In our latest webinar in collaboration with IACCM, subject matter experts Arthur Raguette, Co-founder & EVP, Zycus and Peggy Barber, Regional CEO Americas and General Counsel, IACCM discussed the significant role of AI driven contract management in enabling simultaneous Speed & Control in legal operations and contract management.
Below, we have summarized the webinar to give a crisp and consolidated run-down of all important points covered in this webinar:
AI driven Contract Lifecycle Management
As per Forrester’s research, by 2020 there will be an increase in profitability for contract management market by $47 billion, AI being a major contributor towards this. Contracts form the foundation of business transactions and if utilized appropriately, can contribute to refined decision making and business growth. With the immense amount of critical data they hold, having the power to extract and utilize this data can make a huge difference to business efficiencies. Artificial intelligence turns contracts into a power house of strategic information and enables simultaneous speed & control throughout contract lifecycle.
Speeding up the contract lifecycle with AI: AI powered CLM speeds up every stage of the contracting process from new request intake to contract sign-off
- Reducing intake to best first draft time with Robotic Process Automation
- Reducing review and negotiation time with Semantic Analysis and Natural Language Processing
- Reducing time taken for sign-off through automated workflows and digital signatures
Forrester Research’s observation shows that CLM solutions shrink the timeframe required by legal teams to draft and review contracts by up to 80%.
Complete control of contract lifecycle with AI: AI CLM empowers organizations to effectively control the entire contract lifecycle, even post-sign off – increasing accuracy by up to 40%
- 360-degree visibility across all contract stages for a real-time view of all crucial contract information
- Third party parsing and auto-tagging for accurate clause comparison and drafting
- Pre-configured, automated workflows for increased transparency and accountability
- Increased pre-award compliance (smart clause library, hints, template library)
- Monitoring post-award compliance (milestones, metrics, smart analytics and reports)
1. Predictive AI for contract management
Predictive intelligence, using patterns discovered from past data to predict the future, can contribute to at least two different types of insights to help make better decisions and close contracts sooner:
a. Contract content insights
AI-enabled smart wizard guides users to the right contract template and clauses. Machine learning uses past contract data to suggest the right clause to use and predict the time it could take to negotiate a certain clause. E.g. Past patterns can show that changes to an indemnity clause are likely to require more negotiation and hence more time. Clause variants give visibility into risks associated with each variant and help select the least risky option.
b. Contract processing insights
Predictive AI, using past data and behavior, can predict how long a contract process might take to complete and where delays might arise. This doesn’t just help companies get a time estimate but also helps predict the timing impact of contract changes before you propose them. For e.g. AI could tell whether a change suggested by a negotiator is worth incorporating by calculating the actual impact it will have on the contract versus the increase in time it will result in
2. Robotic Process Automation
According to the IACCM Benchmark Survey 2018, more than 60% of respondents highlight that automation initiatives are now a priority for their organizations. Robotic Process Automation (RPA) automates request intake from everyday business platforms (MS Outlook, CRMs e.g. Salesforce, External Party Portal, Internal Portal etc.) Request can be generated based on simple guided forms – which auto populate a preapproved template. RPA then sends review and approval notifications to the right stakeholders, alerting them to respond quickly. Using RPA for ‘Contract request intake to Best First Draft’ is proven to reduce the turn-around time from a few weeks to as less as a few days or even hours!
3. Natural Language Processing
Incorporating Natural Language Processing (NLP) into AI powered contract management is a big leap in efficiency and accuracy of extraction, classification, and summarization. NLP will allow contract groups to identify when contracts have deviated from their defined standards. The approval process — and therefore the negotiation process — will move much faster when negotiators can quickly be informed how close the current version of the contract is to standards. NLP parses External Party paper into different sections and clauses. It rapidly finds, highlights and parses Terms, Clauses and Sections from Third Party
It can identify the differences in language as compared to the standard contract language. In cases where contract clauses deviate excessive of certain percentage, these are directly routed to the legal teams for review and modifications (using RPA)
Semantic analysis along with natural language processing can also be used for meta-data tagging in case of updates to regulations. It can be used to find clusters of related words that are relevant to the issue and in close proximity, surfacing them, and then applying new metadata tags to these clauses. This is an effective way to ensure meta-data tags are constantly updated thus keeping the contracts from going redundant.
4. Advanced Analytics
Advanced analytics is a sophisticated technology powered by artificial intelligence that helps analyze risk in contract management and predict future outcome based on the past trends:
Pull – Extract contract data from the centralized repository
Prepare – Clean, refine, and hone data
Pick – Identify what factors to predict (negotiation time, cycle time, contract utilization)
Predict – Create predictions from past trends, historic data
Plan – Develop an action plan based on the predictions
A Gartner research shows that nearly 50% of legal departments intend to use analytics for process improvement, and more than a third for legal analysis.
Studying historic data and past trends can provide valuable performance insights into all areas of contracts. It can analyse contract consumption trends for the next month, quarter, or year. This enables insights on cycle times, deviations, risks, statistics (expiry, renewal, pending, etc.), procurement and sales business metrics. It helps organizations with risk management process and enables prompt remediation and maximum value gain through compliance. It enables target and actual value comparison via Tight (real-time) or Light (CSV) integration. It links smart clauses with external triggers to have complete control over compliance changes.
Advanced analytics can also be of use for accurate, comprehensive reporting. They can help generate reports across wide parameters including contract performance, financials, obligations, contract usage, predictions etc. This is useful in building stronger relationships with customers, suppliers, strategic partners and investors and nurturing a culture of excellence.
The hosts Arthur Raguette and Peggy Barber concluded the webinar by summarizing all the above points, explaining the advantages of implementing these solutions, introducing Zycus’s AI powered capabilities, and taking questions and queries from the audience.