Various industry estimates put the cost of inefficient contracting anywhere from 5% to 40% of the total contract value. These costs come from the time spent in researching terms and conditions to make sure new contracts are consistent with standard practices, or from losses due to missed opportunities or poor contract management.
An emerging function of contract lifecycle management systems addresses these deficiencies. That function, often referred to as Contract intelligence, brings Artificial Intelligence (AI) capabilities to contract analysis, especially the ability to extract, understand and interpret the meaning of provisions. It is becoming the foundation of effective contract lifecycle management.
Contract Lifecycle Management Systems Explained
All Contract Lifecycle Management (CLM) systems are equipped with capabilities to capture, review and search basic information. For example, the average CLM system captures party names, commencement date, term and termination date. However most CLM systems do not capture key information embedded in a contract, or if they do, they can handle standard documents with simple clauses and little variations, but do not deliver satisfying results when the contracts do not use standard language – for example, contracts from a subsidiary or a competitor, or when the provisions must be interpreted to be accurately classified. This explains why, in many enterprises, subject matter experts still spend a lot of time to manually review and analyze pages and pages of complex legal agreements.
What does Contract Intelligence mean?
Recently, the term “contract intelligence” has popped up in the context of CLM. But what does it mean exactly and how is it different from contract analytics? Read our white paper “What is Contract Intelligence?” to learn more, in particular:
- How Contract Intelligence goes beyond standard contract analytics
- Why Contract Intelligence is an empowerment tool for subject matter experts and decision makers
- Why Contract Intelligence is critical to stay compliant with changing regulations
- How Contract Intelligence helps a paper-intensive vertical like the insurance industry improve its overall operational efficiency
DOWNLOAD THE eBOOK
