Stay compliant, protect your reputation, and minimize disruption with insights and automation driven by structured and connected contract data.
Time and again in recent years, we’ve been reminded of how globally connected commerce has become. Disruptions in one part of the world ripple across supply chains and markets, impacting businesses in often unexpected ways.
The war in Ukraine is the most recent example of this dynamic. As the crisis escalated and world governments responded with sanctions, companies had to assess the situation through three lenses:
- Are we working with sanctioned parties?
- Are we selling sanctioned goods?
- Do our business relationships align with our corporate principles and customer expectations?
- Are we doing business in impacted regions?
- Is our supply chain at risk (due to war, sanctions, or inflation)?
Responding With Data
Be it the Ukraine crisis, COVID, or the Suez Canal blockage, enterprise data has been key to answering these fundamental questions. Indeed, these disruptions have underscored how critical centralized access to structured business information is.
No two digital transformation journeys are alike, meaning companies need access to different data when crafting their response strategy. When the questions above are raised (e.g., who are we doing business with, where, and on what terms?), different leaders may look to various systems –
- SRM/ERP – Tells you who your suppliers are and where suppliers are going and coming from
- CRM – Tells you what customers you have in impacted regions
- Finance – Gives you details of where company dollars are going to and coming from
While powerful and insightful, none of these systems alone provide the definitive source of truth for who, and on what terms, a company is doing business with: the contract.
Contract Data: A Must-Have for the Compliant, Ethical, and Agile Enterprise
Contracts define a business—what it buys, what it sells, how it runs. While business leaders have long understood the value and force of contracts (there’s a reason why the proverbial “sign on the dotted line” is such a momentous occasion in business), the documents have long resisted the digital transformation trends that have swept other parts of the company. Contract data is often locked inside dense, natural language clauses that even humans can struggle to understand.
However, advances in artificial intelligence (AI) are breaking down this barrier and empowering companies to transform contract information into structured, connected, and on-demand data. AI trained on contract language can identify meta-data, clause types, and even handwritten notes to provide deep insights into a company’s body of contracts—be the thousands of documents or millions.
Organizations with digitized contract data available to create contingencies for COVID shut-downs move faster and more confidently.
One legal director described his company’s leveraging of contract data to respond to COVID disruptions: “When COVID hit, contract data was instrumental in helping our organization be as calm as it could be as the contingency plan started getting underway. It helped people get comfortable with what we knew, what we had, so that there was less of this sense of panic.”
For situations involving sanctions, contract data can be broken into two categories of relevance.
- Who you’re doing business with:
- Counterparty name
- Counterparty headquarters
- On what terms:
- Commodity class
- Termination provisions
- Trade compliance provisions
- Force Majeure
- Payment terms
With this information in hand, companies have a clearer-than-ever picture of who they’re doing business with and on what terms. Integrations with third-party data sources like Dun & Bradstreet and trade.gov can make identifying contractual relationships, like sanctioned individuals or entities, even faster.
Because contract data provides a clear picture of their rights to modify the relationship, companies can move quickly to address impacted relationships. During COVID-19 companies identified force majeure clauses and termination provisions to determine a course of action and impact. With this contact data, they could identify which parties might rely on such clauses (or whether they needed to) and strategize to minimize impact to the company. Today, similar work is occurring as companies work with suppliers in Ukraine or quickly and compliantly terminate contracts with sanctioned parties in Russia.
Securing New Suppliers to Minimize Disruption
Of course, identifying what business relationships are impacted by a disruption is only the first step. To ensure they minimize the impact of the disruption, companies must quickly secure new sources of goods, materials, and services they need to operate.
As before, different companies will turn to various systems to secure these new suppliers, depending on their tech stack and capabilities. This process will be significantly hindered if contracting capabilities aren’t considered.
Contracts are the ultimate output of a sourcing motion, where the rules and terms of the sourcing relationship are codified. With structured contract data, companies can quickly understand alternative suppliers they have under contract and the terms of those relationships to scale up the relationships appropriately and compliantly.
If no existing supplier exists to backfill, intelligent contract automation, integrated with sourcing technology, can deliver a seamless vendor onboarding process, with RFx, risk assessments, and contract negotiations managed in a single location for a more compliant, faster, and more valuable experience.
Every global disruption carries with it its own set of challenges and considerations. Likewise, every enterprise will respond to these disruptions with their own unique approaches and technologies. Yet whatever the circumstances that create disruption and uncertainty between business relationships and global markets, it’s inevitable that contracts will be impacted.
With structured and connected contract data, companies can understand those impacts faster, and then respond to them more confidently.
With unmatched technology and category-defining innovation, Icertis pushes the boundaries of what’s possible with contract lifecycle management (CLM). The AI-powered, analyst-validated Icertis Contract Intelligence (ICI) platform turns contracts from static documents into strategic advantage by structuring and connecting the critical contract information that defines how an organization runs. Today, the world’s most iconic brands and disruptive innovators trust Icertis to fully realize the intent of their combined 10 million+ contracts worth more than $1 trillion, in 40+ languages and 90+ countries.