The Barriers and Benefits of Contract AI Report Now Available
Malbek commissioned benchmark study from the World Commerce & Contracting to deliver deep industry insights about AI’s evolving role in Contract Lifecycle Management
Malbek, today’s most cutting-edge, AI-fueled Contract Lifecycle Management (CLM) platform, announced the availability of its commissioned study from the World Commerce & Contracting (WorldCC) about the barriers and benefits of AI-enabled contracting across organizations. The first annual report found more than a quarter (26%) of an organization’s workforce is in some way involved in contract management, and contract-related data in the typical large organization sits in 24 different systems. The combination of multiple touchpoints and systems demonstrates a clear risk for lost time and productivity, while increasing potential for errors.
Report findings show the need for AI to help mitigate risk in CLM while also indicating that there is a sense of enthusiasm around the use of technology in contract management. Given the pressures of today’s modern workforce working in disparate locations and many companies adopting remote workforce practices, companies turn to AI in CLM because of a growing need for speed and efficiency in virtual, collaborative environments. However, even with efficiency to be gained, there is still a lack of understanding surrounding what can potentially be achieved using AI technology to benefit CLM.
“This research underscores what the WorldCC knows to be true; when CLM and AI technology are embedded throughout organizations, there is so much more than efficiency to be gained,” said Tim Cummins, President at the World Commerce & Contracting Association. “We are confident that these findings will support stakeholders in building a cohesive vision to fuel these important initiatives.”
The survey uncovered six key trends that organizations around the world feel are important to the state of contract lifecycle management and the use of AI in today’s modern workforce.
1. There are still obstacles to implementing CLM solutions, which limits the application of AI tools.
- When respondents were asked if they have implemented a CLM solution, those who had not yet done so surpassed those who had with 53% saying no. However, selecting a solution was identified as a top priority in the next 12 months with 50% of respondents stating that planning is already underway.
2. Contract automation is a priority in most organizations, but there’s still a lack of understanding of what can be achieved beyond efficiency.
- Currently, most organizations’ use of contract automation centers primarily on low (43%) and medium (33%) complexity agreements that require little to no negotiation, such as a Non-Disclosure Agreement (NDA) or a Statement of Work (SOW).
3. Post-signature contract management presents the most challenges for organizations. Many believe that well-integrated technology is the solution.
- 53% of respondents said obligation tracking is the primary point of friction for their organization. Additionally, many said it’s challenging to rate the financial performance of their contracts, 35% said “not at all easy”, 38% said it’s “somewhat easy”, but very few (~6%) find it “very easy.”
4. Excitement about the potential of AI technology varies.
- The industries with the most positive view of AI are technology, banking, insurance, and financial services. This tracks closely with previous WorldCC research in which 90% of organizations in the banking, financial, and insurance sectors were among the first to recognize the importance of effective post-signature contract and relationship management.
5. Most organizations still face significant barriers to AI adoption.
- 60% of respondents say that they are facing one or more barriers to adoption. Survey results uncovered three main barriers: budget, consensus among stakeholders, and lack of CLM solution in place.
6. The collective drive for using AI is a need for speed and efficiency.
- 42% of respondents ranked increased speed and efficiency the top business driver for implementing an AI tool, and nearly 50% of respondents believe that AI will contribute to great improvements in contract efficiency in the next two to three years.
“There is an ongoing battle between needing AI and trusting AI in today’s contracting processes, but the real power of artificial intelligence does not come from replacing human expertise, rather it comes from the potential to augment human intelligence through insights and capabilities that may not even be seen or imagined,” said Hemanth Puttaswamy, CEO of Malbek. “With this vision in mind, we are proud to partner with World Commerce and Contracting to uncover the barriers that exist within organizations around their use of AI and the key trends that influence contract lifecycle management as a whole.”