11 reasons why every CEO should ask about contractmanagement

Contractmanagement (CM) is no longer a back-office function—it’s a strategic enabler that impacts revenue, compliance, and reputation. Yet, many CEOs fail to prioritize CM or ask the right questions about its performance.
Below, I outline 11 compelling reasons why every CEO should make CM a top priority and the critical questions to ask to ensure it’s driving measurable success.

1. Contracts are the Foundation of business relationships

Every partnership, supplier agreement, and client deal begins and ends with a contract. If your CM process is inefficient, it can erode trust, delay projects, and strain relationships. Ask: How are our contracts aligned with our strategic goals and fostering trust with stakeholders?

2. Poor CM costs you money

Research shows that inefficient contract management can cost companies up to 9% of their annual revenue. Missed renewals, non-compliance penalties, and poor negotiation outcomes all add up.
Ask: What KPIs do we use to measure the financial impact of our CM processes?

3. Compliance risks are on the rise

With increasingly complex regulatory environments, non-compliance can lead to hefty fines and reputational damage. Robust CM ensures compliance is built into every stage of the contract lifecycle.
Ask: How does our CM process mitigate compliance risks and ensure regulatory alignment?

4. AI and technology are changing the game

AI is transforming CM by automating workflows, identifying risks, and improving accuracy. However, not all AI is created equal, and understanding the underlying technology is critical. Ask: What technologies are we leveraging in CM, and how are they driving efficiency and accuracy? Are we aware of the risks tied to non-proprietary AI models?

5. Contracts are a goldmine of data

Contracts hold valuable insights into pricing trends, supplier performance, and market dynamics. Failure to analyze this data means leaving opportunities on the table.
Ask: How are we extracting and utilizing contract data to inform strategic decisions?

6. Supply Chain under pressure

Global supply chains are under constant pressure, from disruptions to geopolitical risks. CM plays a critical role in identifying vulnerabilities and ensuring continuity.
Ask: Are our contracts structured to protect us from supply chain risks and ensure resilience?

7. Speed as an competitive advantage 

Delays in contract approvals or renewals can cost you deals and slow down growth. Streamlined CM processes enable agility and responsiveness.  And then lets not even talk about the loss of innovation in general.
Ask: What is our average contract cycle time, and how quickly can we execute critical agreements?

8. Stakeholder joint effort drives huge benefits 

Contracts touch multiple departments—legal, procurement, finance, and operations. A disjointed process leads to inefficiencies and errors.  Remember the days when people said “what procurement bought is not what we need” or “what sales sold we cannot make”….
Ask: How are we fostering collaboration across teams involved in contract management, how do we align roles and responsibilities?

9. CM as an indicator for organizational maturity 

A strong CM process signals operational excellence and strategic foresight, which boosts investor confidence and market reputation.
Ask: What does our CM process say about our organizational maturity and readiness for growth, who is the process owner and why?

10. It is not risk, it is opportunity

While CM is often seen as a risk management tool, it’s also a driver of value creation. From negotiating better terms to identifying upsell opportunities, CM can directly impact the bottom line.
Ask: How are we leveraging CM to not just mitigate risks but also create value and seize opportunities?

11. Leverage industry best practices (Bonus)

Best practices in CM can be the difference between mediocrity and excellence. Aligning with proven methodologies ensures your organization is not only efficient but also competitive.

When it comes to industry best practices, CATS CM has been the gold standard since 2005. Its structured framework empowers organizations to maximize value, mitigate risks, and drive strategic outcomes.
Ask: Are we aligning our CM processes with industry best practices, such as CATS CM, to stay ahead of the curve?

Wakey Wakey: the CEO call to action

Contract management isn’t just a functional necessity—it’s a strategic lever for growth, risk management, and value creation. CEOs who fail to ask the right questions risk inefficiencies, missed opportunities, and exposure to unnecessary risks.

By understanding how CM is functioning, measuring its success, and leveraging the right tools and methodologies like CATS CM, you can transform contract management into a competitive advantage.

So, ask yourself: Are we treating contract management as a strategic priority—or as an afterthought?

TAGS: #ContractManagement #Strategy #Leadership #RiskManagement #CATS_CM #BusinessOptimization