8.4.2023
According to research conducted by World Commerce & Contracting, poor contract lifecycle management processes decrease the average organization’s profitability by 9.2% annually. Improving your organization’s CLM is no longer a question of “can we afford to do this” — it’s a question of “can we afford not to?”
Fortunately, with the advent of artificial intelligence-powered CLM solutions that use machine learning to optimize outcomes, the potential for returns has never been greater for organizations willing to make the investment. Here are 10 ways that AI-driven CLM solutions can increase efficiency, minimize costs, and ensure visibility and integrity across the entire process.
Gain visibility into contract risk
AI CLM systems can power automated scoring of risk in contracts to flag those that might represent a particularly high risk to your organization. By highlighting potentially risky contracts, it empowers your team to find ways to reduce the risk, or to put more focus on managing those specific contracts.
If you don’t do it: you take the chance of unpleasant surprises from high-risk contracts that can leave you with legal and financial exposure.
Automate contractual compliance
Your AI CLM system can be configured to recognize regulatory and contractual compliance terms specific to your industry or jurisdiction. Upon recognizing these compliance requirements, the CLM system can automatically configure notifications for specific team members, ensuring awareness of all key dates and obligations, and even documenting a complete audit trail.
If you don’t do it: contractual compliance becomes (or remains) much more labor-intensive, your audit trails may be incomplete, and you can be held liable for non-compliance.
Streamline processes
AI-powered CLM helps to automate workflows, with notifications that remind key personnel of important contractual obligations and prevent inefficiencies. Automated workflows also help senior management identify bottlenecks and reassign resources to achieve optimal performance.
If you don’t do it: in a best-case scenario, your workflows are simply less efficient, with a higher resource cost and a negative impact on employee satisfaction. In a worst-case scenario, key milestones are missed, and small problems go unnoticed until they become major crises.
Improve review times
By leaning on AI-driven CLM solutions that help to ensure greater visibility, compliance, and efficiency, it makes it possible for your organization to accelerate legal review without compromising quality and better align current head count to more strategic work.
If you don’t do it: you will continue overcommitting valuable resources to immaterial work and inefficient legal review cycles.
Reduce repetitive tasks
Employee satisfaction is not an obvious benefit of an AI CLM solution, but it is an important and underappreciated one.
Automation removes the need for employees to perform rote, repetitive tasks on a daily basis. An AI solution excels at exactly this sort of work, which is the same type of work that negatively impacts the job satisfaction of employees. Human beings become less efficient at these tasks over prolonged periods of time, but AI actually becomes more efficient as it learns what to look for and how to respond to it.
If you don’t do it: you risk employee burnout, costly staff turnover, and an unmotivated workforce that becomes more error-prone as a result.
Maximize employee expertise
Artificial intelligence does not operate with complete independence. It requires human expertise to guide it and fine-tune it and step in when it encounters anomalous situations. An AI CLM solution does not replace the need for employees; it frees them up for more intellectually stimulating and engaging tasks.
If you don’t do it: you are missing out on the opportunity to leverage your teams’ expertise to its fullest extent, overpaying for experienced professionals to do repetitive tasks that make them less satisfied in their roles.
Standardize contractual processes
The most efficient way to manage contractual lifecycles is to put every contract through a single centralized system that provides visibility into the process from start to finish. Using a CLM process guided by AI-enabled technology ensures a consistency across the entire process and makes it easy to instantly identify any contracts with issues that need to be resolved.
If you don’t do it: you will commit legal resources to finding out the status of individual contracts manually, spending valuable time and resources shepherding each one through an inefficient process.
Improve legacy data access
Over time, data management becomes an organization’s the greatest CLM challenge. As processes evolve, contracts wind up stored in different locations and formats. If the organization relies on third-parties to help manage contractual lifecycles, that data may wind up siloed and inaccessible to key stakeholders.
An AI-enabled solution can improve access to legacy data in a number of ways, from digitizing physical contracts with OCR to creating a user-friendly software solution to browse and access digital records regardless of where they are stored.
If you don’t do it: you are vulnerable to all of the risks of incomplete and inaccessible data, including a lack of historical contract information, failure to comply with contractual terms, and poor audit outcomes.
Improved connectivity with other systems
Robust enterprise content management systems unlock unprecedented efficiencies for organizations that can access them. But inconsistent data and outdated storage and retrieval systems often prevent an organization from being able to take full advantage of these advances. AI-enabled solutions can clean up and standardize data so that it’s ready for integration with some of the most powerful enterprise solutions in the world.
If you don’t do it: you will continue missing out on the efficiencies and advantages that automated content management solutions can provide.
Scale efficiently
An AI-enabled CLM system standardizes data, automates compliance, and provides total visibility into the entire process. As an organization grows, scaling an AI CLM solution does not require a proportionate increase in team members to keep it running efficiently, because AI becomes more efficient over time.
If you don’t do it: your organization will continue to struggle to scale up, adding layers of management and complexity and growing less efficient over time.
AI-enabled contract lifecycle management automation is not just the way of the future — it is how more organizations are already solving a variety of challenges, from visibility into the CLM process to employee satisfaction. The benefits are already significant and increasing exponentially, and the costs of not embracing it are only growing.
Mainspring can help with an AI-powered CLM solution that’s right for your organization.