Contracts are a legal necessity that permeate every department, from HR to procurement, and span businesses in all industries from supply chain to banking.
As Deloitte observes, “The use of automation and artificial intelligence in legal contract activities are not new things but nor are they universally embraced.” The deniers often sit in two camps: there are organizations that are concerned about excluding humans from parts of the legal process where money and reputation can be put at risk. And secondly, as Deloitte’s Craig Conte explains, there are those that don’t see the point in only automating part of the contract management lifecycle. They’d rather wait for the technology to be advanced enough to do it all for them.
However, as these technologies are maturing, more are beginning to see the benefits. Both legal professionals and business users can significantly reduce the time they spend on contract creation and routine contract administration work, while having the peace of mind that procedures are being followed thanks to properly designed contract workflows with automated steps.
Contract automation is the use of software and technology to digitize the contract lifecycle and automatically carry out tasks such as contract generation, management, negotiation, execution, and storage.
Building contract workflows with automated steps eliminates manual tasks to ensure a streamlined process with fewer delays and errors resulting in faster sign off.
As with most legal documents, it’s not uncommon for contracts to go back and forth several times among reviewers before getting final sign off. Without a system behind that process, it’s hard to track which stage of the process it has reached, which in turn makes it impossible to chase or estimate timelines. This impacts employee and customer experiences as well as revenue because it often prevents business from proceeding until the contact is agreed.
Contract automation also saves time and resources by automating manual, repetitive tasks. This frees up stakeholders to spend time on more important aspects of the contract, such as verifying clauses and ensuring that terms and conditions are in line with company policies and legal requirements.
While the primary beneficiaries of contract automation are certainly those in the legal department, business users can reap the benefits too.
When contract creation and management is mapped out in a pre-approved workflow, employees who require the contracts as part of their work can self-serve, to a certain extent, and then have the legal team check over any finer details.
This means business users don’t have to wait on the legal team to generate contracts from scratch, speeding up the process and delighting both employees and customers.
Faster approvals: Emailing numerous versions of a contract to different stakeholders for approval and waiting for them to respond to each one can lead to lengthy delays. Automating contract management increases the overall efficiency of the process by allowing all parties to review and amend in one place and sending reminders to those that need to take action. This not only frees up time for your employees to work on other things but also enables faster delivery of the services covered in the contract increasing operational efficiency. For example, sportswear giant adidas reduced their sports asset contract approval cycle by 87.5% from 1-2 months to just one week.
Fewer errors: The large number of administrative tasks involved in manual contract management can often result in mistakes. Plus, sending contracts back and forth to multiple reviewers can lead to a loss of version control and missed revisions. Automation can mitigate errors by reducing human input and duplication of data entry. And when all parties can access and work on a contract in one place, everyone is working on the most up-to-date version.
Better security: Contracts contain sensitive information and therefore need to be shared securely to prevent this information getting into the wrong hands. Storing contracts in a central repository enables you to put protective measures such as passwords and access rights in place to mitigate the risk from security threats.
Greater visibility: With contracts in place across the organization it can be hard to keep tabs of what you’re paying for and whether it’s delivering real value for your business. Accessibility to contracts post sign off allows you to review whether the terms agreed in the contract are being upheld and whether those terms still meet the needs of the organization. Storing contracts in a contract repository also provides a view of all the agreements you have in place and can flag when a contract is due up for renewal so you can take a more proactive approach to renegotiation or termination.
Improved employee and customer experiences: When they don’t have to spend hours manually combing through contracts, your employees can focus on higher value and more rewarding work increasing their level of job satisfaction. And this shift in focus enables them to make improvements that will benefit your customers.
Workflow automation: Mapping out a workflow with predefined rules ensures that company policies and regulations are adhered to during contract creation and handling. It streamlines the process by automatically routing the contract to the appropriate stakeholder, avoiding bottlenecks and getting the contract to signature faster.
Contract tracking & alerts: When contracts are within a workflow, automated alerts can provide notifications on the progress of the document to various stakeholders, so all involved know the status of the contract. It can also trigger reminders if an incomplete task is sat with an individual and remind the team of deadlines and renewal dates.
Template creation: Pre-built templates can be used for certain contracts, which can then be customized based on the individual circumstances. Automation software can determine what needs to be included in the template based on the requirements dictated by the user. This provides an excellent starting point and saves the legal department significant time and resources.
Data integration: Automation software can draw down information from various sources, including CRM and ERP systems to auto-populate contracts with relevant data, saving time and ensuring accuracy.
Clause libraries: You can create pre-approved clause libraries that contain clauses, terms and conditions, that you can automatically add to contracts to ensure consistency and compliance.
Adidas, one of the world's largest sporting apparel brands, has transformed and automated a wide range of processes with Bizagi, including multiple processes across the supply chain. Among those processes is contract management, enabling Adidas to sign contracts with new partners more quickly, cutting out confusion and avoiding delays to business operations.
