Contracts are the lifeblood of a business, spelling out its complete register of liabilities and opportunities. Inspired by DocuSign, contract lifecycle management (CLM) tools have helped streamline contract signing and management processes. A new generation of intelligent agreement management (IAM) tools promises to transform how businesses create and commit to agreements and agreement processes. This promises to improve efficiency, reduce risk and unlock additional value from agreements.
Rebecca Denman, VP of product management at DocuSign, explains how IAM works, differs from CLM, and its future:
DocuSign started 20 years ago, and we were first about pioneering the e-signature space. It was about helping customers and businesses come together and quickly, efficiently and securely sign agreements. And over the past decade-plus, once we kind of got that e-signature space locked in, our customers constantly wanted more support around the whole agreement space.
The signature is just one small piece of that. Other important pieces include the creation of an agreement, the negotiation process, and then the surfacing of relevant information to various stakeholders. Thinking through these different processes planted the seeds for IAM. Last May, DocuSign conducted a survey with Deloitte to understand what was happening in the agreement space. They discovered that the agreement space is not well automated. Denman says:
Agreements are still done very similar to they were when the internet started with email and word processing documents back and forth. The only thing that's really been improved was the e-signature part. We uncovered that there is about £1.5 trillion lost in global economic value every year as a result of those inefficiencies in agreement processes and that agreement data locked and trapped inside of static, flat files.
For example, what happens to an agreement today? After you sign a contract, it gets stored in a static PDF file that's hard to search or take action on. But essential information gets tucked away in these files that are relevant for different stakeholders asking questions like:
DocuSign was an early pioneer in e-signature tech at a time when many legal professionals and courts were unsure that simply clicking on a button would count as a valid acknowledgment. But once courts and regulators came on board, the field was flooded with a bevy of startups looking for more efficient ways to manage contracts, clauses, and agreements.
The launch of DocuSign AI introduced four main components.
Another pillar of DocuSign's IAM strategy focuses on improving components. This is about surfacing agreement-related tooling for enterprises at a pace they can digest. Denman explains:
We realize that the agreement process is a journey, and we have to meet our customers where they are, and sometimes they're not ready for the advanced capabilities of CLM, where you automate these really highly complex workflows. Maybe they just want to automate a piece. We can meet them there, and they can bring those agreements into the repository and make them work for them.
For example, they have components for agreements, preparation, documents, templates, libraries, clauses, data verification, identity verification, and signatures. Also, developers and experts can create and resell new components across the DocuSign ecosystem. This allows specialized experts to develop industry-specific solutions for a particular contractual domain.
We all know what agreements are since we have been making them for thousands of years without considering the ramifications across all stakeholders. At the same time, the concept of an agreement seems to be in flux, and the same agreement might mean different things to different people and at different stages of a company's evolution. An agreement might mean whether a salesperson gets their quarterly bonus. A finance person might wonder about their aggregate risk or why one salesperson seems to be selling so many keyboards in Brazil. The last one is a real example I once heard at a conference where web developers had assigned online sales to one saleslady to get their app to work.
Here is how Denman thinks about agreements:
Agreements are an interesting beast. It is something that, up until this point, have been very legal-centric and really only understood by those legal personas that put those things together and get into those heavy debates and whether or not I'm going to accept your terms or not. And it is our mission to make those agreements more accessible to all parts of the business. But you need to do it while maintaining business compliance, which means you need to understand your business objectives.
Maybe you're a startup focused on customer acquisition, or maybe about proving a technology that your customers love. You are not worried about revenue and profit at that stage. No, you're a startup. You have to care a little about it, but you're driving your revenue differently. But later on, what you're negotiating with your customers will be very different when you're a publicly traded company, and what you're worrying about now is not only your customer install base but also your profit and your revenue. So, the business terms that you want to negotiate evolve and change, but you need to break down an agreement to really understand which pieces of those are most critical to your business at any given stage of the life of your business. We can do that by breaking down an agreement into its parts and creating rules and recommendations around those different types of clauses.
The upshot is that an agreement is a set of components with different levels of priority and are always evolving. Executives need to stay on top of the evolution of those terms to ensure they are negotiating the best terms and understand where they are willing to take some variations.
Once they are formulated, it's important to consider how to act on these agreements. For example, manufacturing teams need to know their timelines for fulfilling obligations. Finance and operations teams need to understand collection terms. Many of these folks are not lawyers who might understand the language of the agreement. This is where AI can help. Denman says:
So maybe you need to write that language down into something more attainable or understandable by those folks. You can use AI to power that information and adapt that information in a way that is accessible to the other parts of your business so that you can execute on those optimal terms that you just spent potentially months negotiating.
Several startups have been born to apply AI to improve various aspects of contract and agreement management processes since DocuSign pioneered the field. Competitors include Ironclad, Conga, LinkSquares, Evisort, and others. DocuSign's recent progress suggests that it is assembling a more comprehensive solution to maintain its lead across the whole contract and agreement space.
My only complaint is that most of these tools only apply to B2B contract and agreement management, as opposed to the B2C user service agreements that are increasingly imposed on consumers. It seems like a sad state of affairs when we must rely on regulators, NGOs, and trusted reporters to push back on some of the more onerous agreement terms without fully canceling our relationships with companies.
