What is Contract Analytics? Unlocking Performance and Compliance with Gen AI

- Last Updated: Jan 06, 2025
- 15 min read
- Arpita Chakravorty
Introduction
A report from World Commerce and Contracting (WCC) found that almost 90% of business professionals consider contracts to be “difficult or impossible” to comprehend. The increasing volume of contracts makes managing performance, obligations, and risks particularly challenging. It’s no wonder many companies struggle with fundamental questions such as:
- Where are my contracts stored?
- Am I getting maximum value out of my contracts?
- How much risk lies within my contract portfolio?
- How many data security clause variances exist, and which pose the greatest risk?
- Which contracts can I terminate or assign at will without incurring penalties?
Contract analytics is the key to answering these questions. The right technology can provide the much-needed visibility into the vast sea of contract data, helping organizations extract value, minimize risk, and ensure compliance.
What is Contract Analytics?
Contract analytics refers to the application of data analysis techniques to extract and interpret critical information from contracts. By leveraging this process, organizations can gain valuable insights into their contractual obligations, risks, and performance metrics, enabling more effective contract management.
Let’s explore what contract analytics can accomplish for a business and the core components of contract analytics software.
The Need of Contract Analytics Software for Businesses
Contract analytics software provides the tools necessary to analyze vast amounts of contract data, offering deeper visibility into contracts. This enables organizations to make more informed decisions, respond proactively to potential issues, and optimize contract performance.
Here’s how contract analytics software addresses key business needs:
- Proactive Risk Mitigation
AI-driven tools automate the extraction and analyzation of key details from contracts- contract clauses and terms, that enables organizations can proactively identify risks, such as unfavorable conditions or deviations from standard templates. This helps businesses address potential challenges before they escalate. - Monitoring Compliance
Contract analytics ensures adherence to legal and regulatory standards by tracking whether contractual obligations are being met. This continuous monitoring helps avoid breaches and penalties by identifying compliance gaps early. - Evaluating Contract Performance
Organizations can use contract analytics to assess how well each party is fulfilling their commitments, such as meeting milestones, delivering on agreed terms, and processing payments on time. This evaluation helps ensure both parties uphold their end of the contract. - Uncovering Trends and Patterns
Over time, analytics reveal trends in contract negotiations, outcomes, and recurring risks. This information helps shape future strategies, enabling companies to refine their contract terms for better outcomes. - Optimizing Costs and Savings
By analyzing contracts for cost-related clauses, companies can identify areas where savings can be made during renewals or renegotiations. This leads to better financial management and more favorable contract terms.
Contract analytics, especially when powered by AI and machine learning, allows organizations to streamline contract management processes, reduce human error, and derive actionable insights from complex agreements. These capabilities make contract analytics a vital tool for businesses aiming to optimize contract performance and minimize risks.
Contract Analytics Benefits for Different Roles
Contract analytics provides distinct benefits for various functions across an organization:
- CEO: Gains a 360-degree view of all customer relationships, tracking performance, risks, and financials while identifying new buy- and sell-side opportunities.
- Procurement: Manages supplier relationships more effectively by using contracts as performance benchmarks and optimizing procurement strategies.
- Finance: Understands the financial impact of the entire contract portfolio, focusing on how contract terms affect revenue and costs.
- Legal: Contract Analytics performs due diligence on contracts by identifying deviations from standard clauses and minimizing risk exposure across the portfolio.
- Sales: Manages customer relationships better by demonstrating the achievement of contracted goals and driving account growth through transparent performance tracking.
Each of these roles can leverage contract analytics to make more informed decisions, manage risks proactively, and achieve better outcomes.
How Do AI-Powered CLM Platforms Empower Contract Analytics?
