AI and legal: for Stuart Brock, founder of iKinetiq, it all boils down to the following: ““GenAI is not ready for unsupervised application right now. And the reason for that is simple: we currently do not have consistent standards to monitor output and authenticate the underlying models and data sources.” and concludes by saying : ““For the near term, I don’t see GenAI being disruptive in ‘how’ and ‘where’ we spend. But I do see it being transformative in due diligence, in transforming contract negotiation and, more importantly, in transforming vendor management.”
GenAI use cases in contracts and negotiations
One use case of AI in procurement is abundantly evident in contracting and legal. GenAI can be used to summarize a contract and create a risk profile. This allows laypeople to negotiate lower-risk contract terms while ensuring higher-risk terms are routed to the legal department. While this has been transformative, he sees even more exciting developments from an operational and process standpoint.
“What excites me,” he says, “is the ability of GenAI to ‘farm’ your existing contract portfolio. It can review the wealth of data in your contract repositories and provide insight into how you historically negotiated similar provisions. Thus, GenAI can become your team’s copilot, standardizing how you negotiate contract terms while ensuring risks are managed within your company’s risk framework. That, for me, revolutionizes how we leverage prior negotiations to obtain better financial and risk provisions, resulting in a tremendous competitive edge.
“Historically, there has been value leakage from siloed negotiations of contracts with the same vendor. There is typically no reason to have different contracts with the same vendor. Our goal should be a master agreement containing the overall terms of the vendor relationship with sub agreements limited to the project’s specific terms. Gen AI provides insights into this historical data that can be used to leverage better positions in current and future negotiations.
“GenAI also helps you determine which of your supplier contracts have performed the best and whether you can leverage these performance metrics against similar providers. This is particularly useful where you have multiple vendors providing similar services.”
However, Stuart doesn’t see the biggest use case in actual spend, such as rate card comparisons, or how much time invoice-to-contract takes.
Read the full article: https://spendmatters.com/2024/03/25/ai-and-the-practice-of-procurement-contracting-and-legal/
