For many companies, adopting a robust contract analytics solution is a necessity. The vast number of historical contracts hidden within repositories represent lurking, potential risk that could severely impact a company’s financials and brand. Yet these contracts also represent sources of business intelligence that point to potential new products and services or opportunities to cross-sell and upsell to current customers.
To mitigate risk and act on business opportunities, enterprises must be able to find, analyze, and leverage contract documents and the critical information they contain. With thousands of unreadable, unstructured contract documents strewn across repositories and fileshares, this is no easy feat—especially when relying on cumbersome manual methods.
Read on to learn how to leverage contract analytics to identify and mitigate risk, achieve greater operational agility, and create more value for your customers.
1. Identify & Mitigate Risk
Historical contracts—often unstructured, unsearchable, and unusable—are a potential source of pain for enterprises. Companies largely don’t know where their contracts are, or what information they contain, which is a nightmare scenario when compliance is in question.
All companies, not just those in financial services, need to get ahead of the regulatory curve and take a proactive approach to identifying and mitigating the risk within contract documents. Waiting until a regulator comes knocking—or for news of legislative changes ripping through the industry—is a recipe for disaster. Relying on manual analysis of thousands of contracts every time a compliance issue arises is not a winning strategy either. Doing so could take years to achieve and wouldn’t be scalable by any means.
No matter how proactive an enterprise may be, there isn’t enough time in the world to manually process all of their historical contracts to achieve compliance—especially when racing towards an unexpected deadline set forth by an external regulatory body.
In order to mitigate the risk contained within an enterprise’s contracts, an automated contract analysis process is vital. Doing so will allow enterprises to find all contracts in all repositories, determine what each agreement contains, and identify the risks that need to be addressed.
2. Create Operational Efficiencies
Contracts and agreements aren’t just potential sources of risk—they represent largely untapped sources of profit in the form of operational efficiencies and new product and service offerings.
Operational efficiencies can be identified by analyzing contracts and extracting data that tells the organization what clients have agreed to let the company do with their data. Costs can be significantly reduced, for instance, if contracts stipulate that a company is free to move and store client data as it sees fit. In that case, efficiencies could be found by migrating client data to the cloud or to a region where storage is less expensive.
To identify potential operational efficiencies, companies must leverage an automated contract analytics solution that will find each contract and extract all the relevant data for analysis and comparison.
3. Identify Opportunities to Create Value
Leveraging data locked within contracts may also allow companies to cross-sell and upsell to current customers. An insurer, for instance, could search existing agreements with life insurance policy holders and determine—based on medical information and personal data—which current customers would be good candidates for a critical illness policy.
Contract analytics may also surface data that reveals trends or business intelligence pointing to the need for a new product or service. For instance, a bank may identify a segment of their client base reaching retirement age who own their home but have little in the way of retirement investments. A new vehicle that helps them create retirement income would be a win/win.
To identify actionable insights and opportunities, companies must leverage technology that allows them to look into all repositories to find all contracts AND look into each contract and extract the necessary fields, values, and data.
Choosing the Right Contract Analytics Solution
To successfully mitigate risks and capitalize on opportunities—without relying on clunky, error-prone manual methods—organizations must adopt a fit-for-enterprise contract analytics solution.
Enterprise Optical Character Recognition (OCR) is another important capability to look for in a contract analytics solution, since many companies need to identify and extract information that was scanned or hand-typed originally. Robust OCR capabilities allow enterprises to automatically clean up any images or other constructs within contract documents, ensuring searchability and drastically improving the accuracy of analytics.
Enterprises grappling with regulatory challenges face significant penalties if they aren’t able to find and analyze all of the contracts in their repositories. Beyond sanctions, companies who can’t access and leverage the data in their contracts also miss out on potential opportunities to create value for their customers. Proactive enterprises seek to implement automated contract analytics tools that enable them to mitigate risks and uncover (and act on) the business insights buried within contract documents.
About the Author
As a senior executive, Scott has spent the last 20 years building Adlib into the thriving organization it is today. Scott has held customer-focused leadership roles spanning success, professional services, marketing, and support. He is passionate about business growth, the human impact of technology, and the pursuit of an ideal customer experience measured in the customers’ terms.