RFP 2.0 - The "Do-It-Yourself" RFP Tool

RFP 2.0 Are You Ready for a Sourcing Upgrade? S i U d ? December, 2009 Paul C. Pinto Managing Partner Managing Partner Sylvan VI, Inc.

Barry Diamond, Vice President, Pinstripe The Vice President of Business Development at Pinstripe, Inc., Barry Diamond is responsible for cultivating, delivering and managing new business. As the fourth executive to join the company, he was instrumental in building fourth executive to join the company, he was instrumental in building Pinstripe’s sales program from the ground up. In his ongoing role, Barry leads the company’s commercial group sales strategy, and the design and creation of customized programs, initiatives, materials, and new service offerings. A driving force in Pinstripe’s success, Barry’s successful new business development efforts result in the hires of more than 15,000 Fortune 1000 employees annually. Barry leverages his expertise in human resources and p y y y g p talent acquisition, coupled with insights gained from diverse business experience in market research, lead generation, and operations management, to maintain and build relationships across the industry. He is responsible for mining new business through a network of existing and responsible for mining new business through a network of existing and prospective clients, as well as managing and leveraging relationships with sourcing advisory companies 1

Paul Pinto, Managing Partner, Sylvan VI, Inc. Paul Pinto, is a Managing Partner at Sylvan VI. Inc. where he is responsible for providing a unique set of ‘Outsourcing Advisory 2.0’ services to U.S. and U.K.‐ based clients. Throughout his 25 year career, Mr. Pinto has provided advice based clients. Throughout his 25‐year career, Mr. Pinto has provided advice and council to a variety of fortune 2000 companies who were interested in experiencing the benefits of outsourcing. As part of 30+ Advisory engagements, Mr. Pinto has facilitated the outsourcing of services to vendors located in Canada, China, Brazil, India, and Russia, and has setup captive l d i C d Chi B il I di dR i dh i centers in India, Egypt, Malaysia, Mexico, and Slovakia. Mr. Pinto also serves as an Expert Witness in court cases that require the unbiased opinion of an expert in the field of outsourcing, breaches of contract. p g, Sylvan VI, Inc. is a new‐breed of outsourcing advisory firm that provides expert advice to support our clients in transforming their businesses through the application of innovative delivery models, that leverage a new approach the application of innovative delivery models that leverage a new approach to providing services in a “2.0” environment. Our mission is to help our clients align their overall business goals by reducing costs, improving operational efficiencies, and ultimately positioning them to be free to concentrate on becoming more competitive in their selected markets. 2

We offer an array of solutions for our partners looking to us for TALENT IN SIGHT Pinstripe Talent Spectrum provides our clients with a complete end‐to‐end recruitment partnership solution. Pinstripe’s Project Focused Talent Spectrum offers our complete end‐to‐end solution but focused by i i ’ j d l ff l d d l i b f db types of positions, location, or specific period of time. Pinstripe Talent Point allows our clients to select points in the recruitment process to leverage our expertise and support their HR process where they need it most. i d h i h h di 3

Discussion Topics Discussion Topics The RFP Process The Current State RFP Process (RFP 1.0) The Current State RFP Process (RFP 1 0) The Future State RFP Process (RFP 2.0) Comparison and Conclusion Comparison and Conclusion 4

Actors in the Outsourcing Ecosystem Influencer Buyer Suppliers of outsourcing-related outsourcing related Consumers of outsourced services information Advisor Provider pp g Supplier of customized outsourcing p Seller and provider of outsourced advice and guidance services The election to involve Advisors and/or Influencers in the outsourcing process, requires a certain The election to involve Advisors and/or Influencers in the outsourcing process, requires a certain level of investment, while the decision to undertake a Do‐It‐Yourself approach bears a certain level of risk. 5

Why Upgrade the Vendor Selection Process? Select the most appropriate vendor within the shortest period of time, in a way that minimizes the cost of the selection process, and builds consensus for the ultimate decision and initiative. • Increase the speed ith hich the Increase the speed with which the ultimately qualified vendor will be • Gain access to qualified selected Faster vendors to which you have no prior exposure • Administer the process while reducing the amount of amount of Greener Better resources being consumed (e.g. paper, toner, mailings …) • Minimize the cost associated with selecting the ultimate Safer Cheaper vendor • Build consensus around the ultimate decision, and the ultimate decision and lay the groundwork for a successful relationship 6

