For CFOs and Procurement leaders, understanding this challenge is critical to protecting contract value.

Document Understanding

AI can read and interpret contract language at scale. Terms that would take hours to extract manually is identified in minutes.

Pattern Recognition

Across hundreds of contracts, AI identifies outliers, inconsistencies, and unusual clauses that human reviewers will miss.

Summarization

Complex contract language translated into plain-English summaries. Non-legal stakeholders can understand key terms quickly.

Comparison

Side-by-side analysis of similar contracts. Identify which suppliers offer better terms on specific provisions.

According to Gartner, AI-based contract analytics will reduce human work for contract assessment by 50% - a significant efficiency gain.

Connect to Operational Reality

AI can extract "2% rebate at €1M." AI can't query your ERP to determine if you're at €850K or €1.2M.

Execute Business Processes

AI can identify a claim window deadline. AI can't generate the claim, compile the documentation, and submit it.

Manage Relationships

AI can summarize supplier performance terms. AI can't have the conversation when performance falls short.

Make Business Decisions

AI can present options and analysis. Decisions about trade-offs, priorities, and strategies require human judgment.

Extraction without execution is just faster reading.

AI alone:

• Reads contract → "Rebate tier 2 is 2.5% at €1M"
• Output: Extracted data
• Value: Information

AI + Integration:

• Reads contract → "Rebate tier 2 is 2.5% at €1M"
• Connects to ERP → "Current spend: €920K"
• Calculates → "€80K to threshold, 6 weeks remaining"
• Alerts → "Opportunity: Accelerate purchases to hit tier"
• Workflows → "Action assigned to procurement lead"

Value: Action that captures money.

The difference between AI as a reading tool and AI as a value capture system.

Questions to ask vendors:

1. Does it just extract terms, or does it connect to my ERP and track value in real-time?
   Extraction alone has limited value.
2. What happens after extraction?
   Does data flow into workflows, or does it sit in a report?
3. Can it calculate my current position against thresholds?
   Not theoretical thresholds - my actual spend vs. my actual contracts.
4. Does it trigger actions or just provide information?
   Alerts, workflows, claims - or just dashboards?
5. How does it handle exceptions and edge cases?
   Multi-tier structures, conditional triggers, stacking rules.

The key question: Does AI help me capture more value, or just read faster?

High-value AI applications in contract management:

Bulk Term Extraction

Converting 500 PDF contracts into structured data in days instead of months.

Risk Identification

Flagging non-standard terms, missing provisions, unusual clauses across the portfolio.

Natural Language Queries

"Which contracts include auto-renewal?" "Where do we have price protection rights?"

Obligation Summarization

Plain-English summaries of complex legal language for non-legal stakeholders.

Negotiation Support

"How do these terms compare to our other suppliers in this category?"

AI does:

• Read and extract at scale
• Identify patterns and anomalies
• Calculate and project
• Surface opportunities and risks
• Generate recommendations

Humans do:

• Verify accuracy on critical items
• Make strategic decisions
• Manage supplier relationships
• Handle exceptions and negotiations
• Exercise judgment on trade-offs

The right model: AI augments human capability rather than replacing it. Humans make better decisions faster with AI support.

According to McKinsey, AI-enabled contract management can significantly reduce leakage - but requires human-in-the-loop for maximum effectiveness.

1. Start with extraction
   Use AI to convert existing contracts into structured data. Build the foundation.
2. Add integration
   Connect extracted terms to ERP/spend data. Create the operational link.
3. Build workflows
   Turn insights into actions. Alerts, tasks, claims.
4. Enable queries
   Allow stakeholders to ask questions in natural language.
5. Continuous improvement
   Train AI on your specific contract patterns. Improve accuracy over time.

Don't skip step 2. Extraction without integration delivers limited value.

If you're evaluating AI for contracts, ask:

Does it just extract terms, or does it connect to my ERP and track value in real-time?

That's the difference that matters.

AI can read your contracts in seconds. It can summarize, compare, and identify patterns at scale.

But AI can't submit your rebate claim. Can't follow up on late payments. Can't make business decisions.

AI reads. Systems execute. Humans decide.

The opportunity isn't AI alone. It's AI as part of an integrated system that actually captures value.