Contracts and agreements underpin almost every aspect of business. Sales contracts secure revenue, vendor contracts control costs, partnership agreements drive growth. Without structured oversight of this critical documentation, enterprises expose themselves to substantial financial, operational and legal risk.
According to the folk over at ISG, implementing centralized, proactive AI contract management using modern tools can transform this significant liability into a source of innovation and competitive advantage. Technologies like intelligent contract platforms promote enterprise-wide visibility and control over contracts to maximize upside and minimize downside.
Gain Visibility into the Complete Contract Portfolio
With contracts scattered across siloed systems and paper archives, few organizations fully understand their complete inventory of agreements. This blindness cripples risk management, compliance, renewals, dispute resolution and other contract-related processes.
Top companies use central contract repositories to avoid data silos:
- Standardize contract naming conventions and storage protocols enterprise wide.
- Digitize paper contracts via scanning and OCR technology.
- Integrate related systems like CRM, ERP and accounting software.
- Feed key metadata and terms into the platform via APIs.
Access to the complete agreement inventory through a unified interface transforms visibility and control.
Systematize Contract Workflows
With contracts flowing across departments, ambiguous accountability around reviews, approvals and oversight often exists. Deadlines get missed, issues go undetected, non-standard language gets introduced.
Instituting standardized contract workflows reduces process ambiguity:
- Establish service level agreements for contract cycle times.
- Map approval chains and escalation paths for deviation.
- Build required checkpoints prior to execution like legal, risk and compliance review.
- Automate notices, alerts and notifications tied to workflow events.
Digitizing and systematizing end-to-end agreement workflows boosts enterprise agility significantly.
Continuously Audit for Risk
Beyond financial risk, improperly managed contracts expose organizations to regulatory non-compliance, intellectual property loss, brand damage and litigation. Staying on top of risks across existing and new contracts is challenging without the right oversight.
Enabling continuous automated auditing of contract risks is critical:
- Create risk scoring frameworks aligned to organizational priorities.
- Develop clause libraries encoding requirements from legal, compliance, procurement, sales and other stakeholders.
- Scan contracts using artificial intelligence to surface risky terms and conditions.
- Dynamically adjust scores as underlying requirements evolve over time.
This provides complete visibility into potential contractual risks organization wide.
Unlock Value Through Analytics
Beyond risk management, vast amounts of data embedded in contracts remain untapped by most businesses. Details around customers, products, regions, industries and trends could fuel new monetization models.
Advanced analytics unlocks hidden insights:
- Use machine learning techniques like NLP to structure unstructured contract data.
- Continuously categorize agreements based on common attributes.
- Identify sales, procurement and partnership trends over time.
- Assess pricing models, termination dates, renewal rates and other key metrics.
- Simulate future performance under various market conditions.
The collective knowledge trapped in contracts can power data-driven decision making company-wide.
Transitioning to Intelligent Contract Management
While decentralized and manual methods have sufficed in the past, modern agreement volume, complexity and risk demand technology-driven solutions. Intelligent contract management platforms provide the foundation for complete control.
Best practices for implementation include:
- Seek executive sponsorship and form a cross-functional transition team.
- Balance standardization with flexibility to customize for some processes.
- Integrate with complementary systems like CLM, DMS and eSignature solutions.
- Phase rollouts incrementally across business units.
- Encourage user adoption through training and support programs.
The transformation towards intelligent contracting unlocks significant strategic value. Establishing enterprise-wide visibility, standardized processes and analytical capabilities converts contracts from obligations into strategic assets.
Conclusion
Contracts drive modern business but inadequately managed agreements introduce massive financial, regulatory and operational risk. Visibility across siloed repositories, systematized lifecycle processes and continuous risk analytics enabled by intelligent contract platforms offer a proactive management solution. As agreements permeate every facet of business, establishing centralized, technological control over contracts separates market leaders from industry laggards.