The hidden value of standardising Contract Management
By Sarah Nørby Larsen
Companies invest heavily in optimising pricing strategies, digital selling, and product and service innovation. Yet one of the most critical levers of commercial performance remains neglected: contracts.
Contracts define how value is promised and delivered. But in most organisations, they are still drafted manually, negotiated without clear guidelines and stored in silos. The results are disjointed handovers, underbilling, over-servicing, poor customer experiences and missed opportunities – all symptoms of a process that has simply not kept pace. This fragmentation creates friction, revenue leakage, and a growing gap between what was sold and what gets delivered.
Most commercial processes have been optimised and standardised over the years, but contracts remain the exception. And the lack of standardisation in Contract Lifecycle Management (CLM) is more than a legal oversight. It is a commercial blind spot.
The challenges run deeper than most organisations realise.
The cracks beneath the surface
According to Icertis’ 2025 State of Contracting report, 90% of CEOs admit they leave money on the table during contract negotiations. That number is striking. But it’s not surprising.
When there is no clear ownership or standardised process, we see the same patterns: bespoke agreements, inconsistent terms, and no entitlement tracking. Sales teams customise contracts to close deals, but with limited guardrails, those variations become operational liabilities. Meanwhile, service and delivery teams are left interpreting ambiguous terms or scramble to meet commitments they had no part in defining.
Without structured data and standardised language, it becomes impossible to automate entitlement checks, flag risks, or even assess whether a contract remains profitable over time. In an era where AI is expected to transform how we work, these foundational gaps create a major bottleneck.
The case for standardisation
Standardisation isn’t about rigidity. It’s about creating a framework that allows for scalability, transparency, and smart automation.
That said, full-scale standardisation is rarely feasible from day one. Many companies operate in buyer’s market conditions or face strong customer preferences, making it difficult to impose a single template across all segments or regions. A more pragmatic approach is to pilot standard templates for a few contract types or critical elements of the contract in a controlled environment. This allows organisations to learn what works, adapt where needed, and balance standardisation with flexibility – building a stronger foundation over time. One small step is better than none.
AI can support efforts to digitise existing contract portfolios and extract entitlements from natural language – but this is only part of the solution. AI cannot redesign processes, establish governance, or resolve underlying fragmentation in how contracts are created and managed. That foundation must come first.
Standardised contracts are enablers. They allow organisations to define obligations, entitlements, and thresholds in ways that are both human-readable and machine-actionable. This opens the door to smarter automation, compliance enforcement, and performance tracking across the lifecycle.
The commercial upside is significant. According to Contract Management Statistics 2025 by Procurement Tactics, poor contract management erodes an average of 9.2% of annual revenue. That’s not just a legal risk. It’s a direct hit to the bottom line.
Simpler, standardised contracts not only reduce internal complexity; they make it easier for customers to understand and engage with the terms. That strengthens both compliance and trust.
Ownership is a team sport
So who owns Contract Lifcycle Management?
Contracts intersect with every part of the business: Sales, Operations, Finance, and Customer Service. Governance must be shared, but with clearly defined roles. Sales needs flexibility, but within defined boundaries. Operations needs clarity to execute. Finance needs traceability to bill accurately.
This demands a mindset shift: from contracts as static legal paperwork to contracts as dynamic commercial assets. They guide how value is delivered and monetised - and they deserve the same strategic attention as pricing or product management.
To make ownership stick, companies must build an operating model around contracts – not just buy a tool. That means clear templates, approval flows, governance models, and change management. It also means helping sales teams understand that standardisation benefits not just internal processes. It’s what makes customers trust you.
“Contracts aren’t paperwork. They’re commercial assets. Standardising them is one of the biggest untapped levers for protecting margin.”
Laying the digital foundation
The potential of AI in CLM is real, but only if the underlying contract data is structured. Before any automation can deliver value, companies must:
Clean and profile their contract data
Define commercial models and modular templates
Introduce configurability to accommodate necessary variations
Establish governance workflows and approval thresholds - not just for pricing, but also terms and conditions
Without this foundation, even the best CLM technology will fall short.
From "closing the deal" to "delivering the value"
Perhaps the biggest shift is one of mindset. Sales often optimises for deal velocity, while service focuses on delivery. But contracts sit in the middle. And that means accountability must be shared, not siloed.
The goal isn't just faster deal closure. It’s better execution – delivering what was promised, at the right margin, with full entitlement visibility across the value chain.
CLM is no longer just a legal process. It’s a commercial capability. And standardisation is its foundation.
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