What is the impact of Artificial intelligence (AI) on contract management?
Artificial intelligence (AI) will have a significant impact on contract management tools: it automates many of the manual tasks associated with contract management. Whatsmore it provides organizations with more efficient and accurate contract management processes.
Following steps of contract life cycle will be impacted:
- Contract Review and Analysis
- Contract Negotiation
- Contract Execution
Relevance of AI for contract management tools:
According to a study by IACCM (International Association for Contract and Commercial Management), 45% of organizations are planning to implement AI-powered contract management tools within the next two years. Which is quite a lot.
Furthermore, the study analized organizations that have already implemented AI-powered contract management tools. Those reduced contract review times by up to 80%. They increased the accuracy of the review process by up to 90%.
Impacts on contract life cycle:
Impact on Contract Review and Analysis:
One of the key areas where AI can help with contract management is in contract review and analysis. AI-powered tools quickly analyzes large amounts of data, identify key clauses and terms. Thanks to this, AI flags potential risks and issues.
For example, a study by Deloitte found that using AI to analyze contracts can reduce the time needed for contract review by up to 80%. This is consistent with IACCM study. The latter found that AI can be used to identify key clauses in contracts, such as payment terms and termination provisions.
A.I. provides as well real-time guidance on contract language and terms.
Impact on Contract Negotiation:
AI can also assist with contract negotiation by providing real-time guidance on contract language and terms. This can help organizations to negotiate more favorable terms, reduce the risk of errors and non-compliance, and improve the overall negotiation process.
For example, AI-powered tools can analyze large amounts of data on market trends and legal precedents. They provide organizations with insights into how to structure contracts and negotiate terms.
Impact on Contract Execution:
In addition to assisting with contract review, analysis, and negotiation, AI can also help with contract execution. AI-powered tools can identify and flag any missing or incorrect information in contracts. They help organizations to ensure compliance with relevant laws and regulations.
For example, a study by PwC found that AI can be used to automatically verify the accuracy of contracts, ensuring that all relevant information is included and that contracts are compliant with relevant laws and regulations.
Conclusion on AI for contract management tools
Overall, the use of AI in contract management tools will help organizations to manage their contracts more effectively. It reduces the risk of errors and non-compliance.
By automating many of the manual tasks associated with contract management, AI-powered tools will enable organizations to work more efficiently and accurately. This can help organizations to:
- save time and money
- reduce the risk of errors and non-compliance
- improve the overall contract management process.
In conclusion, the impact of AI on contract management tools is expected to be significant, but is not here yet. If you feel like this is far too complex for your needs, there are always the brave old Excel sheets for contract management, which are not going to disappear any time soon :-).