This document provides guidance on preparing an effective Request for Proposal (RFP) to evaluate potential new business software systems. It recommends including: 1) a description of issues with the current system and goals for new software, 2) details about business operations and transaction volumes, and 3) a standardized questionnaire and evaluation criteria for software suppliers. This helps create an "apples to apples" comparison, focuses responses on relevant information, and allows for a quantitative evaluation.

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Software Selection
Process Steps

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Introduction
The purpose of this document is to provide you with a brief overview of the key
elements in a Request for Proposal (RFP) from potential business software system
suppliers.
As you prepare material to send to potential software suppliers, you need to remember
that the parties involved in the RFP process (your organization and the potential
software supplier) have very different objectives relative to this process. Your objective
is to get meaningful information about various potential software suppliers that will help
you to “narrow the field” down to some manageable level. The objective of the software
supplier, on the other hand, is to “make it to the next step” in your software selection
process. As a result, most software suppliers will respond to an RFP with a (generally)
voluminous “boiler plate” RFP response document filled with largely useless information
and embellishments. You will find yourself digging through this information in order to
extract the information in which you are interested.
As a result, the key elements of an RFP, from the perspective of an organization looking
to obtain new business software, should be three-fold:
1) Provide an easy “apples to apples” comparison of potential suppliers
2) Provide ready access to key decision information
3) Eliminate any superfluous information that is not germane to the decision
process
Hopefully, what follows, as well as the sample RFP and the RFPResponse.xls
spreadsheet will help you to accomplish these three things.

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Key Elements to a Quality RFP
The purpose of this section is to provide you with information regarding the key
elements that make up a quality RFP that will allow you to produce a quantitative
evaluation of the potential suppliers and do so in a manner that minimizes the amount of
time you must spend to provide reasonable single location supplier comparisons.
The five key elements in a quality RFP are:
1) Definition of why you are seeking new software (i.e., your buying criteria)
2) Description of your business, transaction volumes, user count, etc.
3) Clear definition of what information you are seeking from the suppliers
4) Quantitative (rather than qualitative) evaluation criteria
5) Definition of how the process will work moving forward and the time frames
involved
Each of these elements is key to both helping the potential suppliers evaluate whether
they should continue to participate (they may determine that they do not have a good fit
for your functional requirements) and to make sure that you get the best possible
information to aid in making your decision.
The remainder of this document will provide high-level information regarding each of
these topics. The material presented will reference the TGI document Sample RFP and
its accompanying spreadsheet RFPResponses.xls.
Why Are You Seeking New Software?
You would be surprised by how many RFP’s we have seen that state the reason for
acquiring new software is: (a) “Our existing software uses old technology and needs to
be modernized;” or (b) “Our existing software does not meet our information system
needs.” While these are certainly legitimate high-level reasons for wanting a new
business information system, if they are the best reasons you can state, you’re not
ready to begin a process to select new software for your organization.
A good definition of why you need new software has two components:
1) A statement of the shortcomings of the existing system, either in terms of
features and functionality, technology, or some combination of both
2) A statement of what you hope to accomplish with the new system
The listing of shortcomings with the existing system should not be exhaustive.
Somewhere between three and six items is more than adequate. The items listed,
however, should be those items that represent the most important issues with the
existing system or the top “pain points.” You also do not need to detail these items.

