Six Steps to Define Requirements for a CLM Software Purchase

Once a team of contract managers goes over the list of benefits of adopting a CLM software, they generally arrive to the conclusion that it’s possible to significantly decrease the amount of time and resources needed to manage all contract processes across an enterprise.

However, the greatest obstacle to buying a CLM solution is that contract managers often can’t articulate their requirements. This leads into further delays of a much-needed upgrade of your enterprise’s contract management system. To help you jumpstart the review process, let’s review six key steps in defining requirements for your CLM software purchase.

Editor’s Note: Read our article on what is contract management software to learn more.

  1. Select an Evaluation Committee

Selecting the right technology to improve the contract generation and management across your entire enterprise is no easy task. That’s why from the very start you need to have representatives from all departments that will be affected by the CLM software. Contract management affects many other departments, including legal, accounting, and compliance. Inform department heads about the purpose of this evaluation committee and allow them the opportunity to select their own representative.

As much as possible, establish in advance the necessary time commitment and specify that the representative must be a decision-maker. Having a rep who can’t make a decision may delay unnecessarily delay the process.

  1. Involve the CIO

Just as the technologies that he or she deals with, the role of the CIO is ever evolving.  As the official gatekeeper of all IT systems of the enterprise, the CIO must be involved in the selection of a CLM software. The CIO will help you understand the complexity of the necessary steps to implement the new technology, evaluate the degree of compatibility of the new technology with legacy systems, translate tech jargon into simpler terms for members of the evaluation committee, and perform due diligence according to the needs of your industry.

One important point is to empower your CIO to have sufficient authority within the committee. This is the person who has the expertise to develop an enterprise-wide digital roadmap and assess how CLM solutions can affect all departments across the enterprise.

  1. Review the Steps of Your Contract Lifecycle

One of the first questions that any CLM solution provider will ask you is “what does your contract lifecycle look like?” Plan ahead and map out the steps of a typical contract lifecycle within your enterprise. While the bulk of the task will fall on the contract managers, take this as an opportunity to involve the members of your evaluation committee.

Ask them to look at the contract lifecycle, indicate instances in which they should be involved, and provide suggestions for additional steps. For example, the legal department representative could want to take part of the post-mortem review or the accounting department would like to take part whenever there is a contract up for renewal. Take this as an opportunity to learn about the intricacies of the contract processes of your enterprise and increase the visibility of processes that could be automated.

  1. Identify Special Requirements

Don’t just stop with a master template of a typical contract lifecycle. Dive deeper and identify special requirements according to the unique needs of your enterprise. On the one hand, an organization in the healthcare industry would want to address specific regulatory compliance requirements through its CLM software. On the other hand, an enterprise in the finance industry could want a CLM solution that could help prevent hidden value leakage in M&A transactions.

Additionally, look at your largest customers by both total number of contracts and total dollar value. Given that the majority of your contract processes will stem from such clients, consult with the contract managers handling those accounts about potential special requirements. If your enterprise relies on government agencies for business, review the compliance guidelines for existing and future contract writing. Here is a sample compliance roadmap from the Department of Defense. Such a review could identify key evaluation criteria for selecting your CLM Solution.

  1. Develop an Evaluation Rubric

Once your evaluation committee has:

  • Requirements from each department represented in the committee
  • Requirements from the CIO
  • Steps of a typical contract lifecycle
  • Special requirements for needs of key clients

The next step is to establish a rubric that would allow members of the committee to evaluate presentations from potential software providers in an objective manner. It’s a good practice to allocate priority to each one of the evaluation criteria because some criteria may be more critical than other. Establish the set of must-have requirements that would allow you to easily eliminate inadequate solutions and identify nice-to-have criteria that could serve as a tiebreaker when dealing with very similar solutions.

  1. Set Up a Discovery Call

Now you’re ready to start scheduling discovery calls with different CLM software providers to determine which one is the best fit for your enterprise. By preparing with the previous five steps, you’ll be ready to articulate your requirements, evaluate the fit of the software to your current processes, and facilitate the vendors to put a dollar value on potential customizations. Based on these discovery calls, your evaluation committee will be able to grade each vendor using the pre-established rubric.

To expedite communication between the vendors and your committee, assign one member who will act as a single communication point between both parties. This prevents any miscommunication and allows all members of your committee to be on the same page.


While adoption a CLM solution can benefit your enterprise, it’s a process requiring much more than just the handoff a check. Take a “walk before you run” approach and enable your enterprise to make a more informed decision through an evaluation committee. By taking these six steps, your evaluation committee will have a better idea of what contract processes can be automated.

Good CLM helps everyone be on the same page.