The digital avantgarde of yesterday is the norm of today. Just a few years ago, digital contract management was regarded as an exotic newcomer to the tech stack to some. To others, it was even considered ill advised. The cloud was perceived as ephemeral and vulnerable. And some hesitated to use digital signatures since the validity of the signatures gave the cause of concern, and they wanted to protect themselves against identity fraud.
Today, most modern businesses apply contract management in some way or the other. They are aware that their data is better protected with Amazons’ military-level fortifications than on the local server in their basement. They have also realised that digital signatures are legally valid in almost every industrialised country on the planet, and that they are harder to manipulate than their physical ink scribbles. Digital contract management is the norm.
Contract management applications are widely perceived as useful tools to improve the workflow efficiency, automate manual processes, reduce legal risks, ensure compliance and capitalise on innovations within analytics and data management. However, there are still huges differences in how contract management tools are applied around the world. Some countries are more developed than others. The same goes for industries, companies and even departments. But despite the different tempi, there is still a feeling of inevitability in the contract management industry. The general idea is that the industry gravitates towards a position where data-driven contract automation is a global norm.
But what is the status quo? And what are the current top trends in contract management here and now? Legal Tech Weekly takes a look.
The market for contract management software offers a wide range of tools that solves specific issues in the phase of a contract: from pre-signature contract drafters to digital signaturs and post-signature analytics tools. However, the latest trends favour contract management software that supports processes related to the entire lifecycle of a contract.
While the single-phase focused tools provide deeper functionality, these full life cycle contract management softwares cover more needs and can be applied in more use cases. Modern contract management systems supports everything from contract creation, negotiation and review processes, digital signatures, execution and analytics.
But contract lifecycle management is not the only holistic trend. Most, especially larger organisations, are also looking into buying holistic tools that cover the entire company instead of specific business areas or departments. Why invest in different contract management softwares for sales, HR and marketing when you can get advanced systems that cover everything? The more holistic tools also supports the increasingly important need for interoperability. The more systems you need to integrate in your inter-connected tech stack, the more complicated the process becomes. As the market converges around a few winners, these holistic tools that enable collaboration and integrations seems to come out on top.
This trend also means that the “build or buy” discussion is finally settled once and for all. Nobody in their sane mind believe they can build their own permanent contract management platform. The market is too mature, the SaaS delivery model too favorable, and the softwares on the selves so advanced that it simply does not make any sense to build your own products any more.
Artificial intelligence will have a huge impact on contract management in the future, but we are not there yet. While AI is used and leveraged with some success in the field of contract analysis, simple automations are still way more efficient in the current state of things.
These automations are used to help organisations to work smarter with contracts and to execute highly repetitive manual tasks faster. They make contractual processes more efficient and mitigate legal risks. While there is a lot of hype around the use of artificial intelligence, integrations and simple automations are often more time-efficient and cheaper to develop compared to the value they offer. Much of what is sold as AI is, in fact, just simple automations. So what looks like an AI-trend is most likely an automation trend.
While AI meets some resistance due to its science-fictional reputation and the fear that it will replace human jobs, automation seems to be implemented without hesitation. Nobody talks about humans in the loop when dealing with automations. And everyone seems to agree that automation technologies are here to augment professionals, so they can spend the time they used on the manual management of contracts in detecting potential value in the contract and invest more energy in building up better relations with business partners.
Despite the current immaturity of artificial intelligence technologies, most companies are already looking to prepare themselves for a future with AI. That requires streamlined data in machine-friendly formats. Scanned image files and pdf.formats are hard to read for machines, so transformting contracts into AI-friendly and machine-readable formats like .json is crucial if you want to future-proof your business.
Here and now, gathering all data in streamlined and machine-friendly formats is also important for businesses that wish to apply contract analysis tools and make more data-driven decisions.
Customers value all the interactions they have with companies throughout the entire buying process, so it may have a negative effect on your brand if your contractual processes are not professional and smooth. Because of this, it is very important for most brands to offer an intuitive, well-designed and digital experience when signing contracts them.
Intuitive UX-design and customer-centric support has become key features that modern businesses look out for when picking their next contract management software. They do not want something that looks outdated or causes frustrations for their customers. In fact, many companies (especially large enterprise) are looking for customisable white-label solutions to get something that their brand. Since shelf-ware has emerged as such a clear winner in the build or buy-debate, the market winners must be flexible - especially when it comes to design.
It is almost 2 years since EU's GDPR enforced, and since then the regulation’s extraterritorial scope has forced Non-European countries to adopt similar standards all over the world. Data privacy is not only relevant to stay on the right side of the law and comply with the current regulation. It has also become essential to build and maintain consumer trust. Data ethics is becoming increasingly important to most consumers as the increased focus on data breaches has forced companies to have a more risk-based approach.
On one hand, that means more companies adopting contract lifecycle management software that gathers and organises data on the expense of email systems where data is kept unstructured. On the other, it also makes some people hesitant to adopt contract management software unless it holds a very high security standard.
There is a clear trend in contract management softwares in 2020. Everyone seems to be looking into how they can use and leverage data to create value here and how and to prepare for a future where artificial intelligence will most likely replace the simple automations of today. While basic features such as digital signature has become a must-have, the current trends favours advanced systems that support the entire lifecycle of a contract.