AI-powered CLM platforms automate the extraction of critical information from contracts, comparing it against company standards and risk thresholds outlined in playbooks. They provide insights into deviations and potential opportunities. Here’s how AI-powered CLMs facilitate contract analytics:
- Contract Ingestion and Centralization
AI can ingest contracts from multiple systems (ERP, CRM, procurement) and consolidate them in a centralized repository, eliminating manual efforts and ensuring all contracts are readily accessible. - Metadata and Clause Extraction
AI automates the extraction of metadata, clauses, obligations, SLAs, and pricing details, making it easier to organize and retrieve critical contract information quickly and efficiently. - Risk Identification and Profiling
AI identifies potential risks hidden within contracts, such as termination clauses or deviations from preferred terms. Companies can use these insights to manage and mitigate risks proactively. - Obligation and Performance Tracking
AI tracks contract obligations and performance metrics in real time, ensuring all parties meet their contractual commitments and avoiding missed milestones, penalties, or compliance failures. - Financial Impact Analysis
AI matches payments to contract terms, helping organizations stay on top of payment obligations and avoid financial errors. - Renewal and Termination Alerts
AI provides real-time alerts for upcoming renewals or termination dates, ensuring that organizations don’t miss important opportunities for renegotiation or contract termination.
Through these AI-powered contract management systems, businesses can automate complex tasks, improve efficiency, and ensure greater accuracy in managing their contract portfolios through contract analytics.
Advancing Contract Analytics: The Small Data Model and Generative AI Advantage
With Small data models and Generative AI, contract lifecycle management systems can elevate contract analytics to a new frontier by providing more nuanced insights and advanced customization options. Here’s how generative AI is transforming contract analytics and, consequently, contract management:
- Go Beyond Standard Locations in a Contract
Small data models can accurately extract fields from standard locations and clauses, such as term type and governing law. With Generative AI, you can access fields that don’t have a standard placement or require inference, such as expiry date and effective date. - Contextual Insights in Plain Language
Generative AI allows users to ask plain-language questions, such as “What are the risks in our latest vendor contracts?” and receive accurate answers without technical expertise. This democratizes access to contract data, allowing all stakeholders to gain insights quickly. Provides citations to validate AI-generated answers. - Template Rationalization
Generative AI can review a company’s template library, identify redundancies, and recommend rationalization strategies referencing the company playbook, ensuring consistency across contracts and minimizing errors. - Custom AI Models for Industry-Specific Needs
Generative AI enables businesses to train custom AI models for their specific industry. For instance, financial services companies can focus on compliance with the Digital Operational Resilience Act (DORA), ensuring their operations are resilient to ICT risks. This ensures that the AI provides relevant, actionable insights. - Smart Contract Renewals
Generative AI offers renewal alerts and contextual recommendations, suggesting renegotiation opportunities based on contract performance, market conditions, and vendor relationships. This ensures renewals are strategically optimized, not just executed.
Why Sirion is a Good Choice for Intelligent Contract Analytics
Sirion is at the forefront of AI contract analytics with solutions designed to extract maximum value from your contracts while minimizing risk. Sirion’s AI models provide exceptional accuracy and speed by leveraging a blend of small and large language AI models to extract metadata in non-standard locations and requiring inference. Sirion offers several unique capabilities that make it a top choice for contract analytics:
- Simplify complex data extraction: With over 1,200 AI models, Sirion transcends traditional AI capabilities by leveraging Generative AI and multi-model sequences, facilitating the extraction of complex metadata with ease.
- No-code interface for customization: Utilize a user-friendly, no-code interface to develop custom AI models that extract unique terms and clauses specific to your contracts, effectively meeting your business needs.
- Harness contract intelligence: Continuously generate valuable insights from your contracts to enhance negotiations and strengthen governance. Seamlessly cascade extracted data into third-party applications such as CLM, P2P, CRM, and ERP systems.
By choosing Sirion, organizations benefit from a robust AI-powered platform that can extract actionable metadata from contract portfolios, helping drive performance, compliance, and risk management across the enterprise.
Conclusion: Achieving Better Outcomes with AI-Driven Smart Contract Analytics
Contract analytics, particularly when powered by small data models and Gen AI, offers organizations a way to gain visibility into their contracts, reduce risks, improve performance, and ensure compliance. As generative AI further enhances these capabilities, businesses are now equipped to not only manage their contract portfolios more effectively but also derive deeper insights that drive strategic growth.
With AI-driven solutions, contract management becomes more than just a process—it becomes a key driver of business performance and risk mitigation, helping organizations unlock the full value of their contracts.
Additional Resources

DORA Compliance: A Deep Dive Into Contracting Readiness
