• 8 min read

Contract Management Trends to Look in 2022 and Beyond

Contract lifecycle management systems reduce erroneous payments by 75-90% and cut operating & processing expenses by 10-30%, as per Goldman Sachs.

Rising demand for agile contract management, rapid adoption of AI/ML technologies, and increasing need for contract compliance are fueling the demand for AI-enabled contract management software. 

Catch a Glimpse of Top 8 Contract Management Trends 2022

Continuing with the contract management trends of 2021, this year has paved the way for even more advanced tools. After relying on contract management technology for the past year and a half, businesses realize the advantages of using these solutions beyond the pandemic.

These are the top contract management trends to watch out for in 2022 and beyond. 

Trend #1 The increasing role of AI in contract analytics

As per World Commerce & Contracting, AI-based contract interpretation and summary for dissemination to affected personnel are 98% accurate as compared to 92% accuracy for human-based analysis.

In most organizations, once contracts are signed, they sit in Gmail, Drive, or in a dedicated contract repository until, in rare cases, someone needs to recheck the agreement terms. In such cases, often key milestones are missed and it results in revenue leakage or strained relationships with vendors. It calls for the dire need for intelligent contract analytics and visual dashboards which provide timely and actionable insights. According to Deloitte, companies achieve a 60% reduction in contract management costs using intelligent contract analytics.

Aavenir Contractflow allows contract managers to build custom visual dashboards that provide an elevated overview of data relevant to your business and track key trends and metrics.

Trend #2 Automation of contract review and negotiations

As per Gartner, AI-based contract analytics solutions will reduce the manual effort needed for contract review by 50%.

Currently, in most organizations, legal departments often have to rely on traditional contract review and negotiation processes that have not materially changed for centuries. Needless to say, each contract review cycle necessitates a countless number of emails back and forth to share and discuss concerns. Over and above, contract negotiation is a lengthy process. 

Using automated data entry and risk mapping, AI contract management technology is intended to streamline data analysis and risk management. More time is freed up to focus on critical parts of a business's daily operations and growth while less time is spent on the minute details of contract signing.. AI automation can not only speed up the contract review process by 5X or more but also de-risk the negotiation process. Missed deadlines or constant delays are far less common, and all versions and edits of contracts are saved and retrievable at all times. 

Aavenir Contractflow simplifies contract review and negotiation by shortening your contract approval time by 85% with streamlined redlining and negotiation

Checklist_Vendor_contract_review_negotiation

Download: Contract review and negotiation checklist

Trend #3 Automated clause analysis

As per Global Legal, 65% of Legal professionals lose time on administrative tasks.

Poorly drafted contractual clauses lead to problems in Post Contract management. It is a very important function with both operational and financial implications and hence requires close and effective monitoring. From requests to renewals, for quick and easy contract management, it is vital to standardize clauses across the company contracts to avoid contract and compliance risks. To accelerate contract signature and ensure a smooth transition from the pre to the post-contract stage, while staying compliant, effective clause analysis is a must. A technology is needed which can identify and extract key clauses and terms from your contracts. Usually, contract metadata extraction with AI includes extracting key dates, contract value, contract types, names of the parties, and associated departments. However, in 2022 and beyond, AI will surely expand its roots and wings and play a major role in extracting and automating clause analysis. 

Advanced Aavenir AI Engine extraction with state-of-the-art deep learning that understands contracts like humans, discovers terms and clauses, and automatically identifies deviations from approved clause libraries.

Trend #4 Improved visibility to compliance management

As per World Commerce & Contracting, poor contract management practices and non-compliance cost businesses an average of 9% of their annual revenues.

Failures to comply with contractual obligations expose you to  risk and miss out on possibilities. This happens mainly due to a lack of visibility into or inaccessibility of contractual data like terms, conditions, commitments, obligations, and entitlements. 

Contract managers are looking for ways to track contractual performance and drive predictability with AI. CLM solutions that can detect deviations from stipulated agreements and commitments will be highly sought after. AI-enabled contract compliance management is expected to result in improved ability to manage renewals and stronger and better collaboration amongst stakeholders. 

Aavenir AI Engine intelligently and accurately extracts obligations from contracts using AI, ML, and NLP, assigns ownership, and manages and tracks fulfillment. 

Trend #5 Smarter audit trails and activity logs

As per SignDesk, centralized contract storage with smart clause retrieval also boosts a business’ audit efficiency by nearly 60%. 

From procurement to finance to the business, contract compliance audits can benefit the many functions of your organization.  This may be achieved well by centralizing your contract document management system. A cloud-based, centralized contract repository is a highlight of modern contract management software solutions. With centralized and optimized storage of contracts, you don’t need to worry about losing track of documents. It not only helps in maintaining activity logs and versions but also assists in carrying out smarter audit trails. 

On top of it, when AI comes into play, it enables auditors to review more data in less time through probabilistic sampling approaches. It can sift through and identify any contract language or clause which allows contract auditors to focus on the areas that need attention.  In addition, it accelerates the entire contract review process and executes contract reviews with more accuracy than manual review, lowering a company's risk exposure dramatically.

Increase in pre-award compliance and ensure effective ongoing monitoring of post-award compliance with Aavenir Obligationflow. 

Trend #6 Integrations and customizations

Having CRM in place to manage customers, ERP to manage AP and AR, and similar other systems to manage multiple business functions is challenging for mature organizations. It simply ends up creating silos of information with no direct communication. Such stand-alone business applications are increasingly pointing towards a holistic technology that streamlines all the contracts and related operations.

Hence, many CLM platforms already have a host of external apps that you can use. However, different companies have different needs, so software providers will likely continue to add compatible apps. This will make it far easier for professionals to utilize management software as they can integrate it with many other platforms they’re already comfortable using. A truly integrated CLM solution that seamlessly connects multiple systems to enable communication will be in vogue in 2022 and beyond. 

Aavenir Contractflow offers simplified integrations with external systems like SAP, Salesforce, Oracle with ServiceNow integration hub and specialized connectors. 

Trend #7 Improved user experience with increased contract efficiency

When it comes to contract management software, modern organizations are looking for features like intuitive UX design and customer-centric support. They do not want something that looks outdated or causes frustrations for their customers. In fact, many companies (especially large enterprises) are looking for white-label solutions that may be customized to fit their needs and boost their branding.

Read More: Contractflow Enhancements to Boost User Adoption and Augment User Experience

Trend #8 More disciplined data exchange / Urgency and awareness of data privacy

Some people are hesitant to adopt contract management software unless it holds a very high-security standard. Data privacy is not only relevant to stay on the right side of the law and comply with the current regulation. With the current trend of digitization and with documentation moving online in this age of the pandemic, it is imperative for businesses to have data security in place. Preventing data breaches and ensuring compliance with changing legislation should be a high priority for businesses as the year goes on. As regulatory and policy compliance is vital for consumer/client trust, manually trying to manage the changing legal landscape is proving a complex task for compliance and legal teams, with many businesses now looking at contract management software to provide an efficient solution.

Unlike traditional contract management solutions, Aavenir Contractflow enables contract admins to grant role-based access to the users to prevent unauthorized access and ensure security. 

Closing Thoughts

2022 could bring us contract automation that we’ve never seen before with more advanced AI and even less work on the user’s end. Stay tuned. If your organization wants to stay ahead of the trend, by integrating a robust contract management platform, download this brochure to learn more about how Aavenir CLM can help you organize and manage contracts within ServiceNow.

Explore Additional Resources To Learn More About Contract Management Trends

Navigating Healthcare and Life Sciences Contracting Complexities in 2022
Aavenir CLM ServiceNow datasheet

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