Artificial Intelligence 101:

Introducing AI Into Contract Management

A CobbleStone Software Whitepaper
The Digital Age Is Now
Artificial intelligence (AI) is already sharpening professional best practices
across a variety of industries. However, revolutionary advancements in AI
are particularly beneficial as they apply to contract management solutions
- if corresponding AI tools are fed a nutritious diet of contract data.

C ast aside apocalyptic visions of malevolent androids usurping our throne.

Artificial intelligence is designed to act as an efficient aid for certain tasks that
were previously performed by decision-making humans.

If a university professor were scouring students’ essays for plagiarism, for instance,
it would be difficult to detect every traceable amount of stolen information in
each essay in a reasonable amount of time. However, an artificially intelligent
plagiarism detection service can check submitted documents against its database
and the content of other websites in order to provide a detailed originality score in
a matter of minutes or hours, allowing our collegiate example to focus exclusively
on the content of those essays.

The point is this: AI does not replace the duties of employed human beings,
rendering our workforce obsolete. Rather, it assists professionals in performing
the myriad of demands of their roles so that their positions can be streamlined into
more strategy-based ones.

Recent AI’s machine learning is fostered by the data fed into it by live, human
coordinators. This applies to organizations leveraging contract management
software as well. Artificial intelligence in contract management is designed to
enable humans to focus on strategizing and making informed decisions with
an enhanced understanding of contract risk and the positive and negative
relationships of both data and patterns.

Contract AI does not replace contract management professionals; instead, it

streamlines their data input, analysis, and risk identification tasks with automated
data entry and risk assessment, mitigation, and mapping. AI-based contract
management software supplies the building blocks that contract management
professionals require for improved contract oversight, proactive opportunity
realization, and advanced understanding of contract risk.

© 2019 CobbleStone Software 1 Introducing AI Into Contract Management

Embracing Smarter
Contract Management

Intelligent Tools: Less Work, More Outcome

C ontracts can be incredibly complex, and technology is not at a point where

it can entirely understand an ambiguous or esoteric contract, agreement, or
supporting document. However, artificial intelligence can enhance and support
contract and legal professionals by enabling them to complete their jobs faster,
more efficiently, and with greater ability to identify positive opportunities or
negative outcomes. By using contract management system data, AI can help
establish a contract management process unlike anything seen before.

Artificial intelligence for contract management can help users easily enter contract
data into their software system and interact with said data in an expedited,
transformative, and goal-oriented manner. Contract evaluation and risk
identification tools are additional factors in a creditable AI solution that can help
organizations to achieve better results.

Contract artificial intelligence can help assist with many tasks including:

Automated Data Analysis Risk Identification Better Contract

Data Extraction & Recommendations & Prevention Visibility

As a society, we have evolved from basic AI that gave us a route toward

success, and on to new technology that learns and adjusts based on history,
trends, and real-time status updates.

© 2019 CobbleStone Software 2 Introducing AI Into Contract Management

AI-Powered Data Identification
and Protection

C ontract management artificial intelligence can help contract administrators select

specific data points and define rules for the security and usage of those data points
based on contract types. This intuitive contract management software function is useful
because it consolidates and categorizes data, allowing users to establish rules regarding
names, phone numbers, email addresses, bank routing numbers, locations, dates,
counterparties, and other potentially private details. Once these rules are set, they can
be followed with the help of contract AI, reducing instances of wasted time performing
tedious data import analysis.

Suppose that an organization would like to have PII, PCI, bank routing numbers, social
security numbers, and employee data identified for elimination from consulting agreements.
An AI-based CLM tool could identify classified data, and then notify contract managers to
withhold the information based upon their organization's preferences, allowing the
organization to focus more time on making data-driven decisions.

© 2019 CobbleStone Software 3 Introducing AI Into Contract Management

AI for Contract Data Extraction

AI -powered contract management software is key in allowing organizations to import contract

record data into their system in a way that reduces time and instances of data entry errors.

With leading contract management artificial intelligence, documents can easily be uploaded
into the system. Once introduced, users can select the record type they want to create with their
document (e.g. contracts, requests, purchase orders, vendor/customer records, employee records,
and eSourcing records).

For example, say an organization has a consulting agreement from which they need key data
intelligently extracted. They would choose their contract type and, once it is run through their
artificially intelligent data extraction tool, see pieces of critical data such as dates, details, clauses,
confidentiality notes, and renewal notes auto-extracted from their documents. This allows the
organization to reduce time wasted on data entry and, instead, focus on more client-facing aspects
of contract management.

Contract Insight’s ®
intelligent contract
creation is significantly
streamlined with
AI-powered data
extraction and
classification tools.

The benefits of data extraction tools also apply to organizations that manage legacy contracts.
Suppose an organization has legacy contracts that need to be imported into contract
management software but does not have a standard data spreadsheet with which to execute a
bulk data import. The data can still be extracted, eliminating the need for users to manually key
in fields for active contracts created prior to the implementation of reputable, AI-based contract
management software. Consequently, contract clause, key term, and data input are streamlined,
providing the visibility necessary to search, report, compare, and classify contracts and legal risks
for records that were retroactively imported into a newly-applied system.

© 2019 CobbleStone Software 4 Introducing AI Into Contract Management

 Increased Accountability with AI

P roper risk management is instrumental in successful contract management.