High‐level RFI/RFP 1.0 Process Process Flow Deliverables Business Develop Business Case Total Cost of Ownership, Return On Investment, In‐source vs. Outsource decision Case Long-list of Develop RFI High‐level requirements, long‐list of potential vendors (10 – 20) Vendors Distribute to Prospective p Short-list of Vendors Vendor responses, short‐list of prospective vendors (5 ‐7) d h l f d ( ) Vendors Statement of Develop RFP Detailed requirements, Service Level Agreements Requirements Proposed Facilitate Due Diligence (bilateral) Proposed solutions Solutions Evaluation Evaluate Vendors Selected Vendor(s) Results Negotiate T&Cs with Contractual Agreement selected Vendor(s) Agreement Typical Scenario • 9 Vendors favorably responding to RFI • 1 vendor negotiating contractual Ts&Cs • Focused on Math (price) and Physics (fit) • 5 Vendors favorably responding to RFP • 6‐9 months of calendar time • Keeps the vendors at arm’s length • 3 Vendors engaged in due diligence • 1,500 – 2,100 person‐hours of internal effort • Does not always yield a unanimous decision • 4 Evaluators reviewing vendor responses • 4,200 – 5,500 sheets of paper produced • Uses spreadsheets, and word processers 8

Characteristic of RFP 1.0 Area Characteristic Proven Process The RFP process has been in use for a very long time, and is well‐tested and proven to build consensus for the selection of the ultimate vendor. The process clearly yields actionable results. Template Deliverables Most organizations have a set of dedicated word processing documents (e.g. RFQs, RFIs, RFPs…), and spreadsheets (e.g. TCO, ROI, vendor weighting and rating…) RFIs, RFPs…), and spreadsheets (e.g. TCO, ROI, vendor weighting and rating…) Comfortable The majority of decision‐makers have prior experience being involved in selecting a vendor through the use of the traditional RFI/RFP process. As such, they understand their role in the process, and are relatively comfortable in providing understand their role in the process and are relatively comfortable in providing their input and feedback through this forum. Proven Results The majority of large and medium‐sized outsourcing projects have used the RFP process to facilitate the selection of their external service provider. The majority of these relationships have been mutually beneficial and deemed to be successful. Promotes Competition p The process allows for a like‐for‐like comparison of costs between vendors, which p p , enables the Buyers to aggressively negotiate the cost of services in normalized terms. 9

RFP 1.0 Improvement Areas Area Approach Area of Potential Improvement The standard process of RFI (long‐list of vendors), This approach, while very thorough, can take to long to RFP (short‐list of vendors), to vendor to complete, and runs a risk associated with the Faster evaluations (2‐vendors), to negotiations, to final needs of the business changing dramatically during needs of the business changing dramatically during selection, can take between 6 and 9 months to the evaluation process. complete. The RFP process strives to develop detailed The more detailed an RFP is, the more prescriptive it requirements, so the vendors have a clear becomes, which forces vendors to commit to Better understanding about the scope of services and providing services in a manner in which they may the Service Level Agreements. not be comfortable. This approach encourages the vendors to manage The RFP process is focused on driving the price of the components of scope, resource skills, and Cheaper p services down, as opposed to driving up the value , pp g p quality, in order to satisfy the mandated pricing lit i d t ti f th d t d i i of the relationship. requirements. While this approach does create a level playing field Keeping the vendors at arms‐length provides for a for the purposes of evaluating vendors, it does not Safer more competitive bidding process, where apples encourage the assessment of the vendors cultural fit encourage the assessment of the vendors cultural fit can be compared to apples. with the User’s environment. This approach is extremely paper intensive, and does The RFI/RFP process is produces a significant set not take advantage of the Internet, online of documents (RFPs , Responses, Evaluations) and of documents (RFPs Responses Evaluations) and collaboration tools, and available content. All RFPs collaboration tools and available content All RFPs Greener requires time and effort to organize, and manage can be rendered, responded to and evaluated all of the documentation. electronically, without ever producing a piece of paper. 10

High‐level RFP 2.0 Process Process Flow Deliverables Business Develop Business Case D l B i C Total Cost of Ownership, Return On Investment, In‐source vs. Outsource decision Total Cost of Ownership Return On Investment In source vs Outsource decision Case Short-list of Develop RFP Detailed requirements, Service Level Agreements, short‐list of potential vendors (2 ‐3) Vendors Statement of Facilitate Due Diligence (bilateral) Proposed solutions Requirements Proposed Evaluate Vendors Selected Vendor(s) Solutions Evaluation Negotiate T&Cs with selected Vendor(s) Agreement Results Contractual Agreement Typical Scenario • 3 Vendors favorably responding to RFP y p g • 1 vendor negotiating contractual Ts&Cs 1 vendor negotiating contractual Ts&Cs • Focused on Chemistry (cultural fit) y( ) • 2 Vendors engaged in due diligence • 3‐4 months of calendar time • Engage the vendors in innovation • 4 Evaluators reviewing vendor responses • 700 – 950 person‐hours of internal effort • Does not always yield a unanimous decision • Uses SaaS‐based tools • Uses collaboration tool to manage the process 12

