Artificial intelligence is the latest technological innovation taking place in the contract management world. With artificial intelligence most of the task is automated and the contract data is used in generating bulk opportunities for profit increment, savings etc. The outcome of a research conducted by Accenture says that by 2035, the successful implementation of AI can fetch 38% of the revenue. As per Forrester research $47 billion will increase in profitability by 2020. This would indirectly enhance the complete performance efficiency of the organisation. Technology can cost effectively enhance the productivity. With the involvement of artificial intelligence in contract management the complete user experience will be enhanced as it would ease and explore new areas of scope to build up strategies.
Today AI technology is still too young to be effectively used in contract lifecycle management. The recent developments in contract discovery and analytics have shown the potential of AI and raises the bar for what the contract management solutions should accomplish. As the technology develops it is clear that AI can be utilized for not just contract management, but also, in identifying risk involvement, anomalies in contracts and suggestions, task prioritization, third party contracts, auditing and many more areas. Following points show how algorithms use contract data to enable better decision making
Data in the Contracts
Genetic and statistical algorithms can be used to describe the data in the contracts. This will help in deriving out useful information from a particular type of contract. This will also lead to enhancement in better decision-making.
By digitizing the complete data including terms and clauses in the contracts, predictive models can be derived. Predictive models help obtain the significant variables that impact the key performance index for contracts. Visualizations provide summary of the information in contracts thereby enabling informed decision making to drive better business results.
With neural networks, anomalies in contracts can be found out. These models help in identifying relevant clauses in the contracts. Machine learning is being taken up by modern legal firms to author better contracts.
As per Forrester’s research by 2020 there will be increase in profitability by $47 billion in contract management market, AI will be the major contributor towards this. AI will summarize the potential risk areas in the contracts. AI will also make sure whether the contract confines to the company policy and guidelines. AI will read through emails to draft initial copy of the contract. Organizations will spend less on resources to handle contract management and focus more on its analysis. Many of the processes will be automated, hence huge amount of time is saved and can be utilised in other tasks. Organization’s hidden revenue is lying within the contracts, effective use of which will lead to organization’s performance enhancement. AI will change the usual concept of contract management itself. With the introduction of AI to contract management, overall enhancement of the organization will take place.