Your Essential Guide to Contract Analytics from Data Visualization to Data Insight
Contract analytics is more than just the translation of raw data into graphs and tables. It is more than just utilizing traditional reporting methods (like Excel) that often have their limitations on the robustness of insights. Contract analytics goes one step further; it is the future of sophisticated data analysis that includes visualization and extensive insight into large volumes of documents. It draws attention to essential clauses or data points within a specific contract so that as an organization you can make much more informed business decisions.
An authoritative legal-industry report on the current state of Artificial Intelligence (AI) in contract analysis and data extraction found that 91% of respondents from Fortune 1000 companies apply contract analytics to risk assessment, sourcing, and contract management. 55% of respondents are using contract AI within GDPR and regulatory mandates due to the rising importance of data privacy and protection.
Many organizations are achieving impressive results using contract analytics across a variety of use cases, from data extraction and procurement to applications in financial services, regulatory compliance, and risk assessment. There is significant time- and cost-saving benefits of implementing contract analytics solutions. We have listed a few benefits of embedding contract analytics into your overall data and business strategy.
Gain valuable insight into business performance and drive profits
With contract analytics, you gain knowledge into many areas within your contracts that you may have overlooked before. For instance, essential functions such as cycle times, deviations, risks, statistics (expiry, renewal, pending, etc.), procurement, and general business metrics can be analyzed holistically. Moreover, a variety of metric categories enables configuration of dashboards to drill straight down into the critical data without wasting time wading through the superfluous noise.
Contract analytics discovers and analyzes provisions and clauses that are worded differently but mean relatively the same concepts. Additionally, the system identifies and analyzes side-by-side standard and approved clauses against ones that are reworded, providing a layer of anomaly detection.
Using a combination of OCR and deep learning algorithms to extract contractual terms, clauses, and provisions, large amounts of data can be extracted to provide a 360-degree view of the entire portfolio of contracts. In addition, reporting and data visualization capabilities give the power to drill into specific data points through a drag and drop interface, creating intuitive dashboards, mashups, heat maps, and visualizations across numerous data elements, for fast and well-informed decision making.
For example, management agents with a vast number of office properties in New York would require accurate analysis of price paid per property and historical or future fluctuations in price. Typically, many brokers focus on getting their tenants large free rent or rent abatement periods (3 months to 1 year). Contract analytics has proven that the statistical correlation between rent free period length and other clauses such as renewal option period length are highly correlated. This means, although your broker may be trying to get you an upfront contractual gain, other longer-term conditions in your contract may be weakened by this negotiation tactic and the data proves it!
Add intelligence and customize your reports for each business case
Contract analytics puts intelligence into custom reports that only focus on the most important information. This helps to remove superfluous and unnecessary data in the final, visually presented report, as the person using the dashboard has full control in deciding what business information or statistics they want to view. In other words, welcome to the world of customization!
We mentioned before that contract analytics goes beyond graphs and tables; however, it is still closely tied together because you need to somehow present results to others to recognize trends and statistics. Analysis within visual tools, however, will be more impactful than before due to the in-depth data that is available. Cross-reference your private data and statistics with the data from relevant 3rd party platforms and now you have a truly robust market analysis platform.
As an example, retail businesses that ideally would like to place their business premises right in the area where there is substantial population, traffic, and easy access for pedestrians and drivers. Addressing information contained in your contract such as parking spaces, signage, and co-tenancy clauses and combining that with 3rd party such as Transportation Authorities that result in statistics surrounding traffic that could then be analyzed versus locations of business units in a specific areas with specific contractual terms.
The ultimate goal of contract analytics is to provide an organization with a complete analysis of both historical and current data so that they can make business decisions that will increase efficiency and profits. This eventually leads to predictive analytics and forecasting which is the next evolution from contract analytics. While many organizations do the majority of this analysis manually (or on the back of a napkin), with contract analytics, organizations are able to dive deeper, take a statistical rather than heuristic approach, and conduct these analytics at a much lower cost.