Artificial intelligence, or AI, has been around for a lot longer than many realize. Today, when we think of AI, things that come to mind may be self-driving cars that Tesla is developing, Siri that comes in every iPhone, or even Alexa the smart-assistant from Amazon. The first inklings of AI, however, were being developed back in the 1950s. That’s right, these seemingly future-of-now technologies have been in the works for decades. Businesses have been finding new and inventive ways to incorporate AI into their organizations and processes however, a highly popular area of the application being in contract management.
Contract management is one of the pillars of procurement practices. It’s essentially the currency of procurement professionals on both sides of the exchange. As such, having an updated, effective, and efficient contract management process, working in concert with the best contract management software powered by sophisticated technology and AI, will keep your procurement team up-to-date and highly proficient.
Four Ways AI is Permanently Changing Contract Management
Artificial intelligence is being implemented into business technology in new and innovative ways each and every year. Keeping your thumb on the pulse of the newest trends in contract management software and best-practices will benefit your team and help ensure that you’re adhering to the current best-practices as they suit your organization’s needs.
With such rapid implementation of artificial intelligence into business applications and the rate at which AI’s role in those applications is advancing, it’s wise to get an idea of how AI is changing sourcing and procurement in the context of contract management in the current marketplace.
Improved Risk Mitigation
An inescapable element that contract management deals with is a risk. Now, of course, there’s risk in every aspect of life; but when it comes to procurement contracts, the less risk achievable, the better. With AI-powered contract management solutions, programs and technology will provide enhanced risk-analysis on existing and potential contracts. The data provided by the AI-based tech can then be evaluated, analyzed, and eventually utilized to make important and impactful business decisions on procurement contracts.
The ability to visualize your risk factors and actually reduce them through actionable steps backed by tangible data gives your organization a leg-up when it comes to minimizing risk, leading to reduced overall procurement cost. This is because, with contracts that carry higher-risk factors, there’s a stronger chance that those contracts cost the company more money through one avenue or another.
Similar to conducting and enhancing risk analysis on current contracts, AI-based contract management software is capable of conducting various other forms of contract analysis as well.
Other areas of contracts that AI can analyze effectively include overall cost, the ability to identify duplicate contracts or purchases, and patterns of one-off buying that can be grouped together to reduce the floating budget of procurement. Access to this level of operational insight will grant managers and decision-makers within your organization more powerful data leading to more informed decisions, bettering the organization as a whole.
Another area in which AI benefits the contract management process in the actual contract generation phase. AI has the ability to store and segment the library of existing contracts in order to create building blocks and allow for a more comprehensive look at the contract management cycle.
Using artificial intelligence to generate well-written and organization-friendly contracts allows for your contract management professionals to put their time elsewhere, ultimately letting staff focus their time on more significant business activities rather than recreating staple contracts, or patching together existing contracts to form a new version manually.
As in the example above with contract generation, AI is capable of streamlining processes throughout the entire chain of the contract management system. Starting with data entry and data processing, and ending with processes covered above like contract risk mitigation, and contract generation applications.
Developing an effective and competitive contract management team in today’s economy requires the assistance of sophisticated contract management software, many that are powered by AI.
Artificial intelligence has been a topic of interest for decades. Not only to science, but to filmmakers, sci-fi enthusiasts, gamers, business professionals, and almost everyone in between. The applications for AI are as far and wide as the imagination goes. However, in the context of contract management, AI is already doing incredible things for organizations everywhere.
For more information on the power of AI-based procurement software, or anything else related to procurement, keep browsing the ProcurePort library.