A Pramata Article
Rethinking “Repository”
Why prioritizing a "contract repository" with clean, organized, accurate contract data is essential for success with contract AI
Who needs a contract repository? It sounds like a place your documents go to languish and die, not something that’s vital to every other function of contract management — from plugging revenue leaks to eliminating risky, non-standard terms.
If that’s your idea of a contract repository system, it’s time to rethink your definition and learn why a contract repository isn’t just a nice-to-have for your CLM, but the foundation on which everything you want to achieve is built.
Generative AI has become a buzzword over the last couple of years and the world of contract management systems, or CLM, is no exception. Contract technology platforms that promise the ability to instantly analyze thousands of documents, extract key insights and drive business value sound revolutionary—and they can be! But not without extremely accurate, organized and high quality data as their foundation. Without this, even the most sophisticated AI will fail to deliver meaningful results.
Many businesses have already experimented with Contract AI and failed, in large part because of their system’s inability to power its generative AI with grounded data. This is how your system ingests contracts, cleanses the files, and organizes documents into families and hierarchies is equally—if not more important—than what the generative AI does next.
Simply put, your contract repository system is no longer just a place to store contracts. It’s the foundational piece of your entire legal tech stack, and it has to be clean, organized and accurate before your organization can reap the many benefits that generative AI has to offer.
Read on to learn more, and if you’re ready to take action now instead of waiting one more day, contact Pramata for a customized, live demo.
The true cost of dirty, disorganized contract data
Sure, a collection of disorganized contracts is annoying to sort through when someone on the legal team or elsewhere in the business needs an answer. But it’s so much more than that!
Contract chaos wreaks havoc on businesses, often in more ways than they’re aware. Every day, organizations could lose revenue, miss key obligations and expose themselves to unnecessary risks because they lack full transparency into the terms of every contract at all times.
Consider some of these real-world consequences and whether your company experiences any of them:
Legal team:
- Struggles with disorganized contracts, disparate file formats, duplicates and non-contract files while trying to determine the active terms
- Spends far too many non-revenue generating hours searching and reviewing contracts
- Creates bottlenecks during M&A and compliance reporting, among other common occurrences, due to the manual nature of their tasks
Sales team:
- Keeps customers waiting while they bounce between systems to locate contract details or wait on a response from the overburdened legal team during negotiations
- Misses the opportunity for valuable renewal conversations without a clear view of all upcoming renewals across their accounts
- Loses out on revenue, or increases risk, by agreeing to nonstandard terms without knowing it
Finance team:
- Struggles to ensure money is being spent wisely and all possible revenue is being captured
- Lacks the ability to identify and manage compliance and non-standard language in contracts
- Muddles through M&A and divestitures slowly and with greater risk
Procurement team:
- Accidentally pays for auto-renewals that sneak up on them, and often pay multiple vendors for overlapping products and services
- Spends time reading through dozens, or hundreds, of files to find the most recent contract terms
- Are unable to enforce vendor obligations when vendors fall short of their responsibilities, since they can’t easily pinpoint them within contracts
The real cost of dirty and disorganized contract data shows up differently from team to team, but always impacts the bottom line. Whether it’s wasted time, missed revenue, increased risk or another one of the many consequences, relying on inaccurate data inhibits your organization’s ability to leverage generative AI and puts you behind your more forward-thinking competitors.
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Foundations for success with Contract AI
The excitement around generative AI has led many contract repository systems to incorporate it, and many organizations to rush into implementing it, without first ensuring their data is AI-ready. This approach inevitably leads to disappointing results that are both risky and costly, as AI-based systems produce unreliable and incorrect outputs that we’ve come to know as “AI hallucinations.”
The key ingredient for success with any generative AI, and Contract AI specifically, is high quality, clean, organized and accurate data for the technology to draw from.
You’ve likely heard the saying “garbage-in, garbage-out” and it’s never been more true than with generative AI. If your contract repository system is messy, cluttered, full of duplicates and non-contract files, and with PDFs that can’t even be digitally read, there’s no chance you’re getting value from Contract AI.
Here’s what you actually need as the foundation for your Contract AI:
1. Cleansed contract files
Before you do anything else, you’ve got to begin with clean contract files. This means getting rid of anything that’s not a contract, removing duplicates, converting files to PDFs that can be read by optical character recognition (OCR), merging and splitting files when needed, rotating pages, detecting out-of-scope documents, detecting missing signature pages, and so much more.
If your current or potential contract repository system can’t do this, or can’t do it in a way that makes it extremely easy for you, we advise you to walk away.
