Transforming how contract creation works at Microsoft with automation

Oct 16, 2023   |  

An information worker creates a contract on a Microsoft Surface device.
A new automated contract creation wizard and an automated questionnaire are making it much simpler and more efficient for Microsoft employees, vendors, and suppliers to create statement-of-work (SOW) contracts.

Microsoft Digital storiesAt Microsoft, we do business with an immense number of vendors and suppliers, and many of the services they provide require a statement of work (SOW) contract. Creating, approving, and managing those contracts is an immense task.

We developed an automated contract creation tool to simplify this process for our internal users and to streamline our contract generation overall.

All of our more than 220,000 employees can act as procurement agents for the company. So how can we make that process and that engagement as simple as possible, knowing that these folks don’t have the rich background that our legal experts and the procurement teams have?

—Tom Orrison, director of legal operations, Microsoft Corporate, External, and Legal Affairs

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Maintaining agility while ensuring accuracy

At most enterprise companies, procurement departments manage SOW contracts. At Microsoft, we approach it differently.

“All of our more than 220,000 employees can act as procurement agents for the company,” says Tom Orrison, director of legal operations for Microsoft Corporate, External, and Legal Affairs (CELA). “So how can we make that process and that engagement as simple as possible, knowing that these folks don’t have the rich background that our legal experts and the procurement teams have?”

With Microsoft employees creating 150,000 SOWs per year, CELA needed a way to help users avoid making mistakes that come from manual data entry and from saving contracts locally on individual employee work devices. Our goal was to minimize human error, eliminate compliance risk, and save time and money by reducing the need for hands-on reviews by CELA’s legal professionals.

To solve this, CELA asked the Microsoft Digital Employee Experience team to build a tool to automate SOW contract creation.

Strategizing for simplicity

The teams started with a deep dive into the business problem to make sure the engineers understood the current state of SOWs and end users’ needs.

Contract lifecycle process, with “contract need” and “template management and authoring” governed by the Legal Contracting Experience.
The creation of legal documents by non-experts generates risk and operational inefficiencies, but Microsoft Digital Employee Experience created the Legal Contracting Experience to streamline the “contract need” and “template management and authoring” portions of the contract lifecycle.

“We get together and brainstorm when we start any new digitization, and we go through the existing processes,” says Mohit Chand, principal director for the Microsoft Digital Employee Experience team working with CELA. “On the engineering side, we absorb that and then translate it into our strategy.”

Of the 150,000 SOW contracts that Microsoft employees create each year, 35–40 percent are relatively simple, short-form SOWs. Their simplicity made them a good target for automation.

CELA was already using a Microsoft Azure-based, third-party contract lifecycle management tool called Icertis to handle the submission and backend operations of the contracting process. They needed a way to create and upload those contracts that wouldn’t burden end users who don’t have a legal background.

Using a third-party tool based on Microsoft Azure meant that any solution they created could easily integrate with the Azure stack.

“We had already established this platform to build the foundation,” says Bidyadhar Patra, principal engineering manager for Microsoft Digital Employee Experience. “Now it was about onboarding this different business process to the platform so we could reap its benefits.”

Mohit’s team began their work with the objective of creating a web-based contract-creation wizard that used a guided questionnaire with natural language. Close collaboration between CELA and the engineers was essential to their process.

“We have a deep and healthy relationship,” Orrison says. “We view ourselves as the same team, which enables a lot of this work to happen seamlessly.”

Contract wizardry drives efficiency

Working in two-week sprints, Microsoft Digital Employee Experience started building out the tool. Legal is a complex domain, so the engineers needed to rely on the expertise of CELA’s experts to translate the ideas behind legal clauses into simple, user-facing questions.

“The CELA team helped us understand how the template should be configured,” Patra says. “Based on each question, which particular clause should be dynamically added to the contract?”

The result was the Legal Contracting Experience (LCE), a questionnaire-based contract creation wizard that helps users provide all the necessary information to create a short-form SOW, then automatically generates and submits the contract.

It’s more of a conversational or guided experience. Basically, the tool is guiding you through a conversation about how the SOW will be created.

—Bidyadhar Patra, principal engineering manager, Microsoft Digital Employee Experience

The LCE’s natural language questionnaire starts by determining whether a short-form SOW is necessary for a particular project or not. If it is, the tool asks 10 questions that correspond to specific legal triggers. For example, will the supplier handle privacy info? Where is the work being done? Is the SOW tied to an overarching contract from a preexisting vendor relationship?

