As we move into the new year, the turbulent Covid-19 conditions of the past two years have made us realize that volatility will be the most dominant trend when predicting the future. This has made organizations that stood on the precipice of digitalization for over a decade to accelerate decades of digital transformation in months. To mend the broken chains caused by global work environments, remote solutions became a necessity for daily business operations. Today organizations are looking for ways to digitize their outdated contract management process with greater momentum. With the increasing need for contract compliance and greater adoption of AI/ML tools rising the demand for agile contract management software solutions, let’s look at top predictions and considerations for contracts and CLM in 2022.
1. CLM Will Solidify its Position in the Top Five Critical Enterprise Software Solutions:
CLM which was once viewed as an ancillary function has become a mission-critical function with the onset of the pandemic. It will find a place in every organization’s critical technology stack along with CRM, ERP, etc. in 2022. Everyone will knowingly get a CLM tool as managerial leaders don’t want a ‘mixed’ solution but a ‘single’ solution to rely on as a central source of truth for all their contracts. Contract management system will make sure contracts are not just defensive shields but a digital asset that lists the DNA of business relationships on which organizations can analyze and act upon. What was looked at as a stopgap solution as a covid response, organizations are realizing the benefits of discovering the power of contracts through digitization and CLM will become ubiquitous.
2. Contract Lifecycle Management Software Will Become a Connected Holistic System:
Every business is different and needs a host of different systems to conduct their multiple business functions like CRM, ERP, Salesforce, etc. that need to be connected. CLM vendors already offer a host of external apps that can be integrated like CRM, ERP, Salesforce, etc. But different companies have different needs and CLM systems will evolve from a simple integration platform that switches between applications to a more holistic connected system that is compatible with a multitude of different compatible apps. Organizations can utilize an integrated contract management system with multiple platforms they are already comfortable using. From a suite that can adopt a few major external apps, an entirely customized and holistic contract management solution that seamlessly connects various systems to collaborate disparate workforces that operate efficiently will become the vogue in 2022.
3. AI Driven Smarter CLM at Full Throttle:
Conversing with your contracts through modern conversational AI technology will become common practice in 2022. When asked a question, the AI bot will respond with a recommendation pulling out relevant files from the enterprise document database. This will transform your contracts from static documents to living breathing files with live authoring. AI Techniques and Machine Learning (ML) toolsof CLM can digest loads of complex information and derive insights that matter. It learns the organization’s playbook, analyses past contract data, contract performance, and workflow in minutes, and embeds logic. Based on this when a new contract is requested, it will instantly respond with the right contract template, terms, and clauses with the appropriate workflow that will drive the contract to success for both parties.
4. CLM Systems That Offer Top-notch Data Privacy and Security:
With everything moving online there is a greater urgency and awareness for data security and privacy. CLM systems will enforce more contract management tools to ensure data security is in place in 2022. With inconsistent standards across borders and increasing cyber-attacks CLM systems will ensure to build customer trust through compliance with data privacy standards. CLM vendors will compete to offer a system that is completely encrypted end to end and quickly adapts or make changes to the existing policy to stay ahead of contract management security threats internal and external to organizations.
5. Intelligent CLM Systems That Focus on Risk and Compliance in Volatile Environments:
We are now living in a volatile risk environment where standards and regulations are constantly changing to integrate climate-conscious risk and compliance into the systems. Intelligent CLM systems will address these ongoing changes in 2022. They will offer full contract visibility and automate processes to onboard customers with region-specific regulations. A pre-set robust comprehensive clause and template library will ensure all contracts contain the latest version of approved clauses which was otherwise an ineffective manual highly labor-intensive process for lawyers. Any deviations will automatically trigger an action. AI powered modern CLM systems will scale your ‘Know-your-customer’ compliance globally or cascade sustainable mandates down the supply chain with little or no effort and mitigate revenue leakages and contract compliance risks.