2. Organized contract families
In order for your contract repository system to act as your single source of truth, it has to include every contract representing the entire commercial relationship for each counterparty, and it has to be organized! Before you can ask generative AI to go to work answering your contract questions, you need each contract organized based on order of precedence and the history of change, you need document and account normalization and mapping, and a thorough history of documents, also known as contract hierarchies, created for each entity.
This is normally a highly manual and time consuming process, so if your current or potential contract repository system relies on you to do the legwork of organizing before you can get real results, we encourage you to consider the alternatives.
3. Extracted contract terms
With cleansed files and organized document families, there’s one final fundamental you need in order to have a valuable contract repository system. Your contracts are prepped and ready for data extraction, but if not done right you still won’t get the results you need. Best-in-class models can appropriately tag all clause variations in a document, automatically check every document against predefined fields including Legal, Operational, and Financial Terms and derive accurate renewal dates and auto-advances based on a variety of contract term parameters.
It takes decades and millions of contracts across multiple industries to develop a data extraction model that provides the level of accuracy you need to take full advantage of what Contract AI can do for you. If your current or prospective contract repository system doesn’t have that kind of history, with updates and improvements added monthly, you might want to try one that does.
If you’ve experimented with generative AI in your contract management system and had less-than-impressive results, the likely culprit is something missing from these foundational steps.
From static storage to a living knowledge engine
The transformation from a traditional contract repository system (i.e. document storage) to something worthy of being called a Contract AI Knowledge Engine requires more than just adding AI technology to what you’ve already got. Rather, it takes a fundamental shift in how you think about contract data and it requires contract expertise. A true contract knowledge engine doesn’t just store your documents; it understands them, maintains them, and makes them actionable and beneficial to your entire organization.
Think about the difference between a library and a librarian. A library stores books, but a librarian understands what’s in them, how they relate to each other, and most importantly, how to help you find exactly what you need. Your contract repository system needs to be more librarian than library.
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Vital components of a Contract AI Knowledge Engine
A modern contract knowledge engine goes beyond basic metadata tagging. It understands the complex relationships between documents, recognizes how terms evolve over time, interprets context and maintains the integrity of your contract data automatically even as new contracts are constantly added.
Here’s what that looks like in practice:
Intelligent document relationships: When a new amendment comes in, your system should automatically understand how it relates to the master agreement and all previous amendments. It should know which terms are superseded and which remain in effect. Without this intelligence, you’re left manually piecing together the current state of your agreements—a task that becomes increasingly impossible as your contract volume grows.
Continuous data maintenance: Contract data isn’t static. It’s living, breathing information that changes constantly. Price terms adjust with inflation, renewal dates approach and pass, and obligations evolve. A modern, intelligent contract repository system build on a true knowledge engine maintains this data automatically, ensuring your team always has accurate, up-to-date information without manual intervention.
Contextual understanding: When someone asks, “What are our termination rights?” the answer isn’t just about finding the termination clause. In fact, if your system only knows to search for “termination clauses” it might miss valuable information located in other parts of a contract. Contract AI becomes truly useful when it understands the meaning of what’s in your contracts, not just the words.
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The larger business impacts of Contract AI
When your organization evolves from simply storing contracts to using grounded contract data to power your Contract AI knowledge engine, the benefits ripple throughout your organization:
Legal teams stop being human search engines and start being strategic advisors. Instead of spending hours hunting through documents to answer basic questions, they can focus on high-value tasks and risk management.
Sales teams gain independence. They can access the contract information they need directly, understanding customer commitments and opportunities without constant support from Legal. Ideally, they can do this without ever leaving CRM!
Procurement teams become proactive instead of reactive. They can spot vendor consolidation opportunities, track obligation fulfillment, and manage renewals strategically instead of scrambling to respond to surprises.
Finance teams get visibility into the full financial impact of your contracts. They can track revenue recognition, manage compliance, and identify opportunities for optimization without manual document review.
Even customers win by getting questions answered more quickly and accurately than ever, easier renewal cycles with less back-and-forth and no rehashing previously agreed upon terms because someone can’t find the latest version.
Despite how transformational this change sounds, it doesn’t have to take years or cost more money than your organization can spend. With Pramata, the shift from a static contract repository system to a living contract AI knowledgebase can be quicker and simpler than you ever imagined.
This is because Pramata has spent 17+ years refining its Contract AI with expert humans in the loop to create contract data models that understand contracts and legal terminology like nothing else on the market.
It’s also because Pramata understands the importance of cleansed contract files, organized contract families and extracted contract terms. With a combination of advanced generative AI and 99+% accuracy, Pramata helps organizations reap the rewards of their “contract repository” in a way they never dreamed possible.
If you’re ready to find out what it means to leverage the most modern Contract AI to improve and empower every part of your business, contact us today for a custom demo.