The Benefits and Applications of Contract Intelligence
In a business world that demands constant innovation, growth, and increased efficiencies, the process of Contract Lifecycle Management (CLM) has grown increasingly automated. As businesses grow, so do their volume of contracts and their complexity as volatile conditions and business needs endlessly change. This outlines the demand for an intelligent contract platform that can monitor and manage these contracts concerning a business’s unique processes, entitlements, and obligations.
What is contract intelligence?
Contract Intelligence is the use of artificial intelligence in contract management enabling businesses to contextualize contracts with processes and systems that drive and empower business development. Using continuous, real-time monitoring of a company’s entire contract portfolio, helps organizations automatically minimize risk and facilitates appropriate actions as contract conditions change.
Contract Intelligence empowers businesses by eliminating the menial work involved in CLM, such as data entry, performance tracking, and deadlines, and providing professionals with intelligent insights by compiling data and information gathered from the business’s contract portfolio and tailoring that to the business’s unique needs. Streamlining these processes, it empowers businesses to take these insights and apply them to contract analysis and strategy for business development.
Contract Intelligence vs Contract Management
Traditional Contract Management stores contracts in a central location and automates the workflow of CLM but relies on human intervention to monitor contracts and evaluate their impact and performance.
Conversely, artificial intelligence contracting software uses more advanced tools to streamline processes to move faster and can link any entitlements, obligations, or other critical data to business systems, ensuring that all agreements are up-to-date and remain in compliance, even as conditions continuously change, generating new insights with each transaction.
It can also enable organizations to collaborate across various departments and teams (i.e., sales and marketing, legal, and finance) in creating and negotiating contracts that are better leveraged for things such as improving compliance, managing costs, and identifying new markets and growth opportunities.
The Tasks Where Contract Intelligence Help
Contract management tasks that can be successfully performed with contract intelligence include contract analysis and contract creation and implementation. Whereas standard contract analysis software can extract critical data such as clauses, names, and termination dates, contract analysis through the software can not just extract data, but also understand provisions within a contract, which makes the contract analysis task the most critical task.
This task is the aspect of artificial intelligence in contract management that drives the strategic benefit of its utilization, helping businesses to gain a deeper understanding of how their contracts are impacting their overall business results and how they can be improved to further serve the needs of their business and its clients and stakeholders.
AI contracting software can also successfully carry out contract creation and implementation. The use of artificial intelligence enables it to learn the more frequently that it is used, from which it can compile information gathered from previous contracts and use this data to create new contracts.
AI contacting can help to successfully implement contracts such as by interpreting the clauses and obligations and keeping contracts updated with current regulations, further aiding in managing and mitigating any risks to the business.
Other practical applications of Contract Intelligence include Data Extraction & Classification, Contract Security, Smart Contract Risk Management, and Streamlining Contract Workflow. Contract Intelligence software uses Natural Language Processing (NLP) to extract and pre-process data from contracts and classify this data to enable easier detection of and access for other contract management entities.
This process helps to keep the data organized in a manner that is easily accessible as well as clear and distinguishable so that it can be effectively interpreted and utilized for future contracts. This data classification process can help to eliminate any potential inconsistencies in current and future contracts.
Contract Intelligence can also allow an organization to put controls in place such as restrictions on confidential information at different levels and accordingly scrub certain data and information from contracts, effectively ensuring contract security. This will prevent the business from leaking sensitive, critical information that could potentially harm the business should it be accessed by the wrong parties, protecting the business from potential liabilities resulting from a sensitive data breach.
The Smart Risk Management Application can be used to create graphics, such as charts and graphs, using data from the contracts to demonstrate potential risk exposure and outcome probabilities. This is also a critical function that aids the business in identifying which aspects of their contracts are posing potential risks to the business so that they may strategize on how to manage or mitigate those risks and implement any necessary amendments.
Streamlining Contract Workflow automates what were formerly manual processes, such as communicating with stakeholders, rerouting contracts for approvals, and exception handling, in turn speeding up and increasing the efficiency of these processes. Within this increased efficiency, these automated processes can enable earlier and easier detection of any defects or inconsistencies in the workflow process and minimize the otherwise lengthy and tedious lifecycle of the contract.
The use of a Contract Intelligence platform can provide a smart, customized contract management system for businesses that can reduce the time spent on tedious tasks while also building and contributing to a business’s strategy and development by streamlining the overall contract workflow.
Contract Intelligence streamlines contract workflow by continuously learning the more that it is used, which enables it to use existing data to create and implement new contracts, collaborate across different departments and teams, comprehend provisions and clauses, assess potential risk exposure, and make updates to ensure compliance with current regulation, recognize and secure sensitive information, and automate approvals and communications.
The streamlining of this process effectively reduces the lifecycle of a contract, allowing businesses to spend less time on the manual, time-consuming tasks involved in contract management and instead empower them to focus their valuable time and resources on business development and innovation that will drive their business forward.