Based on the user’s responses, the LCE automatically populates the contract with proper legal language drawn from a library of contract clauses. Then it uploads that contract in the appropriate Microsoft Word format directly to Icertis for contract lifecycle management.

“It’s more of a conversational or guided experience,” Patra says. “Basically, the tool is guiding you through a conversation about how the SOW will be created.”

But a library of clauses can’t account for everything in a contract. Each SOW contains a “Description of Services” section unique to that contract. Employees have their own idiosyncrasies for how they like to structure this section, including bulleted and numbered lists, formatted text, and highlighting.

Patra, Chand, and Orrison pose for pictures that have been stitched together into one image.
Bidyadhar Patra (left) and Mohit Chand (middle) with Microsoft Digital Employee Experience worked alongside Tom Orrison (right) and the CELA team to create the Legal Contracting Experience tool to facilitate automated contract creation.

One of the most substantial challenges was integrating rich text into the LCE itself. The first iterations of the tool didn’t include this feature, so users would have to export their contracts to Microsoft Word, fill in the rich-text portions, then re-upload their SOW to the tool.

“There was one sticky part that the legal professionals on our side weren’t happy with, and that’s the rich text formatting that was difficult for the engineering team to move from a web frontend into Word,” Orrison says. “But Bidyadhar’s team did a great job of listening to that feedback and putting in the hard engineering work to come up with a solution.”

The resulting tool incorporates the entire contract creation process into one streamlined, web-based experience that includes dynamic legal clauses, rich-text descriptions of service, and automatic submission to Icertis.

Speed, efficiency, and compliance

The LCE has simplified SOW creation and submission process across the board, from end users to CELA’s legal professionals. The resulting documents are compliant by design, with legal clauses that map themselves to their relevant regional compliance frameworks.

While it used to take around 30 minutes for a Microsoft employee to create a short-form SOW, the LCE brings the process down to an average of five minutes. Meanwhile, a typical CELA contract review used to take from two to five days. But because the LCE draws a contract’s clauses directly from an approved and up-to-date library of legal language, now CELA can accomplish any necessary reviews in under two days.

There were distinct benefits to choosing a third-party CLM solution based on Microsoft Azure. By starting from a place of compatibility, customization was much simpler than it would have been with other tools.

“This whole concept of having a core third-party utility but then adding a layer of extension and facade outside of that to plug it into Microsoft tools has become a blueprint architecture for us,” Chand says.

It also opens up the potential for deeper insights. Out-of-the-box API availability means that the team will be able to use Microsoft Graph API to chart contract-to-clause relationships as a data point, making big-data insights possible over time. Eventually, that will lead to even more intelligent automation, predictively tailoring the SOW creation process to different user profiles and anticipating their needs.

Employees just want to work with a partner to deliver the scope of their job. So the more we can make things seamless for our users, the better the experience, and it gives us the business velocity we’re looking for.

—Tom Orrison, director of legal operations, Microsoft Corporate, External, and Legal Affairs

The team is currently piloting post-assembly scanning for contracts using machine learning with Microsoft Azure Cognitive Services. Soon, the tool will be able to intelligently review the more customizable sections of contracts, even as they’re moving back and forth between Microsoft employees and vendors during the drafting and negotiation phases.

The next steps are integrating LCE into MyOrder, Microsoft Procurement’s internal purchase order environment, and extending it to more expansive forms of contract. That integration will tie the legal side of contract creation directly to the finance side and Microsoft Procurement, streamlining the overall process as the LCE expands its impact to more types of documents.

The engineers even dream of a time when a tool like this could be accessible through Microsoft Word as an integrated contract creation module. The feature would pull legal clauses directly into Word from a company’s preset legal clause pool, facilitate collaboration with suppliers, and submit the contract when it’s complete.

“The more we can integrate with downstream systems, the better off we are,” Orrison says. “Employees just want to work with a partner to deliver the scope of their job. So the more we can make things seamless for our users, the better the experience, and it gives us the business velocity we’re looking for.”

Key Takeaways

Here are some things to think about as you consider transforming the SOW process at your company:

  • Partner closely with your subject matter experts.
  • Think through the process from the user’s perspective.
  • Recognize that driving change is hard and familiarity is powerful, so users need support.
  • Commit to an iterative approach.
  • Encourage your partners to be demanding in a good way.
  • View your technical and business-side people as the same team.
  • Be extremely clear on your must-haves.

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