Last updated on September 9th, 2019 at 03:09 am
It’s not your imagination. Contracts are getting longer and more complex. The job of a contract manager is now harder than ever. Even small businesses with a handful of contracts still have thousands of pages for contract managers to examine.
This complexity forces companies to either increase their contract management staff or to accept the risk of their overworked contract management staff missing something.
However, help is on the way. Machine learning can help contract managers keep up with the complexity of modern commercial contracts.
What is Machine Learning?
The terms machine learning, artificial intelligence, and algorithms are often lumped together. But, these terms are not synonyms. Artificial intelligence is a broad category of smart machines and functions that allow computers to perform tasks usually completed by humans.
An algorithm is simply a program that solves a problem using a specific set of steps. Every software program uses several algorithms.
Machine learning is a specific type of artificial intelligence. But, not all artificial intelligence programs use machine learning.
Machine learning programs use algorithms to learn how to do new functions and generate more algorithms without a human having to intervene and write new code.
How Does Machine Learning Help with Contract Management?
Machine learning reads the contracts in the database and learns to recognize patterns. When negotiating and drafting an agreement, machine learning can help the contract team identify risks and spot areas where terms and language are out of sync with past practices.
Machine learning can even automate the generation of the standard clauses of the contract.
At every point in the contract lifecycle, machine learning can save a contract manager valuable time. The storage and organization of a contract database is a time-consuming task. This can be automated with machine learning. Even more valuable, searches powered by machine learning are faster and more accurate than typical searches.
Many of the most significant contract management headaches happen in the post-contract analysis part of the contract lifecycle.
Everything from contract compliance to contract performance can be at least partially automated with the help of machine learning. Machine learning-powered contract management software will learn when to flag a contract that is out of compliance or nearing a compliance issue.
Machine learning is not going to replace contract managers. Instead, it is going to make them better at their job.
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Using Contract Management Software as More than a Repository
Contract management software is no longer just a digital filing cabinet. The latest artificial intelligence technology, including machine learning, is making contract management software an indispensable tool for organizations of all sizes.
Contract management software allows companies to get more out of their staff and helps them optimize all of their contracts.
We are reaching the point where companies that aren’t using a powerful contract management system will be at a competitive disadvantage. Leaner, more efficient competitors using machine learning-powered contract management software will take an ever-larger share of the market.