An RFP, or Request for Proposal, is a common tactic when a complex software purchase needs to take place. Prevalent in Government, but also highly utilized in corporate America, the RFP is something that sparks debate on how effective the process really is and how results can be jaded based on strict guidelines and overreaching red tape.
What does an RFP include?
Generally speaking, RFPs are complex documents developed by public sector and enterprise-level organizations when they are procuring bids from software vendors. These documents usually contain the following:
- Background information on the issuing company
- Information on the issuing company’s lines of business
- An in-depth description of the sought-after software solution
- Criteria for how proposals will be graded
- A statement of work, outlining tasks for the winning bidder
I’m certainly biased on this subject, but I wanted to put some objective thoughts together that will hopefully help you decide on whether or not an RFP is right for you and your organization.
Why RFPs are a good thing
Objectively speaking, RFPs truly can be a good thing for your business. They allow you to maintain a lot of control, be incredibly specific with your ask, and should allow you to put all vendors on the same playing field. Let’s talk through a few things you and your team should consider from the outset.
Set crystal clear expectations
One of the major benefits of doing an RFP is that you can articulate exactly what you are looking for. Features and functionality are broken down by area and each vendor is required to reply based on your guidelines.
This prevents vendors, and specifically sales people, from going “yes man” on you and just telling you what you want to hear. The benefit is that you aren’t stuck with a system that doesn’t do and expectations are “closed”, meaning not open for interpretation or spin.
Write everything down
This is a core value here at Fleetio. We believe in taking good notes and writing things down, not only for posterity but also for clarity. Taking the time to write out exactly what you are looking for and involving various members of your team will help you gain clarity into what is truly needed, or not, and better understand where your organization intends to go with a new solution.
By publicly stating that you are going to shop around for a new solution you gain leverage—both with your incumbent provider and with any vendors that elect to bid for your business. The incumbent will know that there will be other suitors knocking on the door and so should get their house in order, while bidding vendors will know that this is a well-facilitated competition and should put their best foot forward.
Why RFPs can potentially be a bad thing
RFPs can also be considered a bad thing, or “real freaking painful”. They can restrict the responses you get, meaning you’ll be relegated to a select number of vendors, which limits the potential upside in terms of scope in a new solution. Let’s take a look at some of the downsides of an RFP.
Time, time, time
RFPs take a tremendous amount of time to put together. Also, it shifts the brunt of the work from the vendors chasing you to your team. You need to gather feedback from each department impacted by the new solution, understand current practice and any major areas that could be improved, and finally understand the “wish list” of each of your stakeholders.
Then, you have to compile all of this feedback and ideas into a comprehensible format along with strict guidelines and directions for the vendors expected to bid. Remember, RFPs are black and white by nature, no gray area, which means you need to be extremely diligent in your approach and the way the RFP content is structured.
Is this really apples to apples?
RFPs, by nature, are intended to be a side by side comparison of different offerings from different vendors. However, what you get most times is an overwhelming stack of proposals that couldn’t be any different.
Pricing will span the gamut from bottom feeding low ball players with minimal experience to value players who have been in the game for decades. You end up comparing one price to another without a real understanding of either offering or the true value they can provide to your organization.
What you want is to fully understand who is going to solve your problems and help you achieve your goals, but you end up doing is looking at a bunch of imaginary numbers and trying to determine which is the most “reasonable”.
Lack of detail and understanding
By shutting out vendors and forcing them to communicate through a framed document, you ultimately prevent them from fully understanding your business and all the intangible things that can’t be put into words. Good vendors will ask deep, detailed questions to really understand how to best serve your needs, and preventing them from doing so eliminates the core value in an efficient evaluation process. You need a partner, not commodity fulfillment.
An RFP is not a fail safe
Just because you spend 2 months putting together a 50 page document that showcases all the effort you put into an evaluation and the diligence you went through to ensure you’re picking the perfect vendor, it doesn’t mean that things won’t go wrong. RFPs can result in a bad relationship with a vendor and can still lead to mis-set expectations. Pointing back to an RFP will not justify a bad decision or help you get out of a long term contract.
At the end of the day, RFPs are not agile and incredibly time consuming, both for you and for the vendors you hope to attract. Fact of the matter is that some vendors simply won’t respond to RFPs, which then limits your options even further and could mean you leave the perfect vendor on the sidelines.
In our next post, we’ll explore the right way to seek out a vendor and even provide some specific examples of how you can ensure an evaluation works in your favor.