Get proper mileage from your RFPGregg BarrettARECENT blog by Mark Turrell, chief executive of Imaginatik, questions the value ofthe request for proposal (RFP) procedures used by most large corporations.It is based on a company’s experiences over a three-month period in which they analysedthe outcome of the RFPs to which they responded, but reflects similar comments receivedby the IACCM from members.Turrell’s findings show that:- 48% (26 firms) projects did not proceed beyond planning phase- 22% (12) pilots did not get far enough to be implemented (one took a year)- 11% (6) pilots did not convince management and the project was cancelled- 11% (6) change of business priority or loss of project team left the project abandoned- 8% (4) programmes were successfully implemented to some extentThere is no debating that RFPs can be unbelievably time-consuming when you have to dothem properly.Turrell says that, based on his findings, an average RFP could take 20 to 60 man hours tocomplete depending on how much detail is required, the individual response needed andif the team needed to travel to the client to present.In my experience for larger companies, where RFPs involve multiple functions andreviewers, this time estimate is a major understatement.Consider for a moment that many RFPs go nowhere. Based on experience, there aremany that have very little buying commitment.Turrell believes it is unfair for large companies to put so many companies through therigmarole of RFPs.He says: “. .. the IT department and procurement group will not own this once the system is bought. And the data does not lie – you will fail to achieve your end goals (unless youare in the lucky 10%).“Even if the buying intent is serious, vendors (and buyers) know that many RFPs are acheckbox game. Tick all the boxes, even if there are some suspicions that you cannot dowhat is requested and you go to the next round (or alternatively, fail to get to the nextround because the process is about ‘due diligence’ – the ‘winner’ was already decided).“So what do vendors do? They check the boxes (even though they know this meanseventual implementation will end up with problems around tricky areas).”This leaves one to ask if the RFP process delivers the value that companies are lookingfor?Viewpoints on this are justifiably mixed. There are organisations that, for example, havean RFP process geared towards value generation and those that have a process gearedmore towards administration with a myopic view on compliance.
Turrell believes what is really needed is for companies to take the time to work out whatmakes their needs unique. What is it about their firm, their process, their culture, theirmanagement expectations that requires a unique response?To illustrate – large, complex organisations need systems and vendors that can handlethem. So, if this is your biggest need, focus the RFP on that. Look for a vendor who willbe around in five years, that does not rely on two people in a basement or has thousandsof people, but looks to impose its methodologies and culture on you. Look for someonewho has explicitly and obviously done it before and shows the versatility to repeat thesuccess in different situations and organisational structures.And call up the references. The amount of (Turrell calls them lazy) firms that run RFPsand do not take 30 minutes to call the reference companies is a disappointment. Smallcompanies sometimes cheat on their references. That does not excuse your procurementteam and business buyers from not making a couple of hours of calls. Call the references– no excuses.Turrell’s summary on what organisations can learn from his findings:- Companies should try to avoid RFPs if they can.- If you have to do an RFP, focus on what makes your needs distinct from the generic.- If you have to do an RFP, call the references first thing to make your review jobquicker.However, before we leave it there, there are more thoughts on the topic including a largeIT solutions company in Europe that cited its biggest challenge as being able to qualifythe RFP beforehand.Their take on RFPs:- To a very large extent, RFPs seem to be a benchmark that have to be done to fulfilinternal processes. The decision is often already made.- Many RFPs turn out to be a compilation of boiler plates eg. the client is asking formanaged services based on clauses intended for “building/construction contracts” or forvery unreasonable insurance requirements.Often we get the answer, “We know, the RFP does not fit but our legal department didn’tprovide anything else.” Or the RFP is done by external consultants who are more activein other industries.- The remainder of the RFPs is asking for the right services based on correct stipulationsand thus covers the interests of the issuer and a fair “contest” for the bidder.Their conclusion was that “in many cases the result is anything but the right quality forthe best price. The RFP is a good tool in a competitive market but need[s] a high level ofattention by the customer to get the optimum out.”For the bidder, it is the challenge to qualify very thoroughly if the opportunity is worthpursuing. Another organisation that weighed in on the discussion believes that RFPs arenot a waste of time.“We’ve had those that do not work out so well, but our process becomes better- definedbecause of it. We have a process that includes cross-functional team members, reference
checks, product demonstration (pilot if possible), scored vendor presentations, lessonslearnt and it works for the majority of our projects.”This organisation recommends that people sit down with vendors and have a conversationthat covers:- Why they believe and why they need Solution X- The evidence that supports their belief- A true understanding of who is affected by the current situation and the cost of notchanging- A set of true requirements that represent a consensus of what they need and why (not abunch of guesses and nice- to-haves resulting from not doing their homework)- A real understanding of the budget and resources necessary to purchase and implement- Short- and long-term implementation goals- Sponsorship at the executive level- Access to all decision-makers to understand their thoughts on the best solution and theircriteria from making a solution.Their belief is that this process will be less time-consuming, less costly and yield superiorresults to an RFP.There are pros and cons to each of the approaches above, but all arguments for andagainst RFPs have merit, so they are worth considering.The key is perhaps a balance.