As with everything, the future of contract management is heavily influenced by technological advances and especially the evolution of artificial intelligence and machine learning. AI-enhanced contract management is already advancing by leaps and bounds. . . imagine what it will look like by 2029?
2022 was a big year for digital contracting. Today's advanced technology allows players in the legal industry to work faster and more efficiently. Growing demand for flexible contract management, rapid adoption of AI/ML technologies, and growing need for contract compliance are driving the demand for AI-enabled contract management software.
So, what’s going to be hot in CLM in 2023? This is the time of year when legal information professionals begin to think about the threats and opportunities that lie ahead. In-person conferences, user groups, and roundtables are all in the planning stages, and we're all interested in what the future holds for legal technology. Let's get ready for a year of excitement as the world of digital contracts changes once again.
The Big Picture Of Contract Management..
Rapid digitization and the penetration of remote collaboration require increased visibility of contracts for stakeholders. CLM plays an important role in meeting these needs and helps enterprises to establish large-scale partnerships.
Fact.MR has conducted intensive research on contract management trends and the future of contract management. Here are its main findings:
- Global CLM market size of US$ 845 million in 2022 is projected to reach US$ 3 billion by 2032 at a CAGR of 13.5% during the mentioned period.
- By 2032, the USA will be the largest CLM implementation market with a 10% CAGR. In the East Asian region, the dominant share may be occupied by China.
- The growth in affordable corporate apps and CLM programs are driving economic growth in countries such as China and India.
- In terms of industries- government, healthcare, pharmaceuticals, information technology, and telecommunications will remain the top consumers of CLM implementation.
- Also, the BFSI sector is anticipated to experience the biggest Y-o-Y growth.
Looking Ahead And What’s Next In 2023?
1. AI's Growing Role in Contract Analytics
According to World Commerce & Contracting, AI-based contract explanations, and summaries for distribution to affected personnel are 98% accurate, compared to 92% accuracy for human-based analysis.
In most organizations, when contracts are signed, they typically remain in Gmail, One Drive, or a separate contract repository until, on rare occasions, someone needs to double-check the terms of the agreement. This leads to key milestones being missed, resulting in revenue leakage or strained supplier relationships.
This calls for an urgent need for intelligent contract analytics and visual dashboards that provide timely and actionable information. Interestingly, according to Deloitte, companies achieve a 60% reduction in contract management costs using intelligent contract analytics.
SpeedLegal empowers contract managers with visual dashboards that provide an advanced overview of data relevant to your business and track key trends and metrics.
2. Role of NLP in Simplifying Complex Contract Data
A PwC analysis found that Fortune 1,000 companies routinely manage between 20,000 and 40,000 active contracts.
A lawyer usually takes more than two hours to draft and review one contract. This is a difficult task when we think of bulk contracts, i.e., managing 20,000 or more active contracts throughout their lifecycle. While more contracts mean more revenue, it also requires more management.
To ease management challenges, contract management teams are now leaning towards AI and NLP (natural language processing) solutions that help them understand the exact nature of contracts and execute human-like comprehension of the complex legal language. AI and NLP can quickly extract and classify key contract metadata while providing accurate information/analysis of ambiguous or difficult-to-understand terms.
Legal jargons are not universal. It differs from one nation to another and from one industry to another. However, NLP can extract clauses from your own standard contract template and help you create a repository of clauses to use when evaluating future contracts or creating new contracts.
How can Speedlegal AI Engine extract key contractual data from your complex and lengthy contract document? Book a Demo.
3. Large Language Models
Artificial intelligence systems that understand and generate text, known as language models, are the newest hot topic in the enterprise. Machine learning models of the LLM kind could handle a variety of NLP use cases. The most famous LLM at the moment is OpenAI's GPT-3, which is considered the best AI model for creating text that reads as if it were written by a human.
Now, two years after GPT-3 first appeared online as a beta, a chatbot based on the model went viral; In November 2022, ChatGPT took the mainstream internet by storm by showcasing the attraction of an AI chatbot designed expressly to communicate with humans.
