Contract management trends in 2020
Contract management solutions provide an opportunity to automate processes across the contract lifecycle. A streamlined contract management process offers increased competitive advantage, reduces risk and improves operational efficiency.
If you can capitalise on the innovation taking place within the contract management, your organisation will reap the benefits.
Here are some of the contract management trends to watch out for in 2020:
1. Technological developments like artificial intelligence
Following Brexit, legal and procurement teams need to prepare for changing trade relationships, and organisations need to know what’s in their agreements. Data privacy is increasingly important, and clauses will need to be continuously updated. Technological developments like artificial intelligence are needed for more effective contract management as they help organisations to overcome many challenges. Contract management solution AI converts texts into clauses and concepts that can be searched, filtered and compared.
The most promising change that AI brings is that contracts become modular, digital entities from the beginning of their creation. It has been estimated that inefficient contracting causes firms to lose from 5 to 40 percent of value on a given deal.
2. Smart contract code that automates parts of agreements
Smart contract code automates parts of agreements based on data inputs from internal or external systems. Smart contract technology doesn’t require blockchain and can be embedded into legal-based traditional contracts.
As we move into 2020, cloud-based smart contract management solutions will allow enterprises to capitalise on the benefits of contract automation immediately. The technology will enable the automation of many aspects of contracting, including, confirming credentials, SLA fulfilment, and calculating and issuing payments.
3. Climate-aware contract management solutions
This trend could be the most impactful in contract management both in 2020 and beyond. The International non-profit organisation CDP reported in 2019 that 215 of the biggest global companies indicate almost a $ 1 trillion risk from climate change. Supply chain accounts for 50-70% of carbon emissions, and climate aware contracting is a welcome and growing trend.
For companies, it’s essential to be able to easily identify contracts that fail to address emissions or will impact the environment. Digital contract technologies can automate the contract agreement lifecycle and streamline the process of updating and renegotiating supplier agreements without resorting to paper. This type of change immediately reduces the impact on the climate in itself.
4. Data privacy and GDPR
Since 2018, all businesses must comply with GDPR, but compliance is an ongoing commitment. It starts by ensuring you know what is in your existing agreements and with any other entity with whom you share data. Leveraging contract management solutions that include AI, electronic signature and digital contract lifecycle management will help organisations to address data privacy and GDPR compliance.
5. Digital identification and confirming proof of identity online
In the past, essential contracts like opening a bank account have required in-person ID verification. In the future, we will see more and more electronic ID (eID) schemes gain momentum. Many companies in the UK are choosing to incorporate photo ID checks into the electronic signing of contracts to drive up compliance and reduce risk.
The solution they choose needs to comply with Europe’s EIDAS regulation. The contract lifecycle management tools that can confirm proof of identity digitally will provide a more seamless experience for customers. Some interesting developments are emerging in the way people can confirm their proof of identity online.
6. Personalised and seamless customer and employee experience
In 2020 we expect to see even more emphasis on customer needs, along with personalised and seamless experiences. The ease of experience and interaction will continue to be a driver of satisfaction for both customers and employees. In the world of contract management, solutions must make it simple for users to complete the necessary paperwork and that they can do that from anywhere, including a smartphone, with ease.
In the future of work, employees will demand a similar digital experience. They will expect forms that they need to complete as part of HR processes to be simple and free from manual and paper processes, allowing them the time to focus on more meaningful and strategic aspects of their role.
Digital leaders that stay on top of these contract management trends will find they can do business faster and with less risk and lower costs.
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