The business world is witnessing a paradigm shift, with Artificial Intelligence (AI) transforming many areas of corporate operations. AI-powered Contract intelligence and analytics are helping companies save millions per year on operational expenses.
AI Saves Money
AI contract platforms now enable companies to improve productivity, tackle compliance and reduce risk. A prime example: 2020 McKinsey study revealed that AI could automate an astounding 80% of contract management tasks. We have seen this result in a 10%+ reduction in annual contract management costs with our customers.
AI revolutionizes contract management by automating manual tasks, eradicating human errors, and increasing consistency. A research report from Harvard Business Review disclosed that AI-driven contract analysis decreased the likelihood of disputes and litigations by as much as 50%, averting huge financial losses.
AI-powered contract analytics for both customer and supplier contracts offer predictive insights, allowing businesses to make data-driven decisions that save both time and resources. A study by IACCM found that 9.2% of a company's annual revenue could be lost due to poor contract management — but AI has the power to turn this around.
Artificial Intelligence Improves Efficiency
The impact of AI on contract negotiation is nothing short of remarkable. By rapidly assessing contract aspects, legal teams can now concentrate on high-priority issues (i.e. claim and defense work, cost control, regulatory compliance, etc.), accelerating the negotiation process by up to 30%. This efficiency boost frees up human resources for other mission-critical tasks.
AI-driven contract intelligence uncovers hidden costs and revenue leakages like never before. A Gartner study highlighted that AI can optimize pricing structures by 15%, renegotiate terms, and consolidate vendor relationships, leading to potential savings of millions of dollars.
But in order to leverage AI for effective transformation, Fortune 1000 companies need a highly capable, motivated, and energized catalyst to get them there.
Boston Consulting Group (BCG) are actively coaching numerous boards and leadership teams to find external catalysts that can drive transformation using AI. One recommendation BCG offers is that these large companies partner with start-ups to help drive AI initiatives. And these collaborations are showing to yield some serious benefits.
The BCG Henderson Institute recently surveyed 600 global business leaders who influence decision-making on technology adoption. The survey covered 20 industries, excluding the tech sector, where AI already has a high rate of adoption and familiarity.
Their survey results determined the following:
Over 95% of industry leaders are looking to external tech partners for AI solutions
One in five industry leaders are able to establish meaningful collaborations with external tech partners (i.e. start-ups)
There is a 3x increased likelihood of financial impact with AI when incumbents enter meaningful collaborations
The likelihood of integrating AI as a core element of most business unit strategies increases 7x when incumbents meaningfully collaborate
These collaborations bring about a variety of advantages, such as accessing customizable solutions for easier adoption, side-stepping the challenge of sourcing tech talent that is AI-literate, and minimizing friction as the organization incorporates AI technology into existing operations and processes.
“Our study of top incumbent decision makers reveals the enormous benefits that incumbents can reap when they collaborate with transformers to unlock the power of AI technology,” the report states. “Yet fostering such collaborations requires sustained attention to emerging challenges. Although these change as incumbents advance through each stage of adoption, the hurdles they pose are surmountable — and the payoff in value is clear.”
As we move towards this intelligence-centric world of work, the opportunity for streamlined processes and overall optimization is more accessible than ever before. Perhaps intentional and meaningful collaboration with an external tech company holds the key to organizational AI success. One thing is certain: if your business doesn't seize this opportunity, rest assured that your competitors will.
Artificial Intelligence Ensures Accuracy
No matter how smart, hard-working, or well-intentioned we are, the truth is that humans make mistakes. Unfortunately, sometimes these innocent mistakes have massive repercussions. Sometimes the consequences of simply miscalculated or overlooked data include fines, penalties, and wasted or duplicate organizational spend.
However, if your contract management solution is fueled by AI, algorithms, and failsafe technology, error is no longer the concern it once was. When the computer does the heavy lifting for you, decision-makers can feel more confident in the information presented to them — when humans are the only ones in charge, there will always be a degree of uncertainty surrounding the data. Our recent eBook, available here, explores this subject further.
But this doesn’t mean we ought to exclude people from the equation altogether. As this Forbes article explains, “Organizations often pit AI against humans as if it were a competition. Sure, to understand the state of artificial intelligence, it is useful to benchmark AI model performance against human accuracy. But all comparisons should stop there. Instead of pitting them against each other, why not bring both the players onto the same team?”
Augmenting AI models with human intelligence proves useful for the overwhelming majority of organizations. For instance, Terzo’s AI-driven software also incorporates double human QA throughout the process so you get the best of both worlds. When it comes to contract management, why choose when you can have it all?
Final Thoughts
In a nutshell, AI-powered contract intelligence and analytics are transforming the corporate landscape by automating processes, minimizing errors, and providing invaluable insights. With an incredible $50 million per year savings on operational expenses, companies embracing AI are poised to dominate today's fiercely competitive market.
Similarly to when the Internet was novel (although it’s hard to imagine such a world now), the companies who resisted going digital ultimately suffered for it and fell behind their peers who were quicker to make the change. So it’s not a matter of if you should implement AI into your contract strategy — but when. Because those who adopt this technology sooner than later will be leaps and bounds ahead of those who don’t.
