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Name: Blog-Subscription_1707619834746 — POST https://s566810826.t.eloqua.com/e/f2?elqSiteID=566810826

<form class="gcdc-form-render gcdc-form-render-BlogSubscribeNew gcdc-form-render-blogsubscribenew" novalidate="novalidate" method="post" action="https://s566810826.t.eloqua.com/e/f2?elqSiteID=566810826"
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2024 CONTRACT MANAGEMENT TRENDS: SMART CONTRACTS, AI REGULATION AND MORE

Contract management has come a long way from paper and pen and metal filing
cabinets. Today’s contract management is faster, easier, more intelligent and
less prone to errors thanks to digitization. If you’re wondering what’s next in
the evolution of contracts—the foundation of so many business operations and
transactions—this is a good place to start.  In this blog, we explore several
developments that will likely impact your contract management in the year ahead,
ranging from enhanced collaboration to a new focus on corporate responsibility
requirements to AI. Here are the trends you can expect in 2024 and what they
mean for your business. 


1. INCREASING USE OF NATIVELY DIGITAL SMART CONTRACTS

If you handle agreements at your organization, you know that contract generation
and negotiation can be time-consuming and inefficient. Most businesses follow
the same process, beginning with a .docx file. After one party creates a
document, the other party marks it up and returns it via email. This often
lengthy process continues until negotiation is complete and the agreement is
converted into a PDF. This change in format typically represents the end of
negotiation and the finalization of the agreement.

Beyond inefficiency, this process has a number of limitations. Introduced into
the market about 30 years ago, PDFs are becoming relics. They require
considerable customization to become mobile-friendly and don’t lend themselves
to easy editing or tracking changes—two essential aspects of contracting.
Companies today need a document format specifically for agreements, with more
capabilities than a PDF.

Fortunately, there’s a growing shift in the contract generation and negotiation
process from static PDFs toward digitally native smart legal contracts. These
new contracts exist in collaborative web environments that both parties can
easily use. For instance, parties can drag and drop clauses into an agreement
and connect to data sources like SAP or Salesforce, allowing for seamless
contract data entry and updates to the source after signing. By permanently
linking contracts with the data used to generate them, users can regain valuable
information currently lost in the PDF generation process. Rather than signing
documents with extensive text, parties will interact with digital forms,
complete with superior user interfaces, on all devices for a modern, engaging,
app-based experience.


2. EXPANDING CONTRACT COLLABORATION WITHIN THE TOOLS TEAMS ALREADY USE    

Tools that facilitate collaboration among teams have become even more essential
over the past few years. Google Docs, for instance, is now an increasingly
common choice for contract generation. In the year ahead, thanks to integrations
with contract management systems, we’ll see even more contract work take place
in the areas where teams already collaborate and work, including apps like Zoom,
Teams, Slack, WhatsApp, Microsoft Office 365 and Google Docs.

These integrations, with their single sign-on capabilities, enable seamless
access to contract management system functionalities right from within favorite
apps. As more organizations choose to take advantage of these capabilities,
contracting work will become even more collaborative and convenient for teams,
especially those that are geographically distributed. 


3. USING AI-ENHANCED NEGOTIATION AND POST-SIGNING WORKFLOWS 

AI isn’t quite ready to write contracts on its own, but it can help summarize
agreements and trigger alerts based on the identification of risks and
opportunities. This, of course, can accelerate the contract review process.
During renewals, AI also enables rapid updating of contract terms. Today, some
companies are experimenting with the use of AI-powered chatbots for autonomous
negotiations to free up personnel for other tasks. In 2024, as AI matures, this
could become more popular for the negotiation of standard agreements as
organizations continue to seek ways to expedite contract workflows.

Machine learning models may also assist organizations in selecting clauses that
counterparties will likely accept.  Because few organizations have solid metrics
on how contract terms and clauses correlate with business successes or failures,
many struggle to find the clauses that are most appropriate and effective. Once
teams have the capability to extract agreement data from the platforms used to
generate contracts, they will be able to determine which contract language
yields successful negotiations.

While detection capabilities for obligation management currently exist, like the
detection of contract expiration dates, the next step is to connect to
real-world data. Then, AI can determine the best next step for a contract based
on actual events that have taken place, saving money and reducing risk. 


