AI in adoption contracting

Aspiration and excitement tempered by the demands of achieving successful adoption

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In brief

Our annual AI report confirms continued growth in adoption and use within the commercial and contract management (CCM) process, though at a relatively measured pace. For many, a sense of aspiration and excitement remains, but tempered by the recognition that the benefits are not instant and can be demanding to achieve.

Beyond addressing concerns over security and accuracy, one of the primary barriers to faster adoption is difficulty in obtaining a budget. That is interesting since there is extensive evidence that CFOs are ready to invest in generative AI – when presented with the right use case. Multiple recent reports and articles indicate that the money is available, so the issue is not so much a lack of funding, but more an inability to make the business case and demonstrate a compelling return on investment.

We hope the findings of this survey help contracting professionals make the case. As WorldCC has famously found in previous surveys, contract value leakage represents a material drain on company margins. In this report, respondents say they expect AI to address this erosion, with ‘contract value realization’ emerging as the top aspiration for AI implementations. Even addressing a fraction of the typical 8.6% missed contract value should whet any CFO’s appetite.

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AI adoption in contracting

Aspiration and excitement tempered by the demands of achieving successful adoption

Barriers to implementation

While there is optimism, there is also unease and a number of perceived risks that continue to delay the full implementation of AI. The main barriers include:
Security and data privacy
remain the ever-present barriers to AI adoption. These concerns reflect fears aboutdata security, privacy regulations, and the potential risksassociated with sensitive contract information and risksassociated to IP.
Data output quality
concerns include issues such asdata fragmentation, AI output accuracy, and the need fortechnical skill to implement and manage AI tools effectively.
Resistance to change and lack of budget
Resistance to change and lack of budget indicating thatboth operational capacity and organizational culture playroles in AI adoption hesitancy. As indicated in the foreword,challenges over funding may not always be the result ofconstrained budget, but more to do with a failure to developa compelling business case for investment.
Other significant factors include a general:
Lack of trust; integration challenges and vendor selection; and a lack of resources and awaiting development of policies.

Workforce and skills development

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To overcome the barriers to AI adoption, organizations are taking proactive measures. Education and upskilling have emerged as critical strategies, with many companies offering training, workshops, and opportunities for employees to personally learn and use AI tools.
 
This approach is intended to reduce resistance to change and increase AI proficiency across the workforce. Another common strategy is the use of case studies and proof of concept projects, which allow organizations to showcase the value of AI through real-world success stories and practical applications. These projects help to demonstrate AI’s potential as well as build trust in its capabilities. Additionally, management engagement has been a focus for many organizations, as educating executives and decision- makers about AI’s value is crucial for overcoming resistance. Our interviews showed that many companies are opting for gradual implementation, starting with simple tools and piloting AI systems with small groups before scaling up.

Expectations and aspirations

The survey reveals strong support for AI’s role in improving contract management. Practitioners see its potential to save time and improve accuracy and also for identifying compliance risks. They expect AI to free up time by automating these routine tasks, allowing an uplift in efficiency and the ability to deliver greater value.
 
The figure below shows a comparative list of benefits ranked by CCM practitioners and compared against the view of ChatGPT. It is interesting to note how little the lists differ: Is this a result of the way humans are using ChatGPT or the way ChatGPT is educating humans?

Practioners expectations of the benefits of AI and comparative ranking by ChatGPT

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AI adoption in contracting

Aspiration and excitement tempered by the demands of achieving successful adoption

Conclusion

The interviews and the overall survey results are consistent in suggesting that AI is positioned to redefine roles, streamline processes, and improve decision-making. However, to achieve these benefits at scale organizations must navigate challenges in trust, governance, and workforce adaptation.
 
This report reveals a cautiously optimistic view of AI in CCM, recognizing its transformative potential while urging careful, ethical, and phased adoption. By grasping this opportunity, the CCM discipline can lead the charge in leveraging AI as a strategic enabler of value creation. The encouraging signs are reinforced by the fact that organizations are taking steps to overcome barriers such as security concerns, data quality issues, and resistance to change. There is also growing appreciation of the need to improve knowledge-sharing and address skepticism around AI’s capabilities. Steps are needed to reassure the workforce through training programs and creating a ‘thought leadership’ of AI to better measure its impact on job roles.  

There is a cautiously optimistic view of AI in contracting, recognizing its transformative potential while suggesting careful adoption.

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Security remains a cornerstone of any AI strategy, and organizations must continue to implement robust protocols to ensure its safe deployment. The cost and workload associated with implementation continue to be major barriers, but delay in adoption will impact profitability, market share and competitive edge.
 
The use of AI in the workplace is an opportunity for growth. However, it is entirely understandable that use cases must be prioritized and the contracting process may not always make the list. We urge organizations to consider whether that omission is the result of careful assessment, or simply a failure to grasp the extent of benefit that can be delivered. AI-enabled contracting contracts permeate every corner of the business, offering not only increased efficiency but also a path to strong financial returns.

Written by

Tim Cummins Follow me on LinkedIn

President
WorldCC

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