Why the RFP Process Is Still Relevant in the Digital Age
Many people hate Request for Proposals (RFPs) and the RFP process – I mean really hate. And it’s tough to blame them. Oftentimes, RFPs are hundreds of pages long, requesting comprehensive information about a product or service. Further, they require responses to be contractually binding, pricing to be firm and due dates strictly adhered to.
This painstaking process has led some companies to ditch the RFP response process altogether. They believe they can get by on word-of-mouth, in-person pitches or other less intensive sales processes. There are a few reasons why that’s not only a mistake, but it’s also setting up those companies for a rude awakening as RFPs become more and more prevalent in the digital age.
Consider how B2B solutions have changed in the last few decades. Previously, work depended on traditional paper pushing processes and technology played only a minimal, supplemental, role. Think back to the pre-PC age (if you can remember it). Then, documents ruled the workplace and the technology stack of a company’s operations attracted little attention.
Nowadays, everyone has a computer, tablet and/or smartphone that pushes data to myriad data storage facilities. Further, different devices have varying levels of functionality, data security, update cycles and access control policies. Hence, when a company seeks an IT solution, they don’t only consider the variability in the solution itself. They must also think about factors such as budget, market position and industry. To that end, even out-of-the-box solutions need to be highly configurable to penetrate markets. For example, Salesforce is widely accepted as the gold standard for CRM solutions. Yet, no two (2) companies have implemented identical Salesforce solutions. This is because every organization has its own CRM needs, budgets and data security requirements.
Increasingly Complicated IT
Procuring IT solutions has become increasingly complicated. This is because more and more stakeholders have to be on board with the solution prior to implementation. And, considering that once an IT solution is implemented, it’s very difficult to change. Procurement teams are especially concerned with getting the right solution in place before implementation. Many procurement folks are not necessarily IT SMEs (Subject Matter Experts), having studied sales, marketing, administration or another relevant field. Additionally, procurement personnel are usually responsible for purchasing many types of solutions outside of IT. This doesn’t allow them the bandwidth to hone in on one industry in particular.
Many teams are affected by an IT rollout. Thus, procurement teams have many hurdles to overcome before purchasing an IT solution. How is it possible to effectively evaluate different solutions? Especially given all of the aforementioned variables and none of the assistance that RFPs offer? It would take hours, if not days, for a salesperson to speak to all the points covered in an RFP. Even with detailed pitch decks, they would still most likely need their legal team, finance officers and developers. This expertise would be necessary to provide in-depth insight beyond their own comprehension. Now, multiply that process by all of the vendors in consideration. By the time everyone is evaluated, months have passed. And, the first vendor has been arguably forgotten and the procurement executive is most likely exhausted by the options.
An RFP solves these issues and more. That’s because everyone responds to the same requirements, in the same format, with the same deadline. Given that the procurement team will be