With businesses looking for ways to make contracts less painful, contract intelligence has become a buzzword in recent years. Software claiming to provide contract intelligence promises faster review times, advanced contract analysis, and cutting-edge automation. But can vendors deliver on these promises?
This post explains what contract intelligence actually is and how it compares to other contract tools on the market.
What is contract intelligence?
Contract intelligence is the process of transforming static legal agreements into a source of intel. This contract data is then used to inform business decisions and assess risk within contracts.
Contract intelligence software is distinct from traditional contract lifecycle management software as it relies on artificial intelligence. This means that contract intelligence platforms are an example of contract AI.
The technology empowers businesses to capture and manage data from contracts qucikly and efficiently. It does this by eliminating the need for human review and admin work.
How does contract intelligence software work?
Contract intelligence technology uses artificial intelligence to identify patterns within contracts. These learnings train the software’s algorithm, enabling the technology to automatically identify and extract specific data, automate the drafting process, and review contracts rapidly.
For example, JP Morgan’s contract intelligence tool relies on machine learning and AI to break down different components of a contract’s wording. It then uses AI to interpret the contracts’ outcomes and risks. This contract review work would otherwise be completed manually by lawyers, and it’s estimated that the software can automate up to 360,000 hours of finance work in seconds.
But how does contract intelligence software compare to other contract management solutions? Let’s find out.
How is contract intelligence different from contract management?
The biggest difference between contract intelligence and contract management is that contract intelligence uses artificial intelligence to analyze legal documents. Contract management software, by comparison, is programmed using code and not trained using machine learning.
This means that contract intelligence platforms are learning continuously and can be trained to achieve specific outcomes. As a result, there’s often greater flexibility around what contract intelligence software can do. This customizability is a huge advantage of contract intelligence software. But what else can it do?
Benefits of a contract intelligence platform
⏱️ Faster contract review and analysis
One benefit of implementing contract intelligence software is that it speeds up contract review and analysis. It does this by automating admin tasks, rather than leaving them to already busy in-house legal teams.
This is significant as KPMG estimates that an inefficient contracting process can result in value leakage of up to 40% of a contract’s value. It’s suggested that contract intelligence software can reduce this leakage and minimize revenue loss in turn.
However, other contract tools can also speed up the contract lifecycle by automating manual processes. For example, Juro’s intuitive platform enables users to bake fallback clauses into contract templates, set up conditions, and pull contract data from other systems of record using integrations.
🌱 Equipped to manage large contract volumes
Contract intelligence software also enables businesses to manage large contract volumes more efficiently. Since it seeks to automate every stage of the contract workflow, it removes the need for in-house legal teams to review individual contracts, chase a contract’s progress, and switch between platforms to make edits or input data.
This empowers businesses to manage large contract volumes with ease. But, again, this isn’t a benefit exclusive to contract intelligence. Contract automation software like Juro also automates your contract workflow to make it more scaleable, but typically for a lower price.
❌ Reduced risk of human error
Since contract intelligence software reduces the need for manual input, it’s suggested that the solution can reduce the risk of human error when managing contracts. As the purpose of a contract is to protect businesses from liability, this makes contract intelligence platforms particularly attractive to legal and commercial teams managing high-value contracts.
However, it’s worth noting that using contract intelligence still won’t guarantee accuracy. AI-based contracting tools are also susceptible to making mistakes, as the software is continuously learning and improving.
You should also remember that not all contract intelligence solutions are born equal. Some are considerably less accurate than others, and this can introduce risk into contracts rather than reduce it.
🔎 Improves visibility into contracts
Contract intelligence platforms are designed to make data extraction simple. This subsequently improves the visibility legal and business teams have into their contracts. Advanced contract intelligence solutions will help businesses to extract a wealth of valuable data and make reporting against key contract metrics quicker and easier.
Most contract intelligence platforms will also attempt to analyze this data to generate insights. Without software in place, this analysis would typically be completed by a contract manager or contract administrator. Or, in some cases, it would be neglected altogether.
Limitations of a contract intelligence platform
The benefits of contract intelligence sound great in theory. But in practice, it’s common for contract intelligence platforms to overpromise and underdeliver. There are numerous limitations of contract intelligence that in-house legal teams should be wary of:
💰 Time-consuming and expensive to implement
One of the biggest complaints about contract intelligence software is that it’s expensive to implement. Unlike off-the-shelf contract management solutions, contract intelligence software relies heavily on machine learning and customization, making it tedious and costly to implement across your organization.
Since contract intelligence platforms are more challenging and time-consuming to roll out, it’s also common for the costs associated with implementation to reflect that.
🧠 Challenging to use
Contract intelligence platforms aren’t only a mission to implement, they can also be difficult to use. This is because contract intelligence typically offers far more complex functionality than other modern contracting solutions. This, in turn, makes it more confusing for users.
This can be problematic and hinder adoption within businesses seeking to enable commercial teams to self-serve on contracts. If a contract tool isn’t easy to use, teams will resort back to manual processes, which means the hefty sums invested in contract intelligence often go to waste.
🤝 Lack of trust
Within a traditional contract workflow, it’s usually the lawyers that have concerns about the standardization and content of business contracts created away from their watchful eye. With contract automation in place, this can usually be prevented with the use of contract templates, conditional logic, and approval workflows to ensure that legal still has full control over contracts.
By introducing AI into the mix, contract intelligence software removes this focus on human input from the legal team and relies on the software’s ability to learn from patterns and experience instead. As there’s no guarantee of accuracy, this can create uncertainty amongst legal teams.
🎨 Best suited to complex contract workflows
Perhaps the biggest limitation of contract intelligence is that it’s not fit for all businesses and contract types. Since contract intelligence software is designed to manage complex contract workflows, it’s likely to complicate the process used to create simple contracts, not streamline it.
Is contract intelligence software worth it?
As you’ve heard already, contract intelligence software is among the most expensive contract tools on the market. Like most customizable and AI-based software solutions, it can be costly to buy and implement. But is it worth the extra cost?
Well, it depends. If you’re looking for a piece of software that’s heavily customizable, can handle complex contract workflows, and provide advanced insights into your business contracts, contract intelligence may be worthwhile.
However, if you’re looking to automate contract admin, scale your contract workflow and have full visibility into your contracts and their data, contract automation software could be a better option. It’s typically cheaper, easier to use, and quick to implement.
In fact, Juro is the #1-rated contracting platform for ease of use, and the solution of choice for fast-scaling businesses like Deliveroo, Trustpilot and Cazoo. Whilst some contract intelligence solutions can take between six months to a year to implement, Juro has a typical implementation time of just 21 days, helping you get to value in days, not months.
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