Industry executives and experts share their predictions for 2019. Read them in this 11th annual VMblog.com series exclusive.
Contributed by Colin Earl, CEO, Agiloft
Technologies Impacting Contract Management
Voice-activated technology
As voice-activated technology matures, we see this being
used more and more as the primary interface for accessing information. The
transition will start with routine tasks. For example, rather than clicking
through to a report or dashboard managers will be able to simply ask the voice
bot to bring up the report or the relevant statistic, such as "Alexa: what is
the total value of contracts up for renewal?" The next stage will be more
sophisticated analysis using voice-activated technology, such as
"Alexa: what are the differences between our NDA and that of a potential
partner?" The advantages are efficiency and productivity, as it eliminates
manual handling of a lot of routine tasks. A disadvantage is that it will take
a while before these systems learn the nuances around business language and
there are a lot of security and privacy issues that will need to be worked through.
For example, if they are recording conversations in meetings and sending back
to the cloud, who owns that information? What happens if it's compromised?
Contract Negotiation Using AI
We're a long way from AI negotiating contracts. AI can
help in data analysis to ensure negotiators have the best pricing information
or point out discrepancies in terms to guarantee that guidelines are being
followed. In short routine tasks, this is important. Certain consumer-facing
companies that have tried negotiable pricing based on variables have faced a
significant backlash. For example, soft drink vendors who raise the price based
on weather conditions or airlines who priced based on how many times your IP
address conducts a search.
In the short-term, AI will be useful in negotiating prices
and the execution of commodity or transaction-based contracts, based on supply
and demand. This is already being used on the consumer side by availability on
airplane seats. The industries that will benefit the most from AI negotiation
down the road are those with simple transaction-based business models such as
retail and travel.
Robotic Process Automation
Companies are still managing their contracts ineffectively,
which causes delays in review and approval cycles at best and significant
revenue losses at worst. In fact, Gartner estimates that 85% of companies do
not have an effective CLM system. Robotic process automation focuses on
engaging with existing systems via light-weight software to help businesses
design processes that have routine inputs. The most effective RPA systems are
highly configurable and built on no-code platforms to allow exact mapping to
existing workflows and immediate flexibility when workflows change. In 2019, we
expect the contract management function within organizations to take advantage
of RPA to speed contract cycle time and ease manual processes along the way.
Organizations will either select and deploy software that is configurable to
manage their contract processes and create their own RPA "bots" by creating
"rules" to guide the contract through a set of pre-determined steps to
completion.
AI-Driven CLM
In 2019, AI will help drive the core contract management
lifestyle (CLM) functions listed below:
- New contract generation
- Today, businesses can save common contract clauses in a central
repository and search them for use in upcoming contracts. If driven by AI,
a draft of a contract might be proactively created based off an email
flagged to the contract management system and drawing upon the full history
of contracts for an organization without human intervention except for a
final review. Natural language processing would allow legal departments to
generate draft contracts using the right templates and clauses based on
the contents of an email.
- Risk scoring - Based on
a set of parameters established by the company, contracts are scanned
today and scored based on the level of risk they present. AI might take
this even further by proactively suggesting alternative clauses, terms and
edits to the contract to reduce the risk score.
Contract workflow - Today, contracts are scanned for
key terms, which triggers a contract workflow. Powered by AI, the system will
speed up review cycles by "learning" decision criteria based on agreements
with similar characteristics and modifying the document to meet corporate legal
requirements.
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About the Author
Agiloft CEO and founder, Colin Earl, is a software industry veteran with
over 25 years of experience as a developer, product manager, and CIO.
Colin worked at IBM, General Electric, and three start-ups before
founding Agiloft in 1991. His vision was to accelerate the building and
deployment of enterprise business applications by removing the need for
manual coding. Under his leadership, Agiloft has achieved this goal,
creating a market segment for agile business software. Colin's focus is
on growing a world-class team and aligning the interests of staff,
partners, and customers. He has an engineering degree from Imperial
College, and moved to Silicon Valley in 1986.