Contracts are the most complicated to skim through. They span across
verticals and have functional roles across all
verticals. The issue of information being inaccessible makes it even more
challenging to manage them. There is a risk of
losing out on business opportunities that may go unnoticed in this chaos.
When contract management is done manually, it becomes even tougher due to
numerous amendments and recurring renewals. As
the contracting base grew with exploding business activities, the need for a
comprehensive contract management system
was felt.
That’s how contract lifecycle management (CLM) was
conceptualized. With CLM solutions coming into play, the landscape
for contract management started changing rapidly. More was expected in less
time now that an automated software was in
place. The markers that provided CLM solutions had to expand their horizons
and offer more than just contract
management. Thus, the work on contract intelligence began.
Contract intelligence and beyond
Contracts hide a lot of information. It has a lot of intelligent insights
that could help businesses analyze risks,
recognize cost-saving opportunities, limit liabilities, and so on and so
forth. By inculcating AI with a CLM, the
innovators found a breakthrough to chart out these insights and convert them
into actionable items. For example, using
AI, the tool could identify and decipher unstructured data into structured
enterprise data.
Now AI has the capacity to generate MIS reports based on the contracts that
are stored in the system. It understands the
meaning of clauses and contracting language. This helps revolutionize
contract management from simple document
management to a fully equipped system that gives a complete overview of the
contracting portfolio.
Applications of contract intelligence in contract management
With the help of advanced machine learning algorithms, it is now possible to
analyze clauses and other data. It makes it
easier for companies to review contracts and quickly streamline the
processes required for a large amount of contract
data. This in turn smooths out the negotiation process directly affecting
the turnaround time for contracts.
Here are a few quick examples of applications of AI & ML in contract
management.
Classification: Each contract can be classified
according to its type and content. E.g. - SOW, MSA, Leave and License,
Lease, Sale Purchase, Sub-contractor agreements, so on and so forth.
Classifications can also be done to segregate
similar types of documents for contracts.
Clause highlighting: Since the AI is now capable of
understanding the language of contracts, it has become possible to
identify and highlight the significance of paragraphs or clauses as and
where required. AI can also highlight important
information covered in these clauses for immediate attention.
Identify new clauses: If there are a lot of new
documents containing new clauses, AI can learn all the new clauses and
save them in its clause library for further use.
Learning and training: A supervisor can alter, edit or
change any wrongly classified clauses, and the system will learn
it over time and recognize the same in the future based on the edits.
How does contract intelligence work?
AI & ML has always been a complex and dynamic field that is loaded with
intricacies. It gets more convoluted when it is
applied to an already lively field of contracts. Let us see a few scenarios
in depth. Automatic extraction of important
information An important and upcoming field is contract abstraction and
migration. It automates the entire process of
extracting information from your contracts. With the power of Natural
Language Processing (NLP) based ML, intelligent AI
algorithms can withdraw the data with remarkable speed and accuracy. It can
also create an index of all keywords,
critical fields, obligations, and compliances. This implies that you can
automatically derive information like party
names, addresses, vendor information, signature dates, renewal dates, so on
and so forth. Auto-tagging can also play a
critical part to bring together the right data and the right people on a
single platform.
Pro Tip: Read about the benefits a CLM can bring for your business so
you can make an informed choice.
Deriving actionable insights
When a system is in place, it is obvious that there will be thousands of
legal documents that will be uploaded on it.
Now imagine, that you would have to go out and tag each of the clauses or
important points manually for the process
ahead. But with AI & ML, it has now become possible to let the system learn
these tags and automate the entire process.
With a trained model, you can now upload a document in the software, and it
will automatically inculcate the tagging
that it learned.
Key takeaways
A comprehensive CLM offers tremendous potential to help your business
migrate to more robust operations. The impact of
advanced AI & ML on CLMs is surely a step ahead, it unearths and unlocks the
hidden potential that contracts can offer
to the business. RazorSign’s CLM has been proven instrumental in being able
to fit our client’s needs like a glove - the
reason being, that we are able to offer unlimited. Read
more about why our CLM will be your best choice.
RazorSign
