The process of reviewing and extracting data from an organization’s
contracts to enhance risk management encompasses the
wide definition of ‘Contract Analytics’. Data extracted from legal
documents, as well as paper copies, is transformed
into a structured format using machine learning and artificial intelligence.
The business value of good contract analytics has increased tremendously due
to the rise in contract digitization in
pandemic times. Structured data from the analysis is now the cornerstone of
the majority of business operations -
driving value for the efficient working of the legal operations team.
A good contract analysis gets you the necessary data from:
Incentives
Policies
Indemnifications
Liabilities
Clauses
What is the scope of contract analytics?
The data that contract analysis provides access to can do wonders for your
contract lifecycle management. For example,
you may require an overview of your contracting portfolio with a client to
determine which contracts are near their
expiry. It sorts through the relevant meta fields and assists you in
grasping accurate information to obtain more
insights.
Let us understand in-depth all the actionable information that you
can derive from your contracts.
Parties to a contract
The information relating to parties, like their name, addresses, or contact
numbers is the most overlooked piece of
information in contracts. With analytics in place, you can easily keep track
of this meta field and gain an overlook of
their contracting profiles with you.
Renewal terms
Along with having a clear idea about the timeline of a contract, you may
have to deal with numerous renewals. An
automated tool for contract analytics integrated with CLM can send you smart
alerts and indicate further actions. You
can then analyze if the parties need to renew the contract manually or this
can be done automatically. This saves not
just the pain of keeping track of renewals but also helps with reducing the
liability for missing deadlines.
Dates
With analytics, you can grasp a timeline of the contract, which includes
signing dates, execution dates, or any other
specific dates of importance. Evaluating a contract quickly can be done by
looking at the timelines and deciding the
steps to be taken ahead.
Termination
Very similar to renewals, a contract’s end dates are also a critical data
point. Well-tuned analytics software can
quickly show you the termination clauses and dates of a particular contract.
Importance of contract analytics
The most prominent benefit of using a CLM to analyze your agreements is to
get valuable and accurate data insights that
help to increase the productivity of the processes and business as a whole.
Here are a few specific benefits that we can
say a good contract analytics tool will give you.
Improve contract process
With the insights that contract analytics can derive, improving the contract
cycle in its entirety becomes easy. There
can be loopholes and delays in contract creation or negotiations, and
analytics can help you understand why. Insights
can help you identify terms in future terms of agreements that can be
problematic or lengthy to formulate or negotiate.
Such critical inside knowledge can assist you in speeding up the entire
contract lifecycle.
Prevent poor quality contracts
Low-quality or inconsistent contracts are termed as one of the top causes of
losing maximum revenue. This can happen
either because of inconsistently drafted clauses, non-addition of standard
clauses, scope creep, or performance issues.
Analytics help you identify these loopholes and avoid making these leakages
in future agreements.
Organization-wide agility
Manual contracting is a very rigid process and makes
it hard for any company to be able to respond quickly to any
untimely challenges. With CLM software, it becomes easy to anticipate
challenges that could affect your contracting
portfolio and become more agile in handling agreements and their terms.
Having well-structured contract data at your
disposal can make it easy for every department and the business overall to
grow and scale faster. Having a central
repository for keeping contract data readily available at your fingertips is
the best way to achieve organization-wide
agility.
Identify growth potential
Contract analytics examine the minute changes and clauses in a contract and
identify growth opportunities. You can help
your clients identify the possible opportunities of scaling up their revenue
by analyzing the last segments'
performance. Good analytics can provide you with actionable insights so work
can be done on expanding the offerings.
Mitigate risks
Minimizing the risks in contracts is the essence of contracting for any
business. Analyzing contracts help with reducing
the risks and predicting problems before they happen. AI can be tuned to
alert you of any off-contract buying or any
other hidden risks.
How to select the best tool for contract analytics?
It is critical to understand primarily that artificial intelligence in
contract analytics is not some magic that will do all your work. AI can only
function as well as the data it gets to work on, which means that it has to
be supplied with the right data sets to function to its maximum potential.
Here is our checklist to help you select the best contract analytics
tool for your business
Easy to use: No software or technology should be
overwhelming to its users. It needs to be designed in a way that makes
the employees
welcome and eases their work. Any new system that gets adopted into an
organization needs to gel well and quickly. The
transition from an old system to a new one is the hardest for any
organization to grasp. Making this phase seem not so
daunting is what should tick the box when you select a CLM for contract
analytics.
High configurability: A rigid system isn’t a system at
all. One glove doesn’t fit all in this innovative technology field.
While selecting a
CLM, make sure that the system is ready and has the ability to offer
unlimited configurations depending upon your
requirements.
Minimum efforts: By this, we mean that the
implementation of any new system is a two-way street. Even the best of
systems fail when not
implemented properly. However, the process of migration of old data onto
the new platform should be a task that demands
minimum effort from the employees and the technical team alike.
Reporting: The system has to offer a wide variety of
configurable reports that can be used and tuned to serve your aims
better. The
data derived out of these reports needs to be easy to understand and
laid out in a generalized as well as a specific
manner for everyone.
Data attributions: No AI and analytics can function
well if it is not linked to accurate data attributes. A system that
understands and allows you to design the data attributes the way you
want will suit you the best.
RazorSign’s CLM is an AI-powered contracts-driven legal ops platform
that is designed to get you the best of contract
analytics. It offers unlimited configuration capacity and gives you the
best possible opportunity to design contract
analytics the way you want.
Conclusion
Contract analytics revolutionizes contract management by leveraging AI and
machine learning to extract valuable
insights. From tracking parties to identifying growth opportunities, it
enhances efficiency and agility. Prioritizing
ease of use and configurability is crucial in selecting a tool. RazorSign’s CLM
offers comprehensive analytics,
empowering businesses to streamline operations and stay competitive.
RazorSign
