Icertis: AI in Contracting and Value Creation Potential
A study by Icertis and World Commerce & Contracting has identified a gap in the understanding of AI between individual executives and organisations.
Drawing from feedback provided by over 500 businesses worldwide, the research suggests an emerging disparity between individual and institutional viewpoints regarding AI, including integration of AI technology encompassing risk management, regulatory compliance, and cost reduction. Largely consisting of legal and procurement experts from a range of sectors, the respondents gave views on AI trends spanning a six-month period, suggesting a transformation of contract management in the era of AI.
“As AI rapidly evolves, this study from World Commerce and Contracting and Icertis points to its power in redefining commercial practices and creating value as a strategic asset capable of enabling both innovation and efficiency,” said Tim Cummins, President of World Commerce & Contracting.
“AI can analyse vast amounts of contract data with speed and accuracy, uncovering patterns and anomalies that might go unnoticed by human oversight. This supports real-time improvements in contracting cycle times, more vigilant compliance monitoring, and proactive cost management – all of which are priorities in today’s business environment.”
Key AI report findings
Personal enthusiasm for AI is outpacing organisational readiness
Nearly 80 percent of legal and procurement professionals are now personally enthusiastic about AI, more than double the number who expressed positive sentiment in June 2023. In comparison, less than 40% of respondents feel their organisation is enthusiastic about AI – only a 10% increase within the same timeframe. This indicates a growing need for decision-makers to accelerate AI adoption in an effort to match their workforce’s appetite to embrace the technology.
Security and reliability remain primary AI concerns
The top barriers to AI implementation include apprehension around security and privacy (57 %), data output quality (46%), and general lack of trust (46%). These factors are likely the source of more cautious AI adoption practices and any lingering uncertainty among business leaders as they seek to protect their company’s data.
AI is enabling strategic impact and transforming core business functions through contracts
Legal and procurement professionals believe AI will help analyse risk and compliance in contracts (94%), assist in contract negotiations (88%), and generate contracts (87%).
Additionally, 84% agree that AI will free up time for more strategic work to help evolve their functions into drivers of innovation and value across the enterprise.
AI ROI is being measured in tangible outcomes
Businesses are assessing the impact of AI in contracting by evaluating cost savings, considering enhanced contract data analytics and reporting, and examining compliance rates with contractual obligations and regulations as the top three performance indicators. Analytics and insights, and risk and compliance support are also among the most desired generative AI capabilities in contracting as legal and procurement
“Many companies spent 2023 talking about AI, but now leaders are under pressure to take action and show tangible returns from AI investments. Contracts are the single source of truth for business relationships, making their data one of the most valuable untapped assets for AI and a prime opportunity for enterprises to realise immediate bottom-line impact by integrating AI into contract-driven operations,” said Bernadette Bulacan, Chief Evangelist, Icertis.
“Icertis offers legal and procurement teams secure platforms and proven AI models that deliver reliable insights they can trust to inform business decisions. Innovations like Icertis Copilots also enable enterprises to leverage AI as a strategic partner rather than just an automation tool, ultimately supporting the cost savings and risk mitigation these teams seek in today’s macro environment.”
Regional variations in AI adoption in contracting
The integration of AI into the contracting process reveals varying adoption and other rates across different regions. The data indicates that the USA, UK, and India are demonstrating leadership in skills acquisition and development. The data offers insights into how individuals in the USA, UK, and India acquire their skills, with a notable emphasis on practical experience across all three countries.
On a scale from 1 to 5:
Oceania shows the highest enthusiasm at 4.1, indicating a positive reception towards AI in contracting.
Europe follows with an enthusiasm level of 3.8, suggesting a favourable attitude towards AI technologies.
Asia and the Middle East both demonstrate a moderate enthusiasm level of 3.5, reflecting cautious optimism.
North America exhibits a slightly lower enthusiasm level of 3.3, indicating a need for further engagement and understanding of AI benefits in the contracting process.
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