Contracting is a common activity, but few firms do it efficiently or effectively. It has been estimated that inefficient contracting causes firms to lose from 5 to 40 percent of value on a given deal. But recent technological developments, like artificial intelligence (AI), are helping companies overcome contracting challenges.
Contracting challenges include:
- Managing a large volume of contracts
- Dealing with inconsistent terms and clauses
In her research, Beverly Rich, author of “How AI Is Changing Contracts,” has seen how technology has increased the productivity and efficiency of contracting. And she believes that AI has the potential to dramatically improve how firms contract by:
- Changing the tools that firms use to contract
- Influencing the content of contracts
- Affecting the processes by which firms contract