Sourcing and Procurement
The benefits of automated contract analysis
Contract management and analysis is a time- and labour-intensive activity that isn't particularly known for its efficiency. It involves teams of lawyers poring over hundreds of pages, marking inconsistencies, making updates, and adding annotations before emailing contracts to the involved parties. Much time is spent on comparing obligations and liabilities, identifying relevant clauses, checking for consistency, awaiting approvals, and sending emails back and forth, not to mention the resources that are spent on these repetitive procedures. Automated contract analysis software can make the process a whole lot quicker, more efficient, and error-free by using machine learning (ML) algorithms to identify and categorise agreements by type, seek out particular provisions, and even use the available data to decide which department, team, or individual a contract needs to be forwarded to for approval.
ML is a branch of artificial intelligence (AI) that deals with developing computer systems that can learn, adapt, and perform predictive analysis based on historical datasets. Such cognitive computing approaches help legal teams substantially reduce the amount of time and manpower otherwise needed for contract reviewing duties. Contract analysis ML systems lighten the load of the legal team by taking over several monotonous tasks, such as:
- Reviewing documents and summarising key findings
- Seeking out specific legal language across contracts and legal documents
- Verifying that the language used is up to established standards and congruent with the agreed-upon terms
- Ensuring that the legal language used across a set of documents is consistent
- Comparing the obligations and liabilities of the involved parties
- Spotting differences and inconsistencies between documents
- Flagging sections in contracts and documents in need of human review
- Making recommendations based on rules-based logic
These are a few ways that the tasks can be taken over by AI in contract lifecycle management. Digging deeper, we can split the practical applications of ML-based contract automation software into three distinct areas. These are the analysis of large amounts of data, the execution of repetitive tasks, and handling administrative duties. Let's take a closer look at each of these facets.
Analysing large amounts of data
When it comes to contract management, legal teams spend substantial time on making sense of and analysing large amounts of data. A proficient ML software can carry out these data analysis duties much faster and efficiently than any individual. The system can recognise and highlight patterns or correlations that humans may miss, identify anomalies in contracts, uncover fraudulent activity, and offer suggestions to optimise clauses within high-value contracts to accelerate the time to signature. Unlike humans, machines don't have instincts and preconceived notions that may cloud their judgement, and this objectivity is a major advantage of automated contract analysis.
Executing repetitive tasks
Repetitive contract management procedures are an ideal candidate for rule-based automation. Contract automation software speeds up the contract management and analysis process by executing repetitive tasks while consistently applying established rules and processes. An example of this is populating counterparty details within a contract. While this is a time-consuming manual process, an automated system can complete the same in a fraction of the time it would take a human by automatically retrieving the necessary information from online sources in seconds. AI systems can also rapidly extract relevant contract information to assist in creating contract metadata or managing contract records. These automated systems can run constantly, which is especially useful for large global corporations that regularly generate contracts across time zones.
Handling administrative duties
Rather than expend your team of highly-trained lawyers in basic administrative work, data entry duties, or other manual tasks, leave this to a competent contract automation software. This will free up your legal team's time for more crucial areas of the contract management process. Administrative and manual tasks that can be automated include scanning contracts for objectionable clauses that aren't in line with company policy, identifying missing clauses that should have been included in the contract, assessing contract risk, or creating standardised documents such as NDAs.
For organisations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed organisational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like living organisms will be imperative for business excellence. A comprehensive yet modular suite of services is doing precisely that. Equipping organisations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organisations that are innovating collaboratively for the future.
How can Infosys BPM help?
Infosys BPM offers an extensive suite of contract management services that focus on delivering value by improving contract compliance and shortening contract cycle times. Reach out to know more about how Infosys BPM can assist your organisation with various aspects of contracting, including creation, solicitation, negotiation, administration, and maintenance.