6. Repository Centric CLM Software will Disappear Paving Way to Enterprise Grade End-to-End Contract Lifecycle Management:
Organizations will no longer look at CLM software that offers at its core a contract repository software layered with a thin veil of contract management software. Enterprise Contract Lifecycle Management Systems that offer end-to-end contract lifecycle management will be the preferred choice in 2022. The biggest pain for organizations is the enormous volume of manual operational procedures that often result in duplicate work, inaccurate data transfers, and lack of traceability. A CLM system that not only stores all contracts in a single centralized contract repository, but also automates the entire contract process from contract initiation to execution and monitors it post-execution for renewal or closure will be in favor. Key focus areas of CLM vendors will be to develop flexible workflows to accommodate complex and collaborative contracts.
7. Robust AI Tools Will Move Up the Chain for Better and Faster Contract Negotiations and Review:
AI will move up the value chain for contract review and negotiation in 2022 where there is more focus on contract automation software. Users will move from pre-trained, customized AI to larger transfer learning-based AI models that find patterns in contract data. Vendor agreements will be run against preferred forms highlighting critical differences and prioritizing differences worth fighting for stronger negotiations. Redlining and revising contract documents will see the increased use of blockchain technology with AI integration. Contract management tools will extract and automate clause analysis redlining deviations instantly making them accessible only to people with access to securely review, revise and accept changes. The inefficient workflow where contracts were lying dormant in the hands of irrelevant parties leading to a lengthier review and negotiating process will be replaced with automated workflows that are 5x faster eliminating weeks, or even months of back and forth of contract movement between different departments.
8. Blockchain-based Smart Contracts Will Find Its Way into All Industries:
Smart contracts will be the talk of the town in 2022. Blockchain-based smart contracts prevalent in financial services will move to other industries. How people interact with digital content will change as this will bring automation of trusted decision-making for agreements by computer programs rather than humans. CLM vendors will utilize the blockchain technology’s cryptographic underpinnings to provide enhanced visibility and transparency trails to protect data tampering or system corruption. This leap otherwise not possible in a global market will have exponential growth in this space.
9. Contracts Will be Democratized:
Contracts are not legal department-centric but affect the entire organization. In 2022, legal will lead but with others. Lawyers will no longer create contracts or manage them. Contract automation software will empower actual business users of the contract to create and manage contracts themselves. The role of legal departments will undergo tremendous change freeing them from mundane routine tasks to focus on critical and strategic legal aspects of the contract. Anything that is not bespoke but a routine legal contract process will be automated and managed by non-legal personnel.
10. Post Award Contract Management Will Continue to Shine:
The onset of the pandemic led to organizations grappling to deal with the ‘force majeure’ clause in their contracts. Storing the contracts in a repository and forgetting them once they are executed has become a thing of the past. Organizations having tasted the monetary value of properly protecting their commercial agreements will continue to appreciate the power of post-award contract management in 2022. CLM software powered with AI will compete to provide better and comprehensive contract analytics tools supported by visual dashboards. They will enhance the organizations’ ability to reassess and reconfigure contracts with greater frequency to respond to complex and mutable regulatory environments.
11. Improved Augmented User Experience:
Businesses will continue virtually leading to more discovery of the global market in 2022. Organizations will look for CLM systems that provide augmented user experience with intuitive UX design and customer-centric support. Cloud-based contract management softwarethat enables error-free agreement generation at the click of a button from anywhere by auto-filling documents with integrated information from the existing record systems in the organization will be sought after. Surprises will always be dropped, but with an enhanced user experience, specialized customer support, and increased contract efficiency, CLM software will deal with non-standard complex contracts and sudden process changes without throwing the operation curveball off balance for organizations.
2022 will bring advanced use of AI in Contract Lifecycle Management Software with automation as its key. As organizations scale by discovering new areas in the global market contracts will be increasingly viewed as strategic business assets by stakeholders. AI-based Ultria CLM system with the right contract management tools will be the right choice for a profitable contract management solution. Partner with us today for a free demo.