AI (Artificial intelligence) is revolutionizing many industries, and it’s catching on in the field of contract management. AI’s range of capabilities can streamline and enhance contract management processes from metadata extraction to on-demand clause creation. AI can empower your organization to improve efficiency, reduce risk, and gain valuable insights.
Contracts 365 has partnered with World Commerce and Contracting (WorldCC) to present a four-part webinar series about the impact of ChatGPT on contract lifecycle management (CLM). Our first webinar, Applying Artificial Intelligence to Contract Management, explores ten practical ways AI can improve contract management processes. In addition, we’ll evaluate each feature’s current maturity level and potential value for businesses. We feel it’s beneficial to share these approaches so that companies can prioritize their needs and better evaluate contract management software vendors familiar with the value of AI in contract management processes.
1. Metadata Extraction for Contract Management in Dynamics 365
AI facilitates the automatic extraction of valuable metadata from contracts without extensive model training. Extracted data could include contracting parties, effective dates, termination clauses, and payment terms. AI-powered tools can also help you visualize, validate, transform, and place data to streamline contract management. This feature provides value to companies by automating workflows and adding value through alerts and escalations.
2. Clause Comparisons and Risk Assessment
With AI, companies can automatically categorize clauses and compare them against standard clauses. AI algorithms can read counterparty-suggested language and assess it for complexity and risk. Legal teams can then identify potential issues. The ability to identify and address high-risk clauses will streamline contract review processes. The clause comparison and risk rating are not presently mature and require diligent oversight at this time.
3. Clause Extraction
AI expedites extracting specific clauses that meet pre-defined criteria, enabling companies to generate a data construct to streamline retrieval and management. Clause extraction supports clause-specific approvals, reporting, analytics, alerts, and escalations, ensuring contract governance and compliance. Although this feature is not fully mature, it promises to progress steadily as it builds on the success of metadata extraction.
4. Obligation Extraction
AI enables companies to extract obligations from contracts automatically and capture essential data attributes. The data is then available for automated obligation tracking, jeopardy management, and strategic reporting. AI-powered contract management tools spotlight critical obligations so they can be addressed promptly. Although this feature can provide significant value to your organization, its maturity level is currently moderate. Therefore, it still requires manual oversight and management.
5. Contract Summarization
AI will produce contract summaries highlighting pertinent information. You can save the summaries as rich metadata text fields or independent documents. Contract summaries will illuminate crucial aspects of the contract and provide quick insights for users and executives without their having to review the entire document. The contract summarization feature is mature but only moderately impacts user experience and workflows.
6. Contract Language Translation
AI tools offer on-demand contract translation between languages. However, translation accuracy may vary due to local idioms and regional nuances. For that reason, you should also implement a validation process to ensure the integrity of the translation.
7. Contract Analytics and Automation
AI-based analytics drive advanced search capabilities, allowing companies to identify relevant contract information quickly. Companies can automate amendments, compliance checks, and e-signature integration tasks by feeding the search results into automated actions and workflows. This feature streamlines contract management, reducing manual efforts. While only moderately mature, it promises significant value as it develops.
8. AI-Influenced workflows Dynamics 365
AI can observe patterns and actively or passively adjust workflows based on pre-defined criteria. For instance, if a standard contract consistently stands up to legal review without problems, AI can suppress the legal review and document that arrangement in the audit history. AI-influenced workflows improve efficiency and reduce unnecessary reviews. This feature may progress a bit slower and is still immature.
9. On-Demand Contract Creation
You can use AI-powered chat interfaces such as ChatGPT to initiate draft contracts on demand. Contract professionals can then issue command prompts with refinements. You can save the corrected content into a secured area for additional review via workflows. Also, you can convert drafts into modular and standardized templates. By leveraging AI, companies can streamline contract creation and facilitate additional reviews. For enhanced collaboration.
10. On-Demand Clause Generation
As with on-demand contract creation, you can leverage AI to create dynamic new clauses during the review process. AI tools and in-context prompts to GPT can interactively refine and create new clauses based on specific requirements. Contract teams can adapt and customize agreements, improving contract quality and compliance.
Using AI to power contract management provides significant benefits. Automate mundane tasks, extract critical data, streamline contract management, reduce risk, and improve efficiency. However, not all AI is equally valuable. Understanding the level of AI maturity, the potential value to your company, and how to make AI work for you is vital.
Leading AI Contract Management Software for Microsoft Dynamics 365
Contracts 365® is powerful contract management software purpose-built for businesses that run on Microsoft Dynamics 365. We combine advanced features with expert configuration and thoughtful implementation to deliver the most flexible, secure, and easy-to-use CLM software on the market today.
And don’t forget to watch our webinar, Applying Artificial Intelligence to Contract Management,
By Contracts 365, www.contracts365.com