AI-driven contract management software simplifies and makes more accurate
risk analysis, assessment, and mitigation. Contract management AI promotes risk
mitigation by making sure that system users are utilizing all of the features and
components made available (such as workflow, searching and reporting, employee
performance, counterparty tracking, tasks, records, etc.).

Next, a risk score is provided to users based on their organization’s usage of

available tools. This feature holds contract management professionals accountable
and encourages regular usage of risk prevention tools.

Suppose, for example, out of all the tools and functions that contract management
software provides, ABC Company only uses 80% of them according to the tracked
usage of risk mitigation tools. This means that 20% of the risk-relevant utilities
available to the organization are not being leveraged. Thus, system administrators
and users are prompted to improve risk mitigation practices, now equipped with
specific insight into what their organization’s risk mitigation process is lacking.

If ABC Company’s Contract Insight ® software

system reveals to them that the organization
is not putting sufficient time into tracking
approval status, then they adjust how they
track approvals accordingly so that they are
allocating the necessary effort to mitigate risks
associated with counterparty activity.

With contract management AI solutions that

establish checks and balances, risk mitigation
practices are improved and risk is reduced
- structuring the risk prevention process and
minimizing losses.

Be aware of contract-associated risk from the beginning. A leading solution

with advanced capabilities can offer enhanced contract oversight, proactive risk
identification, and continuous risk prevention.

© 2019 CobbleStone Software 5 Introducing AI Into Contract Management

Visualizing Risk with AI

C ontract management AI can provide further insight into risk with graphic-based
risk rating and mapping features.

Contract risk profile ratings allow contract managers to recognize risk in an

eye-catching way. Based on the tracking of risk, AI-driven contract management
software can produce a risk assessment matrix. In addition to seeing risk
probability patterns for events within contracts, users can also view the exposure
that results from those risks.

Say, for example, XYZ Company wants to assess confidentiality exposure as it

applies to a consulting agreement that they have in place with ABC Supplier.
They would estimate the risk probability and exposure on a percentage scale,
easily input that information with their user-friendly risk profiler, and view the
data on a grid that categorizes the confidentiality exposure as unlikely, likely, or
anywhere in between. Additionally, users can add risk descriptions and possible
mitigation efforts to be taken – further specifying risk assessment.

Contract Insight’s ®
risk assessment
matrix provides
organizations with
a colorful and
comprehensive
visualization of risk
and risk exposure.

Insight into potentially detrimental consequences of an event with possible risk can
help contract managers determine how to proceed with a contract. Visualizing the
outcome of an action associated with risk inherently reduces risk, allowing contract
managers to move forward with risk management decisions for their organization
more quickly and efficiently.

© 2019 CobbleStone Software 6 Introducing AI Into Contract Management

 What is VISDOM® AI?

C ontract management professionals must empower themselves with the tools mentioned
previously so that they can prepare for better contract transparency and reduced risk.

CobbleStone’s VISDOM contract artificial intelligence and machine learning is

an innovative feature of CobbleStone’s Contract Insight ® Enterprise Software that
simplifies contract administration and facilitates better contract processes for legal, risk,
and procurement professionals.

Automated Data Entry: Reduce the time it takes to enter new contracts in your
system. Don’t waste time manually importing field data when VISDOM AI can
extract document data for you.

Data Sensitivity Analysis: VISDOM AI can help identify key data within a
contract such as locations, dates, monetary values, emails, phone numbers,
counterparties, and bank routing numbers so organizations can choose whether or
not they want to redact that data. Keep in mind, locating personally identifiable
information (PII) is important, especially if your organization cannot store this
information in the system due to compliance limitations.

Risk Assessment Mapping: When adding a new contract to Contract Insight,

VISDOM AI helps identify potential risk by analyzing document text and usage of
risk tools, allowing the system to identify both good and bad language in a contract
based on rules-based sentiment, as well as how often tools were used.

Statistical Data Analysis: Determine positive, negative, or neutral facts about each
contract in your system to help with visibility and strategy. If a contract has a value
that is X% greater than the average contract value in your system, it can trigger an
automated alert as well as an intelligent contract workflow process.

Immediate Recommendations Based on Real-Time Data: VISDOM AI can

provide you with recurring on-screen recommendations and reports that give teams
overall contract visibility. The system can automatically send notification alerts and
present visualization tools based on assessments that VISDOM AI performs.

VISDOM AI systematically analyzes contracts, giving Contract Insight Enterprise

users improved contract oversight, proactive opportunity, and risk mitigation.
Essentially, it does hours of manual work in a few clicks of a button.

© 2019 CobbleStone Software 7 Introducing AI Into Contract Management

About CobbleStone Software

C obbleStone has integrated VISDOM AI and machine learning into its leading
enterprise contract lifecycle management platform, enabling users to convert
static contract documents into dynamic assets to leverage for improved opportunity
identification and risk mitigation.

CobbleStone Software has been a leader in providing enterprise contract

management, vendor management, procurement, and eSourcing software
solutions for over 20 years and is trusted by thousands of users. CobbleStone’s
contract management solutions provide contract and vendor tracking, configurable
email alerts, calendar notifications, contract workflow management, robust security
options, authoring of contract templates with dynamic clauses, revenue/cost
management, full-text indexing and searching, vendor/client ratings, document
version control, custom reports, electronic signatures, smarter contracts with
artificial intelligence and machine learning, and more.

To learn more about Contract Insight ®, contact the CobbleStone Team at

CobbleStoneSoftware.com or call 866-330-0056.

© 2019 CobbleStone Software 8 Introducing AI Into Contract Management