Characteristic of RFP 2.0 Area Characteristic The Proven Process The RFP 2.0 process produces the same proven deliverable as the standard RFP p process, but does so through the use of an innovate set of tools and techniques. , g q Match Making The standard RFI process has been replaced by the use of research data that tracks and monitors the profiles and capabilities of over 10,000 vendors. By matching the Buyer’s specific requirements to those contained in The Outsourcing Institute’s database, we are able to develop a short‐list of highly qualified vendors, within a d b bl d l h l f h hl lf d d h fraction of the standard time. Use of Tools The RFP 2.0 process uses tools that contain the needed RFP content as a cafeteria‐ style menu from which one can select the needed requirements. These tools are style menu from which one can select the needed requirements These tools are provided to the User as a service (SaaS‐based), and are focused on facilitating the Users through a very natural workflow. Electronic The RFP2.0 process is administered through a collaboration environment where the RFP is built, distributed, responded to, and evaluated electronically There is no need to printout an sheets of paper. Faster Results Proven results are reached within half the time of the standard RFP process, due to the removal of the RFI process, and the reduction in administration time associated with managing paper. 13

The Outsourcing Accelerator 14

Buyer Profile Questions Recruitment Process Outsourcing 15

Suggested Path Through the Services 16

Suggested Approach to RFI or RFP 17

Buyer’s Dashboard of RFI/RFPs 18

Assigning Other Buyers 19

RFI/RFP Executive Summary 20

Scope of Services 21

RFI/RFP Service Level Agreements 22

Ask an Expert for Advice 23

Client References 24

Rate Card 25

Seller’s Response to Executive Summary 26

Seller’s Response to Service Level Agreements 27

Evaluator’s Assessment of Vendor Responses 28

Match Making Process Buyer’s Requirement Capabilities of 10,000 Providers Physics Physics Math Math Chemistry Chemistry Short‐list of Highly qualified Vendors 29

Changing Tenets of the RFP Process RFP 1.0 RFP 2.0 Privileged access to proprietary outsourcing information Open access to artifacts through online communities and libraries Low volume of large outsourcing engagements Low‐volume of large outsourcing engagements High volume of small outsourcing transactions High‐volume of small outsourcing transactions Advisory assistance is required to enabling outsourcing Advisory assistance is desired to support Do‐It‐Yourself‐Outsourcing Process focused (process for the sake of process) Outcome focused (get to the results) Due diligence‐based sourcing (driven by Procurement) Accelerated sourcing (driven by the Line of Business) Stand‐alone tools and point solutions Collaborative, SaaS‐based tools ‘Random‐walk’ approach to understanding the business Surgical focus on outsourcing components of the business India is the primary destination Considerable capabilities available in multiple geographies Focused on transitioning work (lift and shift) to offshore Focused on transforming the business Time & Materials fees, best level of effort Performance‐based fees, paid at the outcome Pyramid approach to project staffing, with a part‐time Senior Advisor Apply only experienced Senior Advisors (20+years) throughout the entire coupled with a number of onsite Junior Consultants life‐cycle of the project Traditional vendor selection process (long list, to a short list, to a bake‐ d l d l (l l h l b k l h k ll b b Facilitated match‐making and collaboration between Buyers and Providers off, to a selected vendor) 31

Are You Ready to Make the Move? Area of Concern Traditional Approach Accelerated Approach Organizational view The organization has had limited and/or mixed experience The organization is already a proponent of, and a firm believer of outsourcing with outsourcing, and is undecided about its true level of in the value associated outsourcing and offshoring. added value. Business need There is an ongoing effort to reduce costs, and the There is an imperative business need that is driving this organization would like to explore outsourcing / offshoring initiative (e.g. mandated reduction in headcount). The as a potential option. organization has a strong reason to move fast. Sponsorship This is a departmental initiative, and is being sponsored at The need is so great, that this initiative is sponsored at the the Manager or Director level. the Manager or Director‐level. leadership level, and is being championed by a C level leadership level, and is being championed by a C‐level Executive. Involvement of The Procurement department has a rigid approach to The Procurement department understands that this is a Procurement vendor selection and contracting that must always be different approach to the traditional vendor selection and due followed, as part of any outsourcing event. diligence process, and is willing to actively participate in the process. process Gathering of The organization feels strongly that the requirements must The organization appreciates the value of collaborating with Requirements be fully described before vendors become involved in the prospective vendors, as part of shaping the services that will process. be outsourced. Approach to Solution The organization fully understands the detailed The organization understands the business objective, and is Development components of the solution that is being sought, and interested in accepting innovative solutions from experienced would like to put it out to bid. vendors. Approach to working The organization prefers to keep the vendors at arms The prospective vendors will be brought into the process early, with Vendors length, in order to negotiate the best possible commodity‐ in a collaborative mode, in order to develop the final solution based pricing. based pricing and value proposition. and value proposition Cost of Advisory The organization has budgeted dollars that are dedicated The outsourcing process is only deemed valuable if something Services for use in seeking the advice and guidance of experienced is outsourced, and proven to yield at least a 25% savings in outsourcing advisors. operating costs. 32

Questions? Barry Diamond Paul C. Pinto Vice President Managing Partner Pinstripe Sylvan VI, Inc. bdiamond@pinstripetalent.com bdiamond@pinstripetalent com ppinto@sylvanvi.com ppinto@sylvanvi com (262) 754‐5065 (678) 644.6170 33

RFP 2.0 - The "Do-It-Yourself" RFP Tool

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