It’s no surprise that the impact of LLMs is emerging as dominant for next year. To put it simply, 2023 is going to be the year of large language models. But don't expect ChatGPT to represent you in court next year. But by the end of 2023, LLM programs will certainly change the way people create, share and use digital contracts.
4. Scaling to the organizational level
Implementing CLM at the organizational level helps businesses grow holistically. A CLM solution streamlines workflow between sales, procurement, HR, legal, corporate, and other stakeholder groups, boosting the contract management visibility and improving communication
Enterprise contract management ensures smooth workflows and reduces the likelihood of outdated contracts and associated risks, improving business reputation and revenue.
5. Automation of Contract Review and Negotiations
According to Gartner, AI-powered contract analytics solutions will reduce the manual effort required to review contracts by 50%.
In most organizations today, legal departments habitually rely on traditional contract review and negotiation processes. Of course, each contract review cycle requires countless emails back and forth to share and discuss issues. Moreover, contract negotiations are a lengthy process.
AI contract management technology is designed to streamline data analysis and risk management through automated data entry and risk mapping. Also, more time is given to focus on the important parts of the day-to-day operations and growth of the business, while less time is spent on the nitty-gritty details of signing a contract.
AI automation can speed up the contract review process by 3x or more, and the negotiation process can also be made less risky. Deadlines getting missed or delays happening all the time are much less prevalent, and all versions and revisions of contracts are saved and can be restored at any time.
Speedlegal simplifies contract review and negotiation, reducing contract approval time by 85% with streamlined redlining and approval.
6. Improved User Experience with Increased Contract Efficiency
Today's organizations look for features like intuitive UX design and customer-centric support when it comes to contract management software. They don't want something that looks outdated or causes disappointment for their customers. In fact, many companies, especially large ones, are looking for white-label solutions that can be customized to suit their needs and enhance their branding.
7. More Disciplined Data Exchange / Urgency and Awareness of Data Privacy
Some people are hesitant to use contract management software unless it has very high-security standards. Data privacy is important for more than just staying on the right side of the law and complying with applicable regulations. In the current trend of digitization and documentation moving online in the pandemic era, it is very important for businesses to ensure data security.
Preventing data breaches and ensuring compliance with changing legislation should be a top priority for businesses in the coming year. As regulatory and policy compliance is vital to consumer/customer trust, trying to manually manage the changing legal landscape is a challenge for compliance and legal teams, with many businesses now looking to contract management software to provide an efficient solution.
Prepare For The Future Of Contract Management Today!
Investing in new technologies, such as contract lifecycle management, to support accelerated digital transformation should be at the top of every forward-thinking contract management professional's to-do list for 2023.
As companies expand, the number of stakeholders and the complexity of the contracting process increase dramatically. Staying abreast of the latest trends in contract management will help you develop a document management strategy that promotes more efficient, secure, and customer-centric business practices for years to come.
Speedlegal- A Data-Driven Clm Software Platform
Speedlegal is the leader in today's CLM software market. The CLM platform is a feature-rich and data-driven solution that provides end-to-end contract lifecycle management. This state-of-the-art solution transforms the entire contracting process and helps you execute contracts faster and more accurately than ever.
With SpeedLegal, you get an easy-to-use and intuitive solution that can be quickly and cost-effectively adopted by your organization.
You'll also be able to unlock a wealth of data in your contracts and automate workflows and alerts, quickly assemble contracts ready for negotiation, and more. If you are considering accessing contract lifecycle management software for your organization, request a demo of SpeedLegal.
For more details regarding SpeedLegal's softwareand contract management solutions in general, visit our website. You'll understand how Speedlegal can assist at every stage, from contract creation, collaboration, and negotiation to using its dynamic repository with top-notch security. To learn how automated contract management can tame your wild contracts and improve their performance for you, Sign up for a demo.
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