4. NEW LEGISLATION ADDRESSING DATA PRIVACY AND AI

Lawmakers around the globe, from Brazil to Japan, are beginning to draft
regulations and guidelines informing how companies develop AI solutions, handle
customer data and more. Wherever you are in the world, it’s essential to
carefully consider the risks associated with AI technology. Unlike prior
generations of technology, now when you’re in the market for new tech,
especially any that leverages AI, take the time to find a reputable and trusted
digital solutions provider. More than ever, it’s critical to ask who would have
access to your company’s data if you were to partner with the provider, how they
intend to use your data and whether they have plans to anonymize and de-identify
it.

Not doing your due diligence before signing a deal can have serious
ramifications. Case in point: In the European Union, parliament recently came to
an agreement on rules for its groundbreaking AI Act. Although the law still has
to be formally passed in 2024, it paves the way for a global standard to
classify AI risk, subjecting organizations to regulations according to the level
of risk their systems pose. Organizations also face transparent reporting
requirements and penalties for noncompliance. There have been a number of AI
bills proposed in the US but they have not been enacted by Congress.


5. REALIZING INCLUSIVE ECONOMIC GROWTH THROUGH CONTRACTS 

Bringing greater sustainability, resilience and innovation to communities around
the world is increasingly top of mind for C-suite executives. With contracts
being an essential part of business, one way to progress toward these goals is
by increasing access to contract technology. Even more, as people around the
world continue to rely on their smartphones for business communication, contract
technology providers will offer new, mobile-friendly features.

This broad trend is exemplified by integrations with WhatsApp, a messaging app
with two billion users in more than 180 countries. For example, with the
DocuSign WhatsApp integration, users can sign and receive notifications about
agreements within WhatsApp wherever they are at nearly any time. The ability to
manage agreements in the palm of a hand facilitates business and brings the
potential for economic growth to a community of new users and business owners
who may not have access to laptops or desktop computers. 


6. CONTINUING DIGITIZATION OF IDENTITY VERIFICATION 

With so many business processes now taking place online, agreement processes
like identity verification are gaining even greater traction. Many contracts in
fields like financial services and human resources contain sensitive information
that’s essential to keep secure, including bank account numbers and Social
Security numbers. As a result, governments around the world, particularly in the
European Union, turn to digital identity verification to expedite and streamline
identity proofing and authentication.

If your organization is interested in implementing a digital identity
verification solution, take time to research vendors. Reputable providers offer
robust security measures, including encryption such as a PKI to authenticate
users. They also offer a standout user experience, including SMS capabilities,
to ensure their technology is user-friendly and accessible. 


7. TRICKLING DOWN: THE RISING ADOPTION OF CONTRACTING TECHNOLOGY AMONG SMALL
BUSINESSES 

Often thought of as an enterprise-only solution, contract lifecycle management
(CLM) is increasingly in demand across all sizes of organizations, even SMBs. In
recognition of the SMB market size and needs—like uniting stakeholders or
implementing compliance guardrails—CLM providers are moving toward a more
modular approach, allowing users to purchase only the components of CLM that
they need most.

This modular approach can make contract management feasible on a more limited
budget. SMBs, for instance, can get repository and contract generation
capabilities without other aspects of CLM, such as contract analysis with AI,
which might not be necessary for small organizations. 


8. ADHERING TO CORPORATE RESPONSIBILITY REQUIREMENTS 

In addition to AI legislation, Europe is also contending with new requirements
to disclose corporate responsibility policies. Because supply chain emissions
are often the largest contributor to a company’s greenhouse gas footprint,
adding sustainability requirements in addendums to vendor contracts helps
companies meet their climate goals.  European companies will look to include
corporate responsibility clauses and addendums in their agreements and report
how their vendors are adhering to corporate responsibility requirements.

Similarly, more jurisdictions in the U.S. and across the globe may require
organizations to publicly disclose greenhouse gas emissions moving forward. Many
organizations will look for science-based targets and climate commitments in
their vendor agreements in the year ahead to prepare for the requirement. 


SET YOUR COMPANY UP FOR SUCCESS IN 2024 

Contract management is an essential part of any organization’s productivity and
digital transformation strategy, and staying ahead of the trends can help you
keep pace with changes. Get ahead next year by investing in a contract lifecycle
management solution that’s already forward-thinking.

Learn more about how DocuSign CLM can help your organization automate tasks,
manage complex workflows and remove blockers to work more efficiently.

Author
Austin Miller
CLM Expert
Published
January 30, 2024
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Related Topics
 * Digital Transformation
 * Contract Lifecycle Management

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