Managing contracts is a laborious, time consuming job – and a necessary one at that. As companies expand in size, geography and scope of business, contracts are bound to get more verbose and complex. Moreover, it also means adding software capabilities and cloud storage. However, added memory or storage capacity isn’t sufficient – immediate retrieval, spot analysis and actual data processing is necessary today to manage these large volumes of legalese. This is where Artificial Intelligence is making a sizeable difference.

SirionLabs, a leading enterprise SaaS provider for enterprise contract management. The company is transforming the contracting engagement between enterprises by bringing buyers and suppliers closer together across the full lifecycle of the contract – from authoring to performance to closure, primarily catering to clients in consumer packaged goods, energy, financial services, food & beverage, healthcare, public sector, telecom, transportation and pharma and lifesciences.

Ajay Agrawal, cofounder and chairman of SirionLabs explains how AI has completely transformed contract management, making it more efficient, accurate, and cost-effective. “Contract authoring has traditionally been a cumbersome, effort-intensive process with long cycle times. AI enables businesses to accelerate the new contract creation process while staying compliant with company standards, with AI recommending the right template based on the contract context. At SirionLabs, we recognized AI’s potential in contract management quite early and have made significant investments in building the industry’s most advanced AI engine.”

In addition to build new content, AI helps expedite the legal review process for counterparty paper by automatically mapping the clauses to the enterprise clause library, identifying deviations and suggesting drafting alternatives. By automating the contract authoring process, Sirion’s AI-powered CLM platform reduces the time to create first drafts by up to 90% significantly cutting down the burden on the legal team as well as the cost involved. Another example of AI’s role in the contracting lifecycle is in contract analytics. For most companies, accessing the information from contracts is tedious and often relies on manual extraction. AI simplifies this process by automatically locating contracts across various enterprise repositories, organizing them in a parent-child hierarchical structure and extracting metadata as well as obligations, service levels, pricing, etc. This makes it easy to search for contracts that meet specific criteria and conduct advanced risk analytics across the portfolio. “With its advanced AI-powered contract analytics, Sirion enables organizations to extract data from their contract portfolio at 5x the speed and 50% of the cost of traditional analytics solutions,” he adds.

AI has also enabled advanced automation of post-signature contract management processes enabling real-time tracking of performance against contractual obligations and service levels, as well as automated validation of invoices against the contract and the performance data.

The AI behind Sirion’s CLM:

The core is built on a foundation that fuses machine learning (ML) and natural language processing (NLP). Supervised learning coupled with a massive corpus of industry data is used to train ML models to recognize and ‘read’ not just paper contracts and PDFs but also handwritten notes. Contracts are highly unstructured and often appended and amended with hand-written notes, images of scanned pages, and so on. With image recognition and OCR technologies together play a vital role in digitizing such documents, this data is semantically parsed by the NLP engine to break them down into machine-readable text. These three subsets work in conjunction to convert static contract data (obligations, service levels, price books) into dynamic objects that can be tracked throughout their lifecycle.

Post digitization, the platform uses an expert system – another subset of AI – to go beyond conventional procedural code and solve complex decision-making problems like helping users figure out if a particular clause in a contract is right for their organization or not. Using all these AI functionalities, SirionLabs can effectively deliver contract authoring, enterprise repository, auto-extraction, performance management, invoice auditing and buyer-supplier collaboration.

"Time ripe for overhaul of inefficient legacy processes"

“I don’t think too many businesses in this country, even the ones that are not born digital, will make the mistake of falling too far behind simply because the customers (and citizens) they serve are already demanding better, more compelling experiences from them – competitive pricing, faster service, and so on.”

However, companies do need to look inwards with an eye on overhauling inefficient legacy processes, including the ones centred on contract management and governance. As a largely manual process, it is inefficient, prone to errors, and easy to disrupt as we witnessed during the onset of the pandemic. Needless to say, a lot of businesses were unprepared to take their offline contracts and associated processes online. Add to that the fact that without a technology backbone in place, businesses are likely to miss out on analytical insights that underpin critical data-driven decisions in a highly competitive market. With the pandemic, the pace of digital adoption has increased manifold, and Agrawal is hopeful this wave will carry forward the favourable trends for AI-driven contract management.

Also ReadAI-based contract management for crisis preparedness

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