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Most software suppliers have had other customers and prospects with similar issues
and have a pretty good understanding of what you mean. This list should also be one
to which you continually return during the selection process as a means of doing a high-
level check on whether the proposed application(s) resolve the shortcomings identified
by these items.
You also need to include a statement of what you want to accomplish with the addition
of a new system. A good place to start in developing such a list is your ROI justification
for the project. Again, this does not need to be elaborate, but it needs to define clearly
where you expect to reap the benefits from the system. If the organizations on your
initial list of potential suppliers are straight forward, this will also help them to begin to
determine whether they have a fit to your needs or not (they will actually do this through
the requirements checklist). For example, if an integrated, full-featured warehouse
management system including RF, bar coding, and license plating are key needs for
your organization, and a potential supplier does not have one either included with the
software or available as a bolt-on, then they really do not need to spend much time
responding to the RFP. What you are essentially doing here is defining your high-level
buying criteria. As with the list of issues with the current system, you should return to
this list of items throughout the selection process to guarantee these needs are in fact
being met by the software supplier(s).
Describing Your Business
This seems so simple, but there are a number of RFP’s that are sent with an inadequate
conveyance of the type of business the given company is.
There are three main things you want to communicate regarding your business:
1) What type of business are you defined as?
a. What do you sell?
b. Where do you sell it?
c. How do you sell it?
2) What is your position in your industry (i.e., are you a technology leader, etc.)?
3) What types of volume do you do (i.e., number of customers, orders, etc.)?
This is an important aspect of an RFP since it begins to focus on the true nature of your
business and the degree of fit that the various software suppliers can envision.

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What Business Are You In?
In this portion of the RFP, you should define exactly what business your organization is
in.
You should try to provide answers to the following questions:
1) What products do you sell? If there are readily recognized names or brands,
provide examples.
2) How do you classify your business? Examples are repetitive, make to order,
make to stock, process, job shop, and wholesale distribution.
3) Do you manufacture the products or simply distribute them?
4) Do you import products from overseas?
5) How many locations do you have and what functions does each location
perform?
6) How do you take your product to market? Do you sell to distributors or
directly to end customers?
7) How do you interact with customers and suppliers?
a) How are sales orders received? Examples are EDI, phone, fax, or the
Internet.
b) How are purchase orders placed with suppliers? Examples are EDI,
phone, fax, or the Internet.
c) Do you engage in EDI transactions, and, if so, which ones?
8) Do you have large warehouses, or do you operate more just in time?
9) Is there a need for remote access to your system? Example reasons are
outside or remote sales representatives, visits to a customer site, hotel room
access, etc.
This should provide any potential supplier with the information they need to determine
whether or not they have a basic fit for your business.
What Is Your Position In Your Industry?
Generally speaking, every business believes that they do something that clearly
differentiates it from its competition. This might include being the industry volume
leader, the low cost provider, or the best service provider. What you want to do is
convey to the potential suppliers what it is that you believe provides you with a unique
position in your industry. This is, at the same time, both helpful to the supplier and
important to you in that you want to get software that will help you to both enhance your
existing position in the industry and provide you with the ability to improve your position
in current areas of weakness.

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What Is Your Volume?
This is probably the single most important thing to convey to a potential supplier. It is
also the item that is most routinely glossed over in RFP’s. Most people think that telling
someone they have 100 users and do $300 million in annual sales is conveying
information about volume.
Within both the associated sample RFP and the spreadsheet RFPResponse.xls, you
will find examples of the types of detail information that help potential suppliers
determine your true volume.
These key elements include items such as:
1) Number of order line items per month
2) Number of customers
3) Number of products
4) Number of purchase order line items per month
5) Number of vendors
These types of transactional volumes are important because almost everything in an
ERP system drives from a sales order. In most well-designed systems, if you know how
many order line items are created each month, you can accurately predict numbers of
picking, shipping, invoicing, and manufacturing transactions that will be associated with
them.
An ERP software supplier can have two customers that both have about the same
annual sales volume ($200 million) and same number of users (85). However, one
customer generates about 4,000 order line items per month, whereas the other
generates almost 400,000 order line items per month. Clearly, the environment in
which these two organizations operate needs to be significantly different. Moreover, an
ERP system whose customer base includes organizations like the first organization may
not be designed adequately to handle the volumes of the second organization.
What Information Do You Want From The Supplier?
This is probably the most important part of any RFP, and also routinely the most poorly
done. The main goal in this portion of the RFP is simply to eliminate the opportunity
for variability.
The reason for this approach is really quite simple. Most software suppliers know
almost everything that could reasonably be asked in the course of an RFP. They,
therefore, have a canned “boiler plate” RFP response document that provides answers
to all of these questions (as well as innumerable others that you probably do not care
about), including all the embellishments they deem appropriate. What you, in turn, end

