How DocuSign uses AI to help companies avoid 'agreement traps'

DocuSign (DOCU) CEO Allan Thygesen joins Yahoo Finance's Brian Sozzi to discuss the company’s new product, Intelligent Agreement Management.

Thygesen explains that the new platform can assist companies with every step of the agreement process, aiming to address the “agreement trap,” or the value loss companies are experiencing from agreement-related inefficiencies. In collaboration with Deloitte, DocuSign found the “agreement trap” totals $2 trillion annually.

The new platform employs AI to read agreements and extract the most essential terms, Thygesen says. This allows companies to ensure the key points they spent time negotiating don’t go “to a deep dark place” once signed, the DocuSign CEO explained. While AI was already a part of DocuSign’s existing signature product, this new phase will allow the company to further participate in the “AI moment,” which Thygesen considers to be a watershed similar to the internet’s roll-out.

While the Intelligent Agreement Management platform won’t negotiate contracts for companies, it will help them read agreements received from other parties, point out where the agreement differs from a company’s usual terms, and propose new language.

Reflecting on his tenure as CEO, Thygesen notes the company’s “rejuvenation of innovation culture,” explaining that DocuSign is beginning its journey toward introducing its innovations to the market.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This article was written by Gabriel Roy.

Video Transcript

[AUDIO LOGO]

BRIAN SOZZI: A key moment in the life for DocuSign unveiling a host of new products that are closely watched day for them. Let's bring in DocuSign CEO Allan Thygesen. Allan, good to see you in person. A pretty big week for your company.

ALLAN THYGESEN: Very big week.

BRIAN SOZZI: So what exactly did you launch? I know there's been a lot of focus on some of the new technology. Walk us through it a little bit.

ALLAN THYGESEN: Yes. So what we launched is what we call an Intelligent Agreement Management platform. And what that means is basically helping companies with every step of the agreement process. So just as an example, you would have a lot of salespeople maybe that they've reached agreement, but now it takes several months more to actually get to the finished signed agreement.

You could have that in purchasing where you've signed an agreement with a vendor, but you don't know if they're filling up, they're living up to their commitments. Or in recruiting, you are seeing delays in getting the right candidates signed. All of that are symptoms of mismanaged agreements. And we've launched a platform to help companies address that holistically.

BRIAN SOZZI: What's the agreement trap?

ALLAN THYGESEN: So the agreement trap is, in essence, the value loss that companies are experiencing from all this inefficiency and waste-related to agreements. So we work with Deloitte to size this. And it may surprise you, they sized the total economic loss from mismanaged agreements systems and processes at $2 trillion.

BRIAN SOZZI: It's a huge number. What's going wrong here, that people are just not reading the contracts right?

ALLAN THYGESEN: You know, I think it's a combination of enormous waste in the processing of agreements. And then very importantly as you point out, once the agreements are signed today, they go to a deep, dark place. Nobody wants to look-- nobody looks-- nobody looks at them again until it's time to renew.

BRIAN SOZZI: Yeah.

ALLAN THYGESEN: But the point is you spend all this time negotiating and what you cared about and what the other party cared about is right there in the agreement. We will help you extract that out and compare it to what actually happens as well as other similar agreements. And there's a tremendous value in that.

BRIAN SOZZI: How much AI is used in this software?

ALLAN THYGESEN: Yeah. It's a great question. So look, we've had a long, long time leadership position in AI. We use AI in our signature product. The way all those fields are recognized, that's AI. When we do identity verification, that's AI. But there's obviously been a discontinuity and a new level of capability.

And so the most important thing that we're adding that's AI enabled here is, in essence, this what I just referred to of the immediate reading of the agreement and extracting the most essential terms out of the agreement. Let's say I want to know all of my agreements that are up for renewal in the next 60 or 90 days. I can answer that question immediately. That's simply not possible today. And you can imagine, every kind of search there, that's all AI-driven. And you wouldn't have been possible several years ago.

BRIAN SOZZI: Will this new product helped me negotiate a contract? Are we there yet?

ALLAN THYGESEN: I don't think we're quite there as in you're just going to have the machine negotiate--

BRIAN SOZZI: Can you get this to market already? Come on it make sense.

ALLAN THYGESEN: But I think what we will have is the AI will help you read agreements maybe you receive from other parties, point out to you where it differs from what you might normally agree to, and highlight proposed language. And of course, we could do that for the other side. And then as you-- technically, you could imagine a day where the parties agree that essentially there's a machine to machine settlement.

BRIAN SOZZI: What other use cases do you see for AI on a platform like DocuSign? Because I think a lot of investors just know you as I could sign an agreement digitally-- in my case, I mentioned to you off camera, I bought a car during the pandemic, I signed, and I got it done. But clearly, this sounds like a pivot happening there.

ALLAN THYGESEN: Well, I think it's really an expansion. So we did a nice job, I think, with the most important moment in the agreement journey, which is when the parties actually want to sign. But there's so much more to agreements.

Everything prior to that improving those processes, making it more seamless for businesses and consumers, and then after the agreement is signed getting them out of that deep, dark place and extracting the value out of those agreements. And we can use AI to improve both the front end and the back end. And that's what we're launching.

BRIAN SOZZI: Do you hate when folks ask you, are we ever getting rid of paper? Do you get that question?

ALLAN THYGESEN: I do get that question. We've gotten rid of a lot of paper. But look, there's a lot more to go. So I think we have a very sizable market opportunity.

BRIAN SOZZI: You just passed, what, your year mark as CFO--

ALLAN THYGESEN: I'm just 18 months in.

BRIAN SOZZI: What? You know, where are you at in the turnaround?

ALLAN THYGESEN: You know, I think we have made a lot of progress. I'm particularly proud of the rejuvenation of the innovation culture. And the product release is the velocity here and as illustrated by what we're doing this week. And then I think we're a little earlier in the journey of expanding our go-to market to take full advantage of all these things that we've been building for the last 18 months. But if the energy from this week is anything to go by, I'm very confident that we're on the right path.

BRIAN SOZZI: What's your sense of the outlook for billings?

ALLAN THYGESEN: Well, we have provided guidance. We're not changing that guidance right now. I think we have a very solid outlook. We've really stabilized our core business, our signature business. And we now have this opportunity. It's going to roll out over time, both across segments and across geographies. But I think the long-term trajectory is very positive.

BRIAN SOZZI: What are your-- what's your interpretation of competitors in this space? Microsoft has made some waves with some products, but how do you view them?

ALLAN THYGESEN: Microsoft has been an absolutely fantastic partner for us. Look, we've long been integrated with Microsoft products-- Word and Teams and so on. We were a big partner with them on Azure. More recently, of course, with GPT, some of our AI work is based on Microsoft's platforms.

And they are incredibly engaged with us. They're not interested in being a purveyor of agreement management products. They want others to build that for them. And on top of their platforms, so that's what we're doing. They're-- recently, our go-to market partnership has really expanded. So we're now available globally on the Azure marketplace, which is a fantastic channel. Every large Microsoft customer is a big Azure-- has a big Azure commitment. And so we've already seen some very nice deals come through that way.

BRIAN SOZZI: Is there ways to further, I guess, intertwine yourself with that Microsoft ecosystem?

ALLAN THYGESEN: We are-- look--

BRIAN SOZZI: The Copilot--

ALLAN THYGESEN: So we are actually-- we will be previewing some Copilot stock with Microsoft next month. So good guess. And not just Microsoft, we've had a very longstanding relationship with Salesforce. That's been a key-- we have tens of thousands of customers with joint Salesforce and DocuSign deployments. SAP is another big partner.

So really, any large enterprise software company that has horizontal capability, agreements play into that. And we're a logical partner.

BRIAN SOZZI: So that Copilot, whatever that is, will it help me negotiate contracts?

ALLAN THYGESEN: It will help you negotiate contracts. It will not fully automate the negotiation of contracts.

BRIAN SOZZI: Fair enough. Lastly, you know, you've been in tech for some time. You were at Google beforehand.

ALLAN THYGESEN: Long time, 12 years.

BRIAN SOZZI: What is this AI moment feel like to you?

ALLAN THYGESEN: Oh, I think it is it's as big as when the internet rolled out or when mobile rolled out. It is, at least once in a decade, if not even less frequent technology shift in what's possible. And it's going to disrupt a lot of industries.

BRIAN SOZZI: All right. We'll leave it there. DocuSign CEO Allan Thygesen, good to see you. It's been a real joy following the turnaround in your company and then really just following DocuSign over many, many years. We appreciate it.

ALLAN THYGESEN: Thank you. Thank you for having me. Thank you so much.