GenAI is just the beginning, marking a step toward artificial general intelligence (AGI), which can perform any intellectual task that can be accomplished by humans
The benefits of GenAI include that enterprises can save money by reducing costs and enhancing compliance
GenAI can effectively be used in contract management by centralising contracts, identifying contract-centric use cases and realising the intent
Earlier this year, the US investor guru Warren Buffett made headlines by describing artificial intelligence as a genie that “scares the hell out of me.”
The Berkshire Hathaway chairman and CEO has long been known for his extraordinary foresight, something of a genie himself because of his ability to predict lucrative investment opportunities. His words carry weight, and when he expresses concern, people listen.
In this instance, while Buffett’s caution is understandable, the potential of AI may be greater than the risks.
Although disruptive technology is exciting, it can also raise concerns, particularly when even the AI scientists who developed it cannot fully explain the internal workings of its underlying mechanisms, such as transformers in GenAI. It is difficult to explain but the outcomes it delivers often feel nothing short of miraculous.
The Potential Of Disruptive Technology
I liken GenAI to the dot-com era of the late 1990s and early 2000s, a time when everyone wanted to tap into first-of-a-kind technology in the hopes of discovering new areas for innovation.
Fast-forward two decades, and the power of the internet has been more fully realised. It has improved the way people live and how businesses run. I don’t believe GenAI will take two decades to be realised fully – the world is changing as we speak.
GenAI is just the beginning, marking a step toward artificial general intelligence (AGI), which can perform any intellectual task that can be accomplished by humans. Today’s GenAI already enables AI tools to think logically and creatively like humans. This convergence of human-like reasoning with machines’ vast computational power and data processing abilities is set to fundamentally transform business processes. For example, AI can analyse vast amounts of data at speeds far beyond human capability, identifying patterns and deriving insights that might otherwise go unnoticed. In contract management, this means AI can quickly review and analyse large volumes of commercial agreements to inform better decision-making and increase the pace of business.
Reimagining Contracts With GenAI
Contracts form the backbone of global commerce, defining the rules of business for large and small companies everywhere. It is a single source of truth that a business has with its suppliers, partners, and customers, defining compliance, expected obligations, and the intent of the relationship. This makes contract data one of the most valuable untapped assets in the enterprise.
GenAI’s ability to think creatively and suggest actions within contracts has the potential to elevate commerce by optimising business relationships. This technology not only streamlines time-consuming and error-prone manual processes but also ensures the intent behind business relationships is fully realised. The benefits are twofold: enterprises can save money by reducing costs while also preventing revenue leakage, increasing revenue, reducing risk, and enhancing compliance.
Implementing GenAI In Contract Management
To effectively implement GenAI in contract management processes, businesses can follow these steps:
- Centralise contracts – In most enterprises, this is no small feat. To build a solid foundation for AI deployment, it may be necessary to phase the process out by department, region, or function. Once contracts are centralised, businesses will benefit from improved visibility and control over their contractual obligations.
- Identify contract-centric use cases – Focus on examining critical areas such as contract creation, negotiation, and execution, ensuring timely payments to suppliers, tracking customer payment schedules, and assessing specific regulatory risks. Identifying these use cases is essential for understanding where AI can deliver the most value.
- Automate use cases using GenAI-led contract intelligence – Automating contract-centric use cases can feel daunting for most enterprises. To manage this effectively, consider applying the 70/30 rule – prioritising automation for the use cases that offer the highest return on investment.
- Realise the intent: This final step unlocks two significant benefits. First, leveraging AI with legacy contracts allows for a deeper understanding of business patterns. Second, applying GenAI ensures that contact-related transactions, such as payments and regulatory compliance, align with the original intent of the contract, providing greater accuracy and consistency.
When executed correctly, GenAI can substantially enhance business processes and deliver tangible value. It can reduce complexity and friction – the two deterrents to enterprise agility, allowing businesses to operate more efficiently and effectively. By transforming contract-driven processes, enterprises can optimise business outcomes around revenue, savings, and risk.
Looking Ahead
There has never been a more exciting time in business than now. In 20 years, we’ll reflect and marvel at how little we knew about AI in its early days and how dramatically it has changed our lives for the better. However, to harness AI’s full potential, we must approach it responsibly, starting with a clear understanding of its value within our organisations, its power and its limitations.
By embracing GenAI, businesses can not only navigate the complexities of modern commerce in today’s ever-changing economic environment but also set the stage for future success in an increasingly AI-driven world.
Get this right, and Warren Buffett will realise he had nothing to fear.
