Published on

CLM Software vs AI point solutions: Which do you need?

Authors

Unsure whether to purchase a CLM software or AI point solutions, or both? AI is a focal point for many businesses, with thousands of platforms entering the market to meet demand—and the legal industry is no exception. This guide will help you understand the key differences and decide which is right for your team.

What Are AI Point Solutions?

AI point solutions are modular tools designed to tackle specific challenges within the contract lifecycle. Instead of trying to manage contracts end-to-end, they excel at enhancing particular tasks through cutting-edge AI.

Key Features:

  • Contract Review: Identifies high-risk clauses and deviations from standard terms.

  • Data Extraction: Extracts key contract details like dates, parties, and payment terms with precision.

  • Risk Analysis: Scores contracts based on risk levels for efficient prioritization.

  • Playbooks: Suggests edits or comments based on preconfigured guidelines.

AI point solutions are particularly effective for complex, targeted tasks like contract drafting or redlining. They deliver quick, high-quality results with minimal disruption to your current workflows. However, they are less suited for managing enterprise-wide contract processes. For example, AI-powered contract review tools streamline compliance checks, while data extraction tools can identify critical terms and insights.

Comparing CLM Software and AI Point Solutions

The primary distinction lies in scope. CLM software manages the full contract lifecycle, while AI point solutions enhance specific stages. Here’s a comparison:

  • CLM Software: Ideal for managing contracts from start to finish and facilitates collaboration across teams. It offers broad functionality but may lack precision in specific tasks. While it helps reduce tool fragmentation, it typically requires long implementation times and a significant upfront investment.

  • AI Point Solutions: Focus on specific stages of the contract lifecycle, such as contract review or key term extraction, and are often used by specialized teams like legal or procurement. These solutions provide high precision and speed for targeted tasks. They are designed with a modular structure, allowing for incremental adoption, and enable quick deployment with minimal disruption. Additionally, they are more cost-effective and less complex to implement.

Addressing Misconceptions

Misconception #1: "Point Solutions Add Complexity"

  • AI point solutions enhance existing workflows rather than replacing them. For example, deploying an AI review tool within Microsoft Word streamlines collaboration without requiring users to leave familiar environments.

Misconception #2: "AI Point Solutions Are More Advanced"

  • While CLM tools are comprehensive, they often underperform in specialized tasks. AI point solutions—focused on areas like contract analysis—offer unmatched speed and accuracy. On the other hand, CLM software integrates AI across the contract lifecycle, supporting drafting, review, and summary generation within improved workflows.

Misconception #3: "You Can’t Use Both"

  • Larger organizations with complex needs often adopt both CLM and AI point solutions. AI point solutions work seamlessly alongside existing tools, including CLM systems. For businesses that already use a CLM but need enhanced review capabilities, point solutions are a perfect complement.

Choosing the Right Tool for Your Team

  • Your Pain Points: If contract review, data extraction, or risk analysis is your bottleneck, AI point solutions offer immediate value.

  • Budget Constraints: Point solutions are cost-effective and deliver a faster ROI compared to comprehensive CLM systems.

  • Existing Workflows: For teams that prefer working within familiar tools like Microsoft Word or Excel, point solutions integrate easily without disrupting processes.

  • Flexibility Needs: Businesses that manage third-party contracts with varying terms will benefit from the adaptability of AI point solutions.

  • Business Needs: If your pain point is fragmented processes, a CLM system provides comprehensive solutions. But if you’re focused on reviewing third-party contracts, an AI point solution might suffice.

Final Thoughts

CLM software and AI point solutions serve different purposes. If you’re looking to overhaul your entire contract management process, CLM software is the way to go. For tackling immediate, focused challenges, AI point solutions offer quick relief.