How does your company make “big ticket” decisions such as choosing a vendor to overhaul or replace your legacy systems? How do you shop for the software you need to provide a critical new service?
Most public and many private entities use a Request for Proposal (RFP) process to guide the decision. An RFP can help companies objectively evaluate multiple responders who can perform a service. The structure of an RFP should lend itself to making “apples to apples” comparisons. It should help you make an informed choice that balances service, cost and risk. Many argue that RFPs are necessary to perform due diligence and make wise and objective decisions.
I’ve worked on both sides of the RFP equation, so the subject is near and dear to me. I have drafted RFPs and have often acted as the primary presenter. I have also been the decision-maker as the client.
After many years of on both sides of RFPs, I still have questions about the value the RFP process actually provides to a client. What are the pitfalls of using these processes to evaluate responses and make critical business decisions? Let’s explore.
Quality RFPs and Responses
A well written RFP for workers’ comp products and services, for example, can give a seller valuable insight into the potential customer’s process problems, bottlenecks and organizational structure. An RFP that clearly defines the business problem and uses the evaluation process to solve it can show that your company has a clear vision and goals, allowing a servicing vendor to “see behind the curtain.” In turn, a well written response from a service provider that restates a customer’s problem accurately and then clearly outlines how their software, service, or knowledge would satisfy the customer’s expectations (or better yet, exceed them) goes a long way toward instilling confidence in that service provider’s capabilities.
Does it Work?
Does the RFP process result in the right business relationship? Why do we often see service providers spending extraordinary amounts of time jumping through hoops to satisfy obscure goals? And why are customers often dissatisfied when their RFP process doesn’t result in the success and partnerships they were looking for?
Several factors can impact a service provider’s ability to respond effectively to an RFP. They include:
- Is the scope of work specifically defined?
- How much time is provided for producing a quality response?
- Does the responder have any insight as to how the RFP will be measured or scored?
- How well does the responder know the competition in order to separate from the pack?
Factors that impact the customer’s ability to generate a quality RFP are similar. The RFP should outline the organization’s philosophy and the project’s goals and seek out “partnerships” instead of “vendors” to assist you with finding the right solutions to satisfy your need. I would even encourage customers to not assume the defined problem is necessarily the right problem to solve. Allow your responders the flexibility to respond to the problem you defined while also illustrating that they could help you reframe and refocus to ensure you meet the right needs.
All too often, RFPs appear as a series of fill-in-the blank questions (skipping one gets you disqualified) that ask about your company history and profitability. It may not explain the objective of the RFP until deep into the document. RFPs can be so time consuming that smaller vendors or companies that may be the perfect fit cannot commit the resources to respond when weighed against the low probability of winning the business.
For these reasons, many vendors could list the reasons why RFPs do not support a win-win strategy. Also, there is often a sense that a client knew which vendor would be selected long before any words were typed into the RFP (likely a template) that was published.
Is There an Alternative?
Does publishing an exhaustive RFP that requires hours of work to respond prove that a vendor is willing to work hard? Does meeting a tight deadline for responding illustrate that a servicing provider will be responsive and timely in all future dealings? Does having extensive requirements regarding how the responses are completed, checked and cross-checked assure you that the vendor will always attend to details? Maybe. But probably not.
Does selecting a vendor through an RFP process guarantee you that your future partnership will be solid and your project successful? Certainly not.
Instead of an impersonal RFP, word of mouth and collaboration may be your best measuring sticks as to whether a vendor can get you where you want to go and align with your company’s goals. A series of conversations often reveals much more about whether a vendor can meet your needs than do pages of standard questions. To that end, my advice would be to pair a solid RFP process with lots of phone calls and in person visits.
Would you rather work with a company that checks the boxes correctly or a partner that comes highly recommended to you by one of your peers and stands out in real life?
I know which one I would choose.