Importance of Automated Contract Discovery in Contract Management
Automated contract management can enable companies to expand revenue from contracts, increase productivity, and reduce legal costs. But highly efficient contract management can’t be achieved without first knowing what contracts a company has.
It may seem that an enterprise would, as a matter of course, know all of its contracts. But most enterprises don’t. Organizations that undertake a contract discovery process are often shocked to find out the actual number.
There’s also the matter of identifying the information in all of the contracts. For contract management to work, the key contract metadata from each contract must be abstracted. For contracts that have not yet been identified as contracts, that obviously hasn’t occurred; but even for documents that have been properly tagged as contracts, the data that needs to be extracted for contract management purposes has often not been identified.
To ultimately take advantage of the benefits of enterprise contract management software, an enterprise first needs to undergo a thorough contract discovery process – locating all contracts, storing them in one central repository, and pulling out the necessary data.
“Contract discovery is not just something you should do when things have gone wrong; it is also (perhaps even more) something that should be done to avoid problems and bring added value to the business,” concludes Tim Cummins, the CEO of the International Association for Contract & Commercial Management, in a recent post on his blog, “Commitment Matters.”
Implementing Automated Contract Discovery
Just as automation can improve the contract management process, so too can automation help in contract discovery. Manually checking documents to determine if they’re contractual and extracting the necessary data is a lengthy, laborious process prone to human error. Software designed to conduct contract discovery of your documents can make the process much faster, more thorough, and more accurate.
Some enterprises contract out the discovery process to save the time, hassle, and cost of manual discovery, but software used in-house is by far the better option. Although hiring another company to do the job can save your employees time, it will not necessarily speed up the time until you have the information you need. Contracting out the process also exposes your data to outside security risks.
The Benefits of Discovery for Contract Management
An enterprise contract management system depends on the quality of the data in the system. Without complete, accurate data, the vital decision-making guidance that contract management software can provide will be compromised.
Consider the legal department’s needs – they want contract management software to help them satisfy complex, multi-jurisdictional regulatory requirements, as well as to mitigate liability exposure. Without complete data to accurately analyze contracts in these regards, this effort will be inherently impeded.
In all departments, it’s critically important for an enterprise to have all the necessary contract data. Using automated contract discovery software, once that data is identified and aggregated it can be easily transferred to populate contract management software. From this point, contract discovery will be an ongoing process regulated by the contract management software, so the enterprise will always be up-to-date with comprehensive, relevant contract data.
This wealth of information – married to the ability of automated contract management to identify and manage opportunities and threats created by contractual relationships – will allow an enterprise to more forward confidently and efficiently at it seeks to maximize contract performance.