Across companies, a contract is viewed as something to be signed, filed away, and neglected until something goes astray. In an event when something goes off track, it is usually a frantic effort to obtain the required documents to recognise the implications for a company. Advance innovation like artificial intelligence is supporting companies to get past the issues when it comes to contracting using AI-based contracting software.
By leveraging algorithms on data sets of contracts, it can discover patterns and spins out the different variables, including specific agreement terms, dates, and names of the parties. This empowers businesses to have much better and transparent control over their contracts, which can serve to be very valuable during challenging times, such as an ongoing pandemic.
Deriving Insights From Scattered And Complex Contract Documents
Complex contracts may be scattered across different repositories, locations and sources which is incredibly challenging to manage if done manually. This becomes even more complex when there are slight changes, amendments or renewals to be made in the contracts.
Unfortunately, the COVID-19 pandemic is causing this issue in a highly dramatic manner. As the virus spreads and containment plans evolve by the day, companies with operations worldwide must analyse who they are conducting business with along with the terms of the agreement. While contracts are the single source of truth for this knowledge, a lot of companies have no single system of record to reference analyse these documents.
“The COVID-19 pandemic has hit companies across the globe, leaving them little time to review every clause of their contracts to minimise the damage at hand. Now is not the time for organisations to lose sight of contracts and the commitments, compliance needs, and business implications therein. Contracts make the financial foundation of an enterprise, and hence will be foundational to the business strategy,” said Monish Darda, Co-Founder & CTO of Icertis, a global provider of enterprise contract management in the cloud.
Fortunately, a large majority of contracts are digitised. By digitising contracts and managing them on a central, cloud-based platform, organisations can extract clauses from the contract and mark them based on attributes, for example, compliance clause, obligation,” “delivery requirement”, for greater clarity and management.
Using text analytics tools, process automation, OCR, among others, can unlock the real value using contract management platforms. The intelligent insights and recommendations generated as a result can help legal teams make the right decisions without having to manually go through hundreds of copies of contract sources.
“The companies with a single repository for all their contracts can analyse volumes of contract agreements to understand the impacts the pandemic and economic crisis may be having on their business,” Monish said.
Automating Contracting Workflows
An intelligent enterprise contract management platform can address all these issues. It can store all contracts and control who can view them. It can quickly surface how many contracts you have with the suppliers and what protections you have around disruptions related to infectious disease. It allows contracts to be searched en masse to surface business risk. It can speed the signing of new contracts by automating approval workflows.
To unlock the transformative potential of AI into contract management, Icertis, for example, is utilising the quantity and variety of data in the Icertis Contract Management (ICM) platform. This data represents thousands of contract types and templates, and a unique taxonomy collected from hundreds of thousands of clauses – all outlined to customers’ unique semantic structures within the ICM platform. With artificial intelligence, Icertis is allowing users to address previously unmanageable contract hurdles.
“We have an app called ICM DiscoverAI, which leverages the power of AI to transform a legacy and third-party contracts into live ICM contracts. It recognises contract attributes and clauses and semantically pairs them directly to an organisation’s contract type definitions and enterprise clause library, on the ICM platform. The app seamlessly guides through importing legacy and third-party contracts, managing clause deviations, and verifying attributes. This allows our customers to benefit from redlining, versioning, approval rules, and workflows exactly as they would with their own paper,” according to Monish Darda, Co-Founder & CTO of Icertis.
Moreover, today, the interconnection between contracts has led to something known as the Internet of Contracts. The Internet of Contracts (IoC) according to Monish Darda, promises to revolutionise business by providing new ways to create, manage and execute contracts between organisations. The convergence of AI and blockchain is making the Internet of Contracts come alive and is taking much of the manual work out of monitoring performance.