What if you could make your contracts work for you? That’s the premise of contract intelligence, which uses AI software to simplify contract review, management, and analysis.
Read on to learn more about how contract intelligence benefits companies and gives them a competitive edge in the modern world.
Definition and Key Components of Contract Intelligence
Contract intelligence is the term for using artificial intelligence and machine learning technology to perform contract analytics.
Contract intelligence solutions rely on certain key technologies, including natural language processing, machine learning algorithms, and analytics.
Natural language processing (NLP) allows AI contract review solutions to understand and interpret human language. This technology helps AI software parse through contracts, extract data, and analyze specific clauses within legal agreements.
Machine learning algorithms are designed to take on feedback throughout the artificial intelligence contract review process and integrate that feedback into the AI system. This means that the longer a company uses a specific AI model, the better that model will be at interpreting the company’s specific types of contracts.
By combining NLP and machine learning algorithms, AI contract review systems can analyze contract data and provide meaningful insights to businesses.
The Evolution of Contract Intelligence Technology
In the early stages of contract intelligence, most contract review was performed manually. Document management systems were some of the first technologies designed specifically to address the pain of paper contract management by introducing digital contracting. However, they did little to address the other pain points of manual document analysis.
The next stage of contract intelligence came when keyword-based searching was added to the digital contracting process. This opened up a new avenue for contract analysts because they could search through static contracts based on specific keywords. This allowed them to write queries looking for similar contracts for cross-comparison purposes. However, at this stage, a lot of contract intelligence remained manual.
The advent of artificial intelligence, natural language processing, and machine learning technology spelled another change in contract intelligence technology. Suddenly, contract intelligence software became able to automate many of the tasks that had been manual. Not only that, but artificial intelligence contract analysis was often more accurate, less time-consuming, and more cost-effective than its manual predecessor.
How Contract Intelligence Works: Technology and Processes
One of the key processes behind contract intelligence is document parsing and data extraction. Contract intelligence platforms use document parsing techniques to break down contracts into structured data. This process involves extracting information such as contract terms, dates, parties involved, obligations, and legal clauses.
Clause analysis software allows this AI technology to analyze individual contract clauses to identify their significance, relevance, and potential risks. This component helps users understand the implications of specific clauses and their impact on overall contract terms.
Machine learning technology improves the effectiveness of these processes over time.
Contract intelligence software often includes contract lifecycle management software as well. This software is designed to help manage contracts throughout their lifecycle, streamlining the contract management process from contract creation to execution and through contract renewal or termination.
The Benefits of Implementing Contract Intelligence
Contract analysis isn’t new. Businesses have looked at previous contracts for years, searching for actionable insights to improve upcoming and current contracts. What has changed in recent years is the contract volume many businesses are dealing with. Contract analysts can’t keep up with the millions of contracts in their system.
Machine learning technology, combined with keeping a centralized repository of well-organized contracts, allows contract analysts to continue to perform advanced analytics regardless of how large a business gets. Artificial intelligence contract software is designed with robust algorithms, allowing it to extract large amounts of contract data and reduce contract review time.
Using artificial intelligence in contract management has other benefits as well. AI is well-versed in extracting and manipulating data across different contract types and can do so with pinpoint precision. This reduces the possibility of human errors, especially with complex contracts.
Contract intelligence can also help evaluate contract terms for legal issues, ensuring that businesses stay on top of regulatory compliance standards. This cuts down on the amount of work legal teams have to do and can save companies a significant amount of money.
Applications of Contract Intelligence Across Industries
Contract intelligence has diverse applications across various industries, enabling organizations to streamline contract management processes, mitigate risks, and extract valuable insights from their contracts and legal documents. Examples of how contract intelligence is applied across different industries include:
Legal Services: Law firms and legal departments use contract intelligence to analyze large volumes of contracts, identify relevant clauses, and extract key information for due diligence, litigation support, and contract review purposes.
Healthcare: Healthcare organizations leverage contract intelligence to manage provider contracts, patient agreements, and regulatory compliance documents. Contract intelligence solutions help identify billing discrepancies, monitor compliance with healthcare regulations such as HIPAA, and optimize reimbursement processes.
Technology and IT Services: Contract intelligence solutions help optimize software license usage, track contract renewals, and manage vendor relationships effectively.
Real Estate: Real estate agencies and property management firms leverage contract intelligence to manage lease agreements, property contracts, and rental agreements.
Education and Nonprofit: Educational institutions and nonprofit organizations use contract intelligence to manage grant agreements, fundraising contracts, and donor agreements. Contract intelligence solutions help ensure compliance with grant requirements, track funding allocations, and manage donor relationships effectively.By rethinking enterprise contract management, most businesses can benefit from this diverse technology.
Drive Cost Savings and Reduce Risks With Terzo
If you’re ready to cut down on labor hours and reduce costs while improving the effectiveness of contract analysis, consider using Terzo. Terzo is a leading AI-as-a-service company designed to help companies just like yours. Learn more about why Terzo is the right choice for your brand or get started with our sales team today.
