Three ways in which contract analytics present worth that goes past company legislation
The in-house attorney is using data reporting tools more and more frequently than ever before.
Your colleagues in law firms have long used business intelligence tools such as earnings ratios, financial statistics, and document and case metadata. But now general counsels (GCs) and legal teams also need solid insight into resource allocation and budgeting. You rely on contract analysis engines to better understand your company’s risk – and get the go-ahead for agreements that are on the way for review. They use AI analytics to move from a cost center to a value creation center and advise their colleagues on operational efficiency and cost savings.
However, the need for historical and forward-looking analysis of existing and pending contracts is not limited to the legal department. Middle to high-level executives – in sales, marketing, finance, manufacturing, logistics, and product management – all benefit from contract-related performance indicators. Technology managers also benefit from advanced but easy-to-use contract analysis applications and performance dashboards.
With that in mind, you should understand the transformative impact of cloud-based contract management platforms. Ideally with an AI-supported analysis “brain”. One that offers pre-built reports based on industry-recognized best practices. And one that allows both IT and non-technical executives to pull up data to tailor reports to their individual needs.
Now let’s look at a few departments – beyond the company’s legal team – that can benefit from AI-based contract analysis.
1. The IT team
As Chief Technical Officer (CTO), I am aware of the many priorities and mandates that technology managers face. Many invest in platforms like Microsoft Azure and Salesforce, as well as reporting tools like Microsoft PowerBI. Introducing a contract management system (CMS) that is incompatible with the existing information management ecosystem can lead to unsustainable disruptions, costs and delays.
However, this can be completely avoided by using a flexible, fully integrated Contract Lifecycle Management (CLM) solution. With such an intelligent analysis application, users can run text queries and generate custom reports. Alternatively, you can create pie charts or line charts for data visualization with PowerBI. By having access to contract analysis for themselves, non-IT users can focus on higher value strategic initiatives.
2. Manufacturing, supply chain and human resources
It is absolutely important for companies to ensure the right quality and quantity of people and products to meet contractual obligations. Employee and contractor agreements contain this important information about an employee’s experience, skills, seniority, and other KPIs. And all of these can affect a company’s ability to meet customer expectations.
If a skill or talent gap needs to be filled in order to meet the terms of a job report, HR leaders need advance notice so they can set the recruiting wheels in motion. When raw materials, components, and inventory must be available based on contract terms, shipping and manufacturing managers need up-to-date information on supplier performance, on-time delivery statistics, and manufacturing schedules.
Using contract analysis, these operational leaders can ensure they have the people and products to meet their commitments. This data can also help identify a company’s various needs: equipment, tools, and packaging needed to bring products to market.
Finance managers need historical and predictive data information – such as whether a company is growing out of its office or manufacturing space – in order to make important decisions. When a company merger or acquisition is on the horizon, Chief Financial Officers (CFOs) and other finance managers can learn a lot from:
- The previous acquisitions of their company
- Due diligence on the acquired company’s contracts
- Performance data such as the cost of goods sold (COGS) and the sales cycle time – from the lead to the contract or invoice to cash
- Contract renewal rates, upcoming renewal statistics, and churn data
In other words, contract data analysis enables financial managers to understand the business activities that affect inbound and outbound cash flow. In particular, AI-supported contract analyzes help CFOs to minimize risks and maximize the opportunities presented to them.
Intelligent contract analysis across the company
It is clear that there are many departments within organizations – beyond corporate law – that can benefit from AI-driven contract analysis. Members of your executive team may also be able to view contract data with a completely different lens.
By choosing a SaaS-based CLM platform with built-in analytics, you can reduce your company’s legal risk. All of this without unnecessary IT effort, complex AI / app development cycles or long onboarding requirements for users.