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up getting is a series of responses that not only answer your questions, but also a large
number of questions in which you have little or no interest. To make matters worse,
each RFP response is in a different format. As a result, you will find yourself spending
hours of your time sorting through each document in an attempt to put the information
into a single common format for analysis.
In order to avoid this problem, it is recommended that you provide a specific input
format to be used by all suppliers. A sample of such a format is provided in the
spreadsheet RFPResponse.xls. Using such a form, you control both the content as well
as the context of the supplier responses. All information provided by the suppliers can
readily be compared with a minimum of work and effort on your part. Most importantly,
however, it guarantees that all of the suppliers provide the same type of information.
This, in turn, will allow you to be far more quantitative in the manner in which you
compare the suppliers.
We also recommend that you extend this to include a hardware profile as well. It is
common practice for an RFP to contain a section in which the supplier is asked to
provide a recommended hardware platform. It is our view that, while you should
definitely ask the suppliers to provide such a recommendation, you should also ask
them to provide a quote for a hardware configuration that you supply. The reason for
this is simply to, once again, provide for uniformity in responses and a means for
directly comparing the various proposals.
In order to define the specifics of your functional requirements, the RFP should also
include a detailed listing of these functional requirements. A sample of a requirements
document is included as part of the Software Selection Toolkit. This can be used as a
starting point for your organization’s specific functional requirements. It, too, provides a
standardized format for providing vendor responses and comparing these responses.
Quantitative Evaluation Criteria
As we have repeatedly suggested throughout this document, to the maximum extent
possible, you want your RFP to reflect the fact that your evaluation of vendors will be
quantitative in nature rather than qualitative. You should spend some significant
amount of time defining the evaluation criteria. Specifically, the relative weight to be
given to various functional areas as well as to final price should be clearly identified.
Finally, using a standardized format for proposal responses means that the supplier
who provides an incredibly high power, glitzy boiler plate RFP response has no real leg
up on the competition simply because the response looks like it was prepared by a
professional graphics designer (because it really was prepared by a professional
graphics designer) and is really “cool.”
You should make it clear that additional supporting material to accompany the provided
form is more than welcome. The suppliers, however, need to understand that the

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primary source of information to be used in the decision process is the information
contained on the provided form.
Definition of the Process
When you are sending out your RFP, it is extremely valuable if you define what your
expectations are for the process moving forward.
This should include an expected timeline that might include things like:
1) When the RFP responses are due
2) When the vendor list will be narrowed down to X for remote demonstrations
3) When the vendor list will be narrowed down to Y for on-site demonstrations
4) When and how the on-site demonstrations will occur
5) When a final “preferred” supplier will be identified
6) When and how due diligence and contract negotiations will occur
7) What the expected implementation start-up date is
8) When the estimated go-live date for the implementation will be
This information helps the supplier to define the anticipated schedule and also lets the
supplier know how many other suppliers will be participating at each stage of the
process. Believe it or not, the fact that you have a defined schedule also helps give the
suppliers a comfort level with the fact that you are really serious about obtaining new
software and not simply someone who is “kicking tires.”

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Conclusion
Hopefully this document has served to provide you with some high-level information on
putting together an RFP. There is no right or wrong way to do an RFP. An RFP that
follows the basic guidelines outlined above, however, will make it easier for both you
and the supplier organizations.
For additional assistance in the software selection process, review TGI’s complete set
of white papers and templates provided within the Software Selection Tool Kit. Visit
www.tgiltd.com for more information.

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About TGI
TGI is an industry-leading enterprise software solution provider to small and mid-market
manufacturers and distributors. TGI’s exclusive focus is on the development,
implementation, and support of Enterprise 21, the company’s fully-integrated business
management software solution. TGI is a privately-held organization with one of the
highest revenue per employee ratios in the ERP software industry.
Find out more by visiting our website at www.tgiltd.com or by calling us at (800) 837-
0028 or (419) 841-0295.