Importance of OCR Capability in Contract Management

1
OCR Capability

• Its importance in contract management

2
OCR

• OCR stands for Optical Character Recognition.
  This is an advanced software capability that
  involves artificial intelligence (AI) to turn a
  scanned contract or document from a picture to a
  usable data set. OCR has changed the playing
  field for Contract Management Systems, in a huge
  way!
• A CMS with OCR treats a scanned contract or
  document the same as a contract or document that
  was created on your computer and saved with a
  file name. A CMS with OCR is the preferred CMS
  software for any company that has old paper files
  to turn into useful digital copies or operates
  with contracts created by lawyers or other
  parties.

3
CMS with OCR

• A CMS without OCR is like sending a text message
  with a flip phone, when to text the word
  search, you enter 777733277722244 into your
  phone keypad.
• Another comparison is that a contract risk
  management tool without OCR is like reading a
  stack of 500 commercial lease contracts to
  isolate which contracts include the address of
  Main Street or were signed by John Doe or
  which are pending renewal, or which include a
  specific phrase.
• The process of reading 500 contracts could take
  weeks, and human error is a factor. People tend
  to make errors when fatigued or distracted.
• A contract risk management tool with OCR can
  search through 500 contracts in only a few
  seconds and give you accurate results with 0
  human error.

4
How does OCR work?

• The OCR process starts with scanning a document.
  Then, the OCR software transfers the image from
  just a single image that is made up of a single
  datum to a collection of data points, each point
  with multiple capabilities.
• Every letter, word, number, phrase, becomes a
  separate data point. OCR turns the same single
  datum image into hundreds or thousands of data
  points.
• If your CMS has OCR, then a hard copy of a
  contract or document can be scanned and read
  (using OCR). Then, these contracts and documents
  act like live files in your computer and in
  your CMS software.
• Live files can use the search and filter
  options in your CMS to find either a short list
  of contracts or documents, or one specific
  contract or document.

5
How does OCR work?

• Live files save each word or integer separately
  in a gigantic database, as part of your software
  system.
• Then, when a search or filter of all
  documents and contracts is performed in your CMS,
  the AI tools scour your entire database to find
  which contracts or documents include each
  individual word and integer in your search
  criteria.
• Next, ORC sorts all your files into two
  categories, files with the search criteria, and
  files without the search criteria.
• The files that include your search criteria are
  listed on your CMS interface in seconds. Then,
  you can narrow your search even further, or read
  each document knowing that it is relevant to your
  search purposes.
• Further refinement can isolate a single contract
  or document with a longer or more detailed search
  phrase that matches your needs.

6
What Are You Missing?

• If your CMS does not have OCR, then every
  contract or document that enters your CMS will
  need to have manual attachment of metadata.
• Metadata is data that describes other data. For
  example, metadata for a commercial leasing
  contract would likely include, contract name,
  date created, date signed, property
  address.
• Metadata is how your computer matches search
  criteria to a list of files. For example, a
  commercial lease contract may include 5,000
  words. Since it is not practical to include
  5,000 words into the metadata of a single
  contract, nor is it time efficient, how can you
  know that searching a non-OCR CMS will include
  all pertinent contracts or documents? Simply
  put, you cannot know.
• A CMS without OCR is inferior to a CMS with OCR.
  Reducing the time to sort contracts and documents
  reduces operating costs and increases bottom
  lines.

7
Free OCR or Proprietary OCR?

• While there are some free options for OCR, the
  capabilities and data storage are limited.
• Another major drawback is privacy. Your
  contracts are private. Keep them private by
  using a quality CMS system that charges a fee.
• Why? Because at the end of the day, you want
  your contracts and documents to be safe, under
  your control, and shared with only those other
  parties that you choose.