificial Intelligence in order to help users streamline and automate the contract lifecycle phases.
As far as contract management software solutions go, the following contracting options are available due to AI:
- contract databases (all contracts are stored in one centralized database, automatically).
- error auto-detection (AI prevents users from making any legal errors with business documents).
- automated creation (these tools can automatically create contracts based on the objective of the legal document, terms, relevant clauses, etc.)
- version retrieval (all past versions of contracts are saved and can be retrieved at any time).
- automated alerts (contract monitoring tools can be used to automatically alert users when a contract is about to expire).
This is only the tip of the iceberg — AI plays a key role in cloud-based contract management solutions and has many benefits.
What Did CLM Practices Look Like Before You Could Manage Contracts Online?
Before contract management software solutions and AI, creating, negotiating, signing, and managing documents was a much more timely and expensive process.
Before you could manage agreements online, businesses had to:
- handwrite documents
- create contracts from scratch
- negotiate in-person
- make back-and-forth edits
- keep track of edits
- sign in-person
- physically store contracts in filing cabinets
- and much more
Current Best Practices
Thanks to contract management software solutions, monitoring tools, and other AI-based technology, managing legal documents is easier than ever for businesses.
The entire contract lifecycle is faster and fewer mistakes are made, which frees up business hours and saves money with labor costs and legal fees.
Also, these software solutions provide businesses with more time and resources to focus on what really matters – growth and sales.
How Cloud-Based Solutions Are Shifting the Role of Professionals
AI in contract management allows users the ability to streamline certain data entry, reporting, and managing tasks that previously had to be done manually.
Now, thanks to these cloud-based solutions, managing contracts effectively and efficiently is becoming more feasible for organizations of all sizes in all industries.
Because of this, the role of contract management professionals is shifting – mundane tasks that were once required of them are becoming obsolete thanks to this technology. Now, the contact professionals will be less of an administrative expense and more of a ‘top-level’ asset with unique expertise to bring to the table.