What is JAGGAER Contracts AI?
JAGGAER Contracts AI is a great example of how artificial intelligence (AI) and machine learning (ML) – which can at times seem rather arcane topics only of interest to data scientists – can make us more efficient, more productive, and more strategic in our day-to-day lives.
JAGGAER Contracts AI uses optical character recognition (OCR) and other AI/ML technology to identify and extract unstructured data (words, clauses, sentences, numbers, signatures) from hundreds or even thousands of contracts automatically. The extracted data is repackaged as structured metadata to provide clear visibility and insights across all contracts – even if some are in the form of an image, such as a scanned pdf.
When analyzing the extracted text, JAGGAER Contracts AI applies natural language processing (NLP) techniques to not just look for matching terms, but also take into consideration similar wording and its context within the document to determine the presence or absence of clause language in the contract. That’s a lot of technical terms, so let’s turn to some practical examples.
How can I benefit by using Contracts AI?
Let’s say a specific regulation you are using for contractual due diligence with some of your suppliers has changed and you need to locate all active contracts that contain that (or very similar) language to determine if you need to amend any of these contracts. Today, this might require a team of people to review every contract in your entire portfolio just to locate those contracts.
With JAGGAER Contracts AI, instead of sifting through all your contracts, reading from top to bottom, trying to figure out exactly which ones contain the clause, you can easily search across all your contracts, and with the power of AI and NLP-based semantic search. The system can automatically identify every contract and clause that contains matching or similar language.
Your team can locate, review, and analyze your contracts at scale. For enterprises with thousands of contracts, Contracts AI will save you hundreds of hours of mind-numbing effort. Another perfect use case for this capability is during mergers, acquisitions and partnerships assessments.
No one wants to carry the responsibility for overlooking key obligations or binding terms in these inherited contracts. Restrictions such as non-compete clauses could impose disadvantageous limits on the acquiring business and could potentially affect the overall value of the merger or acquisition. It is especially difficult when the contract language used by the two organizations varies.
Identify non-standard language or missing clauses
Another feature of JAGGAER Contracts AI that is often used during contract negotiation is the ability to identify and compare clause language in a proposed contract document against your organization’s standard, preferred legal language and highlight the differences.
Let’s say you receive a lengthy contract proposal authored by a supplier on their paper, and you need to know if there are any mandatory clauses that are missing (a “indemnification clause” for example) or clauses that contain language which differs significantly from your organization’s standard language. Typically, this would require someone to scour the document to identify all the clauses and then manually evaluate each clause for differences.
With JAGGAER Contracts AI, by running a clause variance, it automatically identifies the presence or absence of clauses, as well as compare the extracted language against your organization’s standard language and determine the difference in meaning between them.
By having the system do the bulk of this work, it not only helps identify contracts that pose a potential risk, but it also frees up your legal team to focus on the differences and determine the best way to respond. This process can also be run against multiple contracts at any stage of the contract lifecycle, which provides an overview of your contracts, highlighting those that might present a higher risk based on the language contained.
Migrate legacy contracts
In addition, since Contracts AI is not a standalone solution at JAGGAER, by pushing the extracted metadata into JAGGAER’s contract lifecycle management (CLM) solution, you accelerate the implementation of your CLM solution. It’s also easier to bulk import your contracts (e.g., from a legacy system, from a new acquisition, etc.) into a single repository for better visibility, analysis, and possibly for easier identification of new sales opportunities.
Important Note: We will provide more information on a future article.
These are just a few of the many examples where Contracts AI can deliver a return on your investment in a matter of days or weeks. Our clients are very creative and use JAGGAER Contracts AI to help them with all kinds of problems that would normally take an army of legal experts to resolve.
Who in your organization would benefit the most using JAGGAER Contracts AI
The two groups who will benefit the most from the powerful automation of JAGGAER Contracts AI are procurement and legal (and some of our clients even have Sales and Finance teams using the tool) which is a testament to the versatility of the system.
Here are some of the benefits and value that these teams can expect to see:
Procurement Teams for buy-side contracts
- A decrease of up to 40% of your revenue leakage with better insight into non-standard or special negotiation terms.
- Up to five hours back in your week by automatically extracting metadata from unstructured documents and making that data available in other key systems (e.g., contract lifecycle. management, customer relationship management, enterprise resource planning, sourcing etc.)
- Faster ability to perform advanced searches across all your existing contracts and attachments, even if they were previously located in different locations and document formats.
Legal Teams for any types of Contracts
- An acceleration of the contract approval process (on average 50% improvement).
- Reduction of the financial, legal, security and compliance risk of your company, by systematically identifying, extracting, and highlighting non-standard or missing clause language.
- Up to 50% manual labor cost savings from your legal operations teams, by automating data extraction and analysis. One customer reported: “If I didn’t have JAGGAER Contracts AI, I just wouldn’t have been able to review this large number of contracts in the next 2 years!”
In our next article, Siva Pullabhotla, Co-founder and ex-CEO of DocSkiff, now VP of Product Management in charge of innovation at JAGGAER, will cover “The 7 Must-Have Features You Need to Look for When Buying your Contracts AI solution.”
