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Discover how Generative AI propels contract management to new heights of efficiency and value creation.
In brief
- Explore the transformative impact of GenAI on contract management, significantly enhancing process efficiency and compliance measures.
- Strategic applications of GenAI in contract management deliver immediate improvements and pave the way for long-term value in contracts.
- Successful GenAI integration depends on identifying impactful use cases, defining precise success metrics, and developing future-ready skills.
The strategic integration of Generative AI (GenAI) in contract management is becoming essential for companies seeking to elevate operational efficiency and speed, enhance risk mitigation, and gain a competitive advantage while preventing value leakages.
Contract management is a critical function that can benefit significantly from the application of GenAI. As revealed in EY’s Report, “The AIdea of India - Generative AI's potential to accelerate India's digital transformation,” contract generation and analysis are high-impact areas where GenAI can lead to a value uplift of 30-40%.
Strategic implementation of GenAI
The successful implementation of GenAI in contract management involves a structured approach:
1. Identifying high-impact use cases: Organizations should start by identifying areas where GenAI can have the most immediate and significant impact, for example:
2. Define measures of success: Establishing clear, quantifiable metrics is crucial for evaluating the success of GenAI initiatives. Organizations should tailor these measures to the specific GenAI application, and they should continue to evolve with the program, for example:
- Enhanced user experience: Measure improvements in user satisfaction and access to information.
- Improved contract compliance: Monitor compliance rates using various methods and data from a different line of defense.
- Reduction in contract leakages: Track financial metrics related to realization of contract benefits and reduction of leakages pre-and post-GenAI implementation.
- Reduction in contract review time: Set benchmarks for time savings in contract reviews and take feedback and data to monitor improvements.
- Reduction in contractual issues: Categorize and quantify contractual issues to assess the impact of GenAI.
3. Change management and skill development: The integration of GenAI into contract management is not just a technological upgrade, but a paradigm shift that needs thoughtful change management and targeted skill development.
As organizations embark on this transformative journey, they must prioritize the following key areas:
As GenAI becomes more integrated into contract management, professionals will transition to roles that emphasize strategic negotiation, analytics, and relationship management. The World Economic Forum predicts that by 2025, machines will perform more current work tasks than humans. Organizations must prepare for this shift by rethinking roles and workflows to leverage GenAI's capabilities fully.
In conclusion, GenAI offers a pathway to transformative efficiency and strategic advantage in contract management. Organizations can unlock the full value of this powerful technology by identifying high impact use cases, defining success measures, and preparing for the evolution of skills.
Summary
Embracing GenAI in contract management propels organizations towards enhanced efficiency and valuable strategic insights. This adoption not only optimizes processes but also positions businesses to capitalize on GenAI's evolving capabilities, ensuring a competitive edge in an increasingly digital landscape.
How EY can help
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