By Colin Earl, CEO of Agiloft

The Next Evolution of Contract Management

Technologies like AI, machine learning and robotic process automation (RPA) and low and no-code platforms and all made substantial progress over the course of 2019. Thanks to these technologies, contract management is evolving faster every year and its value is extending across the enterprise. Let's take a look at how contract management will continue to grow in 2020.

CCLM

Gartner estimates that currently only 15% of organizations have an enterprise contract lifecycle management (CLM) system but by 2023, 90% of organizations will have implemented CLM, making contract management one of the fastest growing spaces in the software industry. Because contracts are the lifeblood of an organization, they present a tremendous opportunity for companies who don't have a CLM strategy in place. In 2020, we will see the trend of contracts extending to adjacent commercial activities continue, unlocking value by integrating disparate areas from supply chain to compliance. 

As companies continue to work towards digital transformation, the ability to model contracts more deeply to get better value out of counterparties will take center stage. The next evolution of contract lifecycle management - let's call it contract and commerce lifecycle management (CCLM) will see companies use contracts as the core system of record that integrates the full scope of internal and external commercial systems to drive enterprise-wide value creation.

Having said that, the number one driver for implementing a CCLM system will not be operational efficiency or maximizing profitability, it'll be managing risks associated with compliance. Contracts contain all kinds of sensitive information. Whether it's valuable IP, pricing information or confidential customer and employee data, not keeping contracts in a secure access-controlled system is a recipe for disaster. More companies will realize the real value of a well integrated CCLM system is in mitigating security and compliance risks.

AI and Smart Contracts 

While the promise of smart contracts were thoroughly hyped in 2019, their potential still won't be fully realized in 2020. Eventually, smart contracts will become a core component of contract management solutions over time but that transition will not happen in the next year. Artificial intelligence (AI), however, will make a measurable impact on contract management in 2020 as a critical driver for autonomous contracting. For example, by analyzing the metadata in counterparty contracts received, AI can pull out the clauses and highlight new changes and how they relate back to the clauses that the organization likes to use. AI will empower companies to easily make comparisons and drive negotiations, expediting the process and removing a manual layer.

RPA

Automation will continue to reduce human intervention in traditional contracting activities in 2020. In the age of automation, robotic process automation (RPA) will take center stage as a powerful tool to automate mundane tasks while enabling integration and digitization of contract. Just like there are hundreds of thousands of skills being built using the Alexa platform, in 2020, companies will start to build bots and deploy them through a digital interface to execute tasks that are repetitive such as reminders, escalations, and approval assignment. This ensures approval task communication is always timely and staff members are freed from busy work to focus on productive activities.

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About the Author

Colin Earl is the CEO of Agiloft. Agiloft provides top-rated product suites for Contract Management Software, Service Desk, Custom Workflow, and more.