The distinction between Contract Analytics and Contract Performance Management (CPM) became clear to us through hands-on experience. We’ve come to see that Contract Analytics is best understood as a component of the broader, forward-looking discipline of CPM rather than a peer or alternative to it.
At the heart of CPM lies a simple but powerful idea: every contract begins with a reason, a goal - a business need. Yet, somewhere in the contracting process, that original purpose often fades from view. Contract Performance Management is about refocusing on that purpose and asking why this contract was signed in the first place. And, more importantly, is it delivering on that purpose? That’s what separates performance management from analytics.
This article makes that case. We’ll explore where Contract Analytics delivers value, especially in legal and risk settings, and why its insights alone aren’t sufficient when it comes to ensuring commercial outcomes. Then, we’ll show how CPM goes beyond analysis to drive real performance, ensuring businesses actually realize the value in their contracts.
If you want to see how our perspective and focus evolved, you can read our backstory in the article ‘Why Contract Performance?’
Contract analytics refers to the application of artificial intelligence (AI), machine learning (ML), and natural language processing (NLP) to analyze large volumes of contract data. It focuses on extracting, organizing, and interpreting contractual information to uncover insights, assess risks, and inform business decisions.
Contract Analytics are often sold in conjunction with Contract Lifecycle Management (CLM), with vendors increasingly bundling analytics into their CLM offerings to add value via AI. Gartner’s 2023 CLM Magic Quadrant confirms this trend — nearly all vendors highlight clause extraction, risk scoring, and other AI-enabled features as differentiators.
Contract analytics platforms have enabled organizations to extract large volumes of agreements for key terms, clauses, and risks. Extracting structured insights from legacy and in-flight contracts allows faster audits, risk reviews, and regulatory compliance.
The technology has also delivered value in supplier segmentation, benchmarking clause patterns and M&A due diligence.
However, the insights contract analytics provides are, by nature, protective and often retrospective. They help the business understand what has already been signed or is under negotiation, how it deviates from standard terms, and where risks may exist. In short, it tells the story of how well-protected the organization is from legal and risk standpoints.
For legal and risk functions, this is invaluable, reducing legal review time, speeding due diligence and audits and providing better visibility into legacy contracts and proactive risk identification.
Valuable as these outcomes are, they do nothing to ensure that negotiated terms are effectively translated into actual business outcomes.
CPM, in contrast, is primarily a proactive discipline that treats contracts as living frameworks. Post agreement, CPM monitors actual performance against contractual obligations, service levels, delivery milestones, and vendor KPIs in near real-time.
Where Contract Analytics tells you what’s in the contract, Contract Performance Management starts by asking why the contract exists — what business need it was meant to serve — and works to ensure that purpose is actually fulfilled.
The shift of emphasis is from business protection to business performance, from “What did we agree to?” to “Are we getting what we agreed to?”:
The core functions of CPM are:
By surfacing missed Service Level Agreements (SLAs), tracking noncompliance, and enabling timely interventions, CPM ensures that organizations capture the value that was contractually agreed upon, preventing leakage, disputes, or missed savings.
Recent research from McKinsey reinforces this view. Mitigating Procurement Value Leakage with Generative AI identifies contract optimization and compliance as two of the largest and most persistent sources of procurement value leakage. According to their 2025 report, up to 80% of procurement teams lack visibility into competitive terms, and enforcement failures — from missed rebates to duplicate invoices — can quietly erode up to 2% of spend. On a $2B budget, that’s $40M in avoidable loss.
The primary business outcomes from CPM are maximized contract value and savings, early detection of non-performance and complex insight generation. These insights are essential for supporting proactive supplier relationship management and minimizing value leakage. The primary sources of value leakage, and thus key use cases for CPM, are:
It is worth noting that CPM takes in pre-defined legal and risk questions, as the definition of contract performance includes the contract being fit for purpose. For example, a global delivery contract between an automotive parts manufacturer and a car manufacturer might have legal jurisdiction governed by the headquarters address, while multiple delivery addresses influence contract performance and risk.
Naturally, the definition of ‘fit for purpose’ also covers commercial considerations such as payment terms not being in line with corporate policy (‘rogue contracts’).
Our perspective is that Contract Performance Management (CPM) offers a forward-looking approach that helps procurement, operations, and finance teams manage future commercial outcomes.
It also covers the core functions of Contract Analytics (CA). While CA typically supports legal and risk teams with retrospective insights, CPM takes it a step further by turning those insights into active levers for managing cost, value, and risk. In this sense, CPM builds upon what CA offers, making it a practical choice for organizations that haven’t invested in standalone analytics tools.
It works just as well for SMEs as it does for larger companies looking to strengthen how they manage contract performance without needing separate systems to do so.
By embracing a forward-looking performance discipline closely tied to accountability, procurement can take a step toward a better future: one where contract terms and data accurately reflect real-world operations and supplier capabilities, and performance becomes the starting point for driving broader and more strategic value across the organization.