Is your business facing issues like a lack of real-time data analysis? Are human errors affecting the quality of your products or service ranges?
With the introduction of AI and automation, businesses are getting a helping hand in the form of accurate and data-driven decision-making.
Along with supporting businesses, AI is also making an impact in Contract Lifecycle Management. The AI-powered CLM software can help companies to streamline their contract lifecycle.
As per Concord’s statistics, business organizations that have implemented AI-powered CLM have been able to reduce the contract processing time by 80%.
So, let’s dig deep into the blog to understand how AI has become inevitable for Contract Lifecycle Management.
What is Artificial Intelligence in Contract Lifecycle Management?
AI-CLM or Artificial Intelligence in Contract Lifecycle Management is the integration of Machine Learning, Natural Language Processing, and Predictive Analysis to automate every stage of CLM, starting from contract creation to contract renewal at the end.
Contrary to the traditional contract lifecycle management which had the capacity only to store the contracts; the AI-powered CLM can understand the essence of the contract and can offer intelligent recommendations that can help the contracts to turn into intelligent business assets.
The table will help you to understand how AI powers CLM.
| Serial No. | Technology | Functionality | Outcome |
| 1 | Natural Language Processing (NLP) | Understanding The Legal Language | Review Time Reduced |
| 2 | Machine Learning (ML) | Learning from Past Contract Data | Accuracy Improved |
| 3 | Predictive Analytics | Forecasting Outcomes and Risks | Amount Saved by Forecasting Risks and Optimizing Decisions |
| 4 | Robotic Process Automation | Automating Repetitive Tasks | Contract Hour Reduced |
| 5 | Computer Vision | Processing Document Formats | Understanding All Possible Types of Contracts |
How AI is Helping Make Contract Management Easier
Artificial Intelligence (AI) is revolutionizing the way businesses manage contracts by bringing automation, intelligence, and efficiency into every stage of the contract lifecycle. From creation to execution, AI-driven solutions are making contract management faster, smarter, and with less errors.
We can have a look at the stages.
1.Streamlined Contract Lifecycle
The AI-powered orchestration engine can help streamline the contract lifecycle by helping the business organization locate contracts, perform calculations, and generate reports from a single unified platform.
Real-time updates can help companies to make better decisions.
2.Seamless Contract Creation
The AI-empowered tool can ensure an automated contract drafting maintaining accuracy. AI-driven analytics can analyze the data to make negotiation easier, suggest better contract terms, and help people make better decisions.
3.Extraction of Important Information
The software can handle many contracts at once. Generative AI can scan an existing contract and extract customer-specific terms, which is especially required when you are modernizing a contract for merger & acquisition.
4.Receiving Valuable Insights from Contract
In a business organization, contracts are usually scattered across various departments. It makes extraction and analysis of important data both difficult and time-consuming. Sometimes, it results in financial losses and compliance risks as well.
The AI-powered contract analytics system can extract important insights from contracts using NLP and ML. These insights can help the company to find accurate contract performance and mitigate potential risks.
5.Centralized Contract Storage
It is often difficult to check manually whether a party is following the Service Level Agreement (SLA) post signing a contract or not. It often leads to missed deadlines and other concerns. The AI-powered CLM solution has a centralized contract storage system that keeps all the contracts in a single place, gives reminders to all parties when a deadline is nearby along with it checking if any party is breaching the contract terms.
Organizations can reduce risk, save time, and gain valuable insights that can drive better business decisions by leveraging AI in contract lifecycle management. AI is going to become an essential tool for managing contracts with greater accuracy, transparency, and control.
Departments Reaping the Benefits of Automated CLM
Some departments are reaping the benefits of automated CLM.
We are discussing them here.
1.Procurement Department
The AI-empowered KYC and document processing system helps in seamless vendor onboarding. It can also filter the right vendor for you based on your criteria, evaluating the risk factor, and your preferable price range.
2.Sales Department
It can make an integration between sales and CRM platform to generate contracts. The software can suggest price ranges and discounts as per the deal ranges. It can also send necessary reminders and monitor the signature as well.
3.Legal Department
The AI-powered CLM is trained to read the legal language and track compliance, and it can audit any legal document as well.
Automated CLM is transforming how key departments like Procurement, Sales, and Legal can operate by reducing manual workload and increasing efficiency. These departments can make faster, data-driven decisions while ensuring accuracy and compliance by integrating AI into their workflows.
Benefits of Leveraging AI in Contract Lifecycle Management
There are many ways, i.e. automated contract drafting and risk analysis, leveraging them the automated CLM solution is befitting the businesses.
We are going to explore the ways.
1.Repetitive Task Automation
Contract drafting and data entry are some of the repetitive tasks that AI-driven CLM does accurately without any error. It helps the businesses to focus more on the strategic part.
2.Reduction of Time
From contract drafting to the contract reviewing process, the artificial intelligence-powered tool can significantly reduce the contract lifecycle management time.
3.Compliance Improvement
It can detect any kind of contract anomalies at an early stage and can conduct compliance monitoring in real time.
4.Large Data Set Management
The AI-CLM leverages the NLP or Natural Language Processing tool to understand the legal language written in a document. It can even manage large data sets and successfully extract important information from there.
5.Strategic Decision Making
AI has made all the difference between how a traditional CLM used to work earlier and now how it performs its task. It can instantly extract the correct insights from thousands of contracts, the dashboard will show clearly the contract value, deadlines, etc. All will make your decision-making easier.
6.Improved Collaboration
The software has made it easy to work between different teams and stakeholders within a business organization. It provides a central platform where different teams can share documents, track progress in real-time, and get immediate updates thus denying any kind of miscommunication and improving collaboration.
7.Faster Contract Creation & Negotiation
The solution can easily draft the contract for you with a predefined template and clauses. Even it can help in contract negotiation by offering alternative terms and clauses based on historical data, past negotiations, and industry benchmarks. Ultimately, it leads to the creation of an agreement in a faster way.
Leveraging AI in Contract Lifecycle Management empowers businesses to streamline processes, reduce risks, and make smarter decisions. As AI continues to evolve, its role in enhancing efficiency, collaboration, and compliance within contract management will become more critical.
Future Trends in AI-Powered CLM
We are expecting to experience more new features in Contract Lifecycle Management as AI is evolving continuously.
You can read the section more to know it further.
1.Deeper AI Integration
The advanced features of NLP or National Language Processing can understand complex legal terms in a better way. The more sophisticated ML or Machine Language can make more accurate recommendations and predictions of the contract. The combination of AI and blockchain technology can make the contract more secure.
2.Better Ethical Implication
It is expected that AI will be more careful in ethical issues while dealing with a contract and its lifecycle management in the future. The tool will be more trained to handle diverse data and not to produce any biased decisions.
It is expected that in the future AI will work in a more creative and faster way and businesses will receive better results in the future.
3.Positive Impact on Legal Professional
Experts predict that AI will take over most of the routine tasks in the future, and people who are associated with the legal profession can focus more on strategic tasks.
However, legal professionals will also have to expand their AI literacy for a better understanding of the recommendations made by AI. It will help them to make better decisions regarding contracts.
As AI continues to advance, its role in Contract Lifecycle Management will become more intelligent and supportive. These future trends are telling that AI will not only automate tasks but will also enhance the capabilities of legal professionals and business leaders.
Final Thoughts
The modern-day AI-powered CLM solution offers a new perspective on contract management. By automating the entire phase of the contract lifecycle, the solution has increased the efficiency and accuracy of the entire contract lifecycle which results in better outcomes.
SutiCLM, the AI-powered Contract Lifecycle Management (CLM) can automate and streamline your contract lifecycle seamlessly. You can smartly manage your contract with features like Contract Templates, Contract Authoring, and others with the solution.
