http://spendmatters.

com/2017/01/03/artificial-intelligence-contract-management-considerations-
practitioners-part-1-introduction/

Within CLM, this activity can begin now. Building such a commercial knowledge base, however, simply
can’t be supported by older-generation CLM approaches and systems (e.g., relational databases that
store contract document metadata and attachments). The ability to build such an enterprise knowledge
base that can form a foundation of AI-enabled commercial information requires high quality contracts
and high quality processes that manage those contracts through their lifecycle.

As such, leading CLM apps are a great place to start building the groundwork for AI-based CLM. I started
this series with three simple steps in CLM:
1. Build a high-level knowledge base about all your contracts in the form of a contract repository.
2. Derive key intelligence from within your contract clause data/metadata to identify risks and
rewards.
3. Begin to leverage your augmented commercial intelligence within upstream CLM processes and
other commercially informed enterprise processes

But how? Does this require next-generation AI tools?

The answer is no (at least for now). But, if you want to build such commercial intelligence, whether on
the buy-side for supplier contracts or more broadly for all enterprise contracts, you should take three
basic steps:
1. Build a high-level knowledge base about all your contracts in the form of a contract repository to
gain high-level self awareness of your commercial health vis-à-vis your contract documents.
2. Derive key intelligence from within your contract data to identify critical risks and latent
opportunities (e.g., unclaimed money due to you). This is where the heavy lifting of AI starts by
training the “machine” to decipher the legalese down to a granular contract clause level (including
metadata).
3. Begin to use your augmented commercial intelligence within upstream processes (e.g., strategic
planning, negotiations, risk management) to plan, predict and optimize your commercial decisions
at massively improved efficiency and effectiveness levels.
Intelligence is meaningless without knowledge, and vice versa

Expertise is built on knowledge that adequately models the richness of a certain domain, but high
intelligence allows the knowledge to be more effectively and efficiently applied to solve problems.

Teaching the machine to learn (i.e., “machine learning”) is also key to enabling predictive analytics in
areas such as risk management and prescriptive analytics that help guide you in decision-making. All
this knowledge modeling is great, but then what?