Get proper mileage from your RFP

Gregg Barrett ARECENT blog by Mark Turrell, chief executive of Imaginatik, questions the value of the request for proposal (RFP) procedures used by most large corporations. It is based on a companys experiences over a three-month period in which they analysed the outcome of the RFPs to which they responded, but reflects similar comments received by the IACCM from members. Turrells 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 extent There is no debating that RFPs can be unbelievably time-consuming when you have to do them properly. Turrell says that, based on his findings, an average RFP could take 20 to 60 man hours to complete depending on how much detail is required, the individual response needed and if the team needed to travel to the client to present. In my experience for larger companies, where RFPs involve multiple functions and reviewers, this time estimate is a major understatement. Consider for a moment that many RFPs go nowhere. Based on experience, there are many that have very little buying commitment. Turrell believes it is unfair for large companies to put so many companies through the rigmarole 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 you are in the lucky 10%). Even if the buying intent is serious, vendors (and buyers) know that many RFPs are a checkbox game. Tick all the boxes, even if there are some suspicions that you cannot do what is requested and you go to the next round (or alternatively, fail to get to the next round 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 means eventual implementation will end up with problems around tricky areas).

This leaves one to ask if the RFP process delivers the value that companies are looking for? Viewpoints on this are justifiably mixed. There are organisations that, for example, have an RFP process geared towards value generation and those that have a process geared more towards administration with a myopic view on compliance. Turrell believes what is really needed is for companies to take the time to work out what makes their needs unique. What is it about their firm, their process, their culture, their management expectations that requires a unique response? To illustrate large, complex organisations need systems and vendors that can handle them. So, if this is your biggest need, focus the RFP on that. Look for a vendor who will be around in five years, that does not rely on two people in a basement or has thousands of people, but looks to impose its methodologies and culture on you. Look for someone who has explicitly and obviously done it before and shows the versatility to repeat the success in different situations and organisational structures. And call up the references. The amount of (Turrell calls them lazy) firms that run RFPs and do not take 30 minutes to call the reference companies is a disappointment. Small companies sometimes cheat on their references. That does not excuse your procurement team and business buyers from not making a couple of hours of calls. Call the references no excuses. Turrells 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 job quicker. However, before we leave it there, there are more thoughts on the topic including a large IT solutions company in Europe that cited its biggest challenge as being able to qualify the RFP beforehand. Their take on RFPs: - To a very large extent, RFPs seem to be a benchmark that have to be done to fulfil internal processes. The decision is often already made. - Many RFPs turn out to be a compilation of boiler plates eg. the client is asking for managed services based on clauses intended for building/construction contracts or for very unreasonable insurance requirements. Often we get the answer, We know, the RFP does not fit but our legal department didnt provide anything else. Or the RFP is done by external consultants who are more active in other industries.

- The remainder of the RFPs is asking for the right services based on correct stipulations and 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 for the best price. The RFP is a good tool in a competitive market but need[s] a high level of attention by the customer to get the optimum out. For the bidder, it is the challenge to qualify very thoroughly if the opportunity is worth pursuing. Another organisation that weighed in on the discussion believes that RFPs are not a waste of time. Weve had those that do not work out so well, but our process becomes better- defined because of it. We have a process that includes cross-functional team members, reference checks, product demonstration (pilot if possible), scored vendor presentations, lessons learnt and it works for the majority of our projects. This organisation recommends that people sit down with vendors and have a conversation that 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 not changing - A set of true requirements that represent a consensus of what they need and why (not a bunch 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 their criteria from making a solution. Their belief is that this process will be less time-consuming, less costly and yield superior results to an RFP. There are pros and cons to each of the approaches above, but all arguments for and against RFPs have merit, so they are worth considering. The key is perhaps a balance.