Inefficiencies in contract management can cause substantial losses. The greater the volume of contracts processed, the greater the possibility of even bigger deficits—up to 40% in one study by accounting giant KPMG. There are also countless opportunities lost as contract managers are simply unable to see the patterns in the data stream.

For companies or institutions that enter into large numbers of contracts, the problem is particularly acute. It is often the sheer volume of these contracts, and the unclassified data in them, that make them nearly impenetrable to human analysis.

Advances like the development of artificial intelligence (AI) techniques in handling large quantities of data, however, has changed the game. For the first time, the entirety of the contracts data can be installed in a database that now affords all the manner of organization, comparison, and management.

Experts see AI techniques having a big impact in three areas of contract management. These incude the tools used in managing contracts, the content and analysis of those contracts, and the personnel involved in contract management.


New AI contracting software, for example, now make it possible to see how specific outsourcing clauses are worded in contracts throughout several divisions in a company, ensuring uniformity in contracts and decreasing the possibility of litigation without the need to employ a huge team of lawyers to comb over every contract.

Data Analysis

Data about the length and renewal dates of whole sheaves of contracts can easily be extracted and displayed.   The data present in the contracts can be sliced and diced to produce insights into possible savings and other strategies that can give the company a leg up when the next renewals come up again.

Aside from the competitive advantage provided by AI contract software as it digests contract data, AI techniques can also combine this data with real-world data on global supplier markets and variable pricing in different localities in order to create a more advantageous contract proposal. AI processes can also point out new business opportunities previously hidden in the mass of data.


The use of AI and other automated processes in contract management is also expected to reduce the work force needed to run the department properly. Instead of a manager with the organization skills to run a huge team, managers with a more technical background and the ability to derive more value from the AI contract software will be desired. Contract review teams can also be reduced as they now would only have to respond to contracts flagged by the AI.

The surge towards digitization in the supply chain is only just beginning. Yet it is already easy to see what effects AI-powered real-time advanced decision-making technologies will have in the procurement space.