Revolutionising procurement: embedding continuous contract oversight to unlock value and mitigate risk

As procurement functions take on a strategic role, many organisations struggle with contract oversight vulnerabilities. Experts advocate for structural reforms, standardised governance, and continuous monitoring to unlock hidden value and reduce operational risks.

Procurement functions today find themselves at the heart of business strategy, tasked with balancing an evolving array of priorities, including cost control, resilience, sustainability, supplier performance, a...

nd compliance. However, beneath these expanding responsibilities lies a persistent structural vulnerability: contract oversight. Despite procurement’s increasing maturity, contract risk management often lags behind, introducing significant operational and financial risks that can quietly erode value.

Research from Procurement Magazine highlights that only 48% of organisations maintain clear, centralised access to their contracts. Many teams still resort to manually digging through emails, shared drives, and personal folders to locate essential documents. This fragmented storage system, combined with unstructured data locked in inaccessible formats like PDFs, results in lost rebates, missed renewal dates, overlooked service-level agreements (SLAs), and diminished supplier accountability. As a consequence, organisations may lose nearly 9% of contract-related value annually.

This issue is compounded by the complex ownership landscape post-contract signing: procurement manages commercial terms, legal oversees contract language, finance tracks spend, and operations produces supplier delivery, but no single function assumes full lifecycle responsibility. Even organisations equipped with Contract Lifecycle Management (CLM) platforms suffer from inconsistent data inputs, weak governance, and insufficient maintenance. These gaps lead to reactive risk management, where problems are often addressed only after they escalate, making remedial action more difficult.

Procurement teams can strengthen contract risk management by focusing first on structural improvements rather than solely relying on technology. Central to this approach is creating a single source of truth with structured and searchable contract data, covering obligations, pricing models, KPIs, renewal dates, and risk clauses, so that contract terms become a strategic asset integrated into category planning, supplier performance management, and competitive procurement processes. Additionally, standardising governance reduces risk related to contract variation by aligning Procurement, Legal, Finance, and Operations under consistent frameworks, playbooks, and approval rights. This ensures clarity on ownership and risk posture, facilitating faster decision-making without compromising control.

Perhaps most critical is adopting a continuous monitoring model for obligations, SLAs, and renewals. Contract risk is ongoing and not a one-off annual exercise. Proactive tracking of supplier performance, pricing changes, and renewal timelines enables teams to renegotiate effectively and preserve negotiated value. This vigilance prevents contract terms from becoming outdated and helps avoid costly auto-renewals or lapsing commitments.

Yet, many procurement teams lack the capacity to maintain data accuracy or conduct ongoing monitoring effectively. This is where managed contract services can play a vital role by providing dedicated experts who uphold structured data integrity, routinely track performance and obligations, flag risks early, enforce governance, and ensure CLM platforms remain accurate and useful. For procurement leaders seeking to increase maturity without overburdening internal resources, such services offer scalable, high-impact solutions.

Broader perspectives from industry sources reinforce these insights. Icertis defines contract risk management as the process of identifying, assessing, and mitigating potential risks in contractual agreements to avoid financial, legal, and operational liabilities. Common causes of risk include performance failures, ambiguous contract language, hidden obligations, missed revenue opportunities, changing circumstances, regulatory non-compliance, and third-party issues. Recognising and addressing these proactively helps organisations contract with greater certainty.

Meanwhile, DiliTrust points to the consequences of contract risks such as disputes, delayed payments, and operational disruptions. Their advice underscores the value of centralised contract management systems, standardised templates, and automated alerts to track key dates and obligations, practices aligned with continuous monitoring models. Trackado similarly recommends proactive measures like setting reminders, employing contract management software, and regular contract reviews to ensure obligations are met and to safeguard business relationships.

Conga identifies risky contract behaviours including short-term focus and inconsistent terms. They advocate for clear communication, collaboration, escalation procedures, and integrating risk management into procurement planning and supplier selection to mitigate exposure effectively.

Attorney Aaron Hall highlights the dangers in informal procurement workflows where contract ambiguity, such as undefined scope or unclear payment terms, can foster misaligned expectations and disputes, signalling the imperative of precise drafting and rigorous review.

In the software procurement arena, Vendr stresses thorough evaluation processes, strategic supplier lists, strong budget controls, and centralised contract management to avoid pitfalls like auto-renewals or missed termination deadlines.

Overall, successful contract risk management requires a blend of structured data, standard governance, continuous oversight, and often, external support services. Procurement’s elevated strategic role demands a shift from reactive, fragmented contract handling towards integrated, proactive oversight. This evolution not only mitigates risks but also unlocks significant value, reinforcing procurement’s contribution to organisational performance and resilience.

Source: Noah Wire Services