The convergence of artificial intelligence and contract lifecycle management (CLM) is fundamentally reshaping how organizations handle their contract processes. For companies operating within Microsoft environments, this transformation presents unique opportunities to leverage integrated AI capabilities while maintaining already established security and compliance standards.
Based on feedback from our recent webinar, data reveals a mixed landscape of AI adoption across organizations:
Despite these varied approaches, one trend is clear: executives are increasingly asking how their teams plan to leverage AI within their business functions. The message is becoming unavoidable: organizations that fail to embrace AI in some capacity risk being left behind.
Microsoft’s approach to AI centers around their Azure AI Foundry, a comprehensive platform that supports over 1,900 different AI models. This isn’t just about Microsoft’s own models or its OpenAI partnership—the platform embraces an open ecosystem that leverages a wide array of technologies from Anthropic, DeepMind, HuggingFace, Meta, and even xAI’s Grok model.
Key developments in Microsoft’s AI infrastructure include:
Microsoft is pioneering “agentic AI,” where multiple AI agents work together autonomously. (An AI agent is a computer program that can perceive its environment, make decisions, and take actions to achieve a goal.) This means you can have agents that query ERP systems, communicate with CLM agents, and then interact with other specialized agents to bring comprehensive data together.
At Microsoft’s core is a commitment to keeping customer data secure and within their own tenants. (A tenant is your portion of a cloud-based application or system; while you share access to the cloud, hosts like Microsoft keep your data and settings separate from others.) The key point to understand is that your information isn’t shared across different large language models, and customers maintain full control over their data. In addition to not sharing your data, Microsoft does not use customers’ data to train large language models, which is a new concern among AI users.
The practical applications of AI in contract management extend far beyond simple document processing. Here are the ten most impactful use cases:
A critical understanding for organizations is that AI doesn’t replace CLM infrastructure—it transforms it. Successful implementation requires both progressive AI capabilities and robust CLM system foundations. This is because, at Contracts 365, we have seen—across hundreds of customers—that a robust CLM system provides the infrastructure needed to securely store and catalog contracts and document records, to understand user roles and permissions, to choreograph workflows and delegation of authority, and to provide real-time contract visibility, notifications, and control to contract managers and business users alike.
This is why AI components must work within a structured hierarchy:
When AI extracts information, it must know where to place different types of data within this hierarchy and how to bind everything together for comprehensive access and reporting.
When implementing AI in CLM within Microsoft environments, several technical factors need to be kept in mind so that data is properly recorded and managed:
Microsoft’s own development process demonstrates AI’s potential—approximately 30% of their code is now being built by AI agents. This represents the kind of multiplier effect that organizations can achieve when AI assists in creating more AI capabilities.
The concept of “agent-to-agent” communication is particularly exciting for CLM applications. Imagine AI agents that can automatically query contract databases, email systems, Teams communications, and CRM platforms to provide comprehensive analysis of how contracts are being impacted across all business systems.
Feedback from our recent contract management webinar reveals that organizations are already experimenting with AI in contract management:
The rapid pace of adoption suggests that the 49% not currently using AI will likely decrease significantly in the coming months.
One of the key advantages of implementing AI-powered CLM within Microsoft environments is the security model. Leading solutions store all customer contracts within the customer’s own Microsoft 365 tenant, ensuring:
At Contracts 365, we’ve been closely watching the development of AI for years. We’ve also had the privilege of being able to work closely with Microsoft to understand their AI infrastructure—and we’ve been able to create CLM technologies that leverage Microsoft’s AI stack in a highly modular way. This means that, as Microsoft pivoted to Open AI and ChatGPT, we were able to seamlessly integrate their new Large Language Models (LLMs) as they’ve progressed from o1 to 4o, and all the steps in between.
Today, Contracts 365 offers our customers Contracts 365 AI Companions that infuse AI efficiencies into key contracting tasks in ways that are easy to understand and highly leverageable for both savvy contract professionals and everyday business users.
Our AI Extraction Companion allows users to automatically extract contract metadata to quickly create contract records and supporting documents. During contracts negotiations, Contracts 365’s AI Negotiation Companion allows you to compare third party contracts, offering suggestions when clauses deviate or terms don’t align with predetermined standards—allowing you to redline, synthesize language, and escalate items to subject matter experts within your organization, all with just a few clicks. And this is just the beginning.
The integration of AI and CLM within Microsoft environments represents a significant opportunity for organizations to transform their contract management processes. The key to success lies in understanding that AI enhances rather than replaces solid CLM infrastructure.
Organizations should start with specific use cases, prepare their teams and processes, and maintain realistic expectations about AI’s capabilities. With Microsoft’s robust AI platform supporting over 1,900 models and their commitment to security and open standards, the foundation is in place for transformative contract management solutions.
The question isn’t whether AI will impact contract management—it’s whether your organization will be ready to harness its potential. The time to start experimenting and building expertise is now, before the competitive advantage of early adoption diminishes.
As the technology continues to evolve at an unprecedented pace, those who begin their AI journey today will be best positioned to leverage the even more sophisticated capabilities that lie ahead.
If you’re ready to get started with AI-powered contract management, or just want to learn more about how to get greater efficiencies out of your contract processes every day, Contracts 365 is happy to help. And good luck in this brave, new Agentic world! .