AI in contract management systems – key considerations
Artificial Intelligence (AI) now permeates many areas of business, and is beginning to be seen in contract management. Contract law and business contracts are highly specialised and require appropriately qualified (and highly paid) company lawyers to translate for the business people who have to implement them.
Contracts between vendors and clients hold the legal commitments, rules, payments, penalties and timelines that govern the relationship. Ideally, the documents would be used by the business to ensure the relationship is commercially successful. Both parties could use them to identify and mitigate risks, reduce costs and waste, and maximise value.
Digitise and transform
One of the exciting growth areas for AI is in learning human thought processes, reasoning, and interacting in a useful manner. This is the function of a leading edge CMS. Once the CMS has deciphered the contract wording, it can provide genuine intelligence to the business.
Management can use the system to identify business opportunities and risks. This is relevant to both vendors (commitments) and clients (requirements) but also, notably, areas of mutual benefit.
The use of AI (aka Expert Systems) is a key issue in public finance. The Chartered Institute of Public Finance and Accountancy (CIPFA) Finance Business Partnering briefing raises some points – http://www.cipfa.org/~/media/files/training/webinars/businesspartnerwebinar.pdf?la=en.
By analysing and improving performance on today’s contracts, the business can learn how risks and opportunities can be better managed in tomorrow’s contracts. Thus, the application of AI can have a positive change in areas across the full lifecycle. Company strategy can take account of risks encountered, and mitigate them. Known areas of strength and weakness can influence negotiation with business partners. Executive decisions can be better informed.
In summary, AI can transform written commercial agreements into a usable knowledge base of commitments and benefits. This can be used to drive better business relationships, allowing more collaboration, reducing unnecessary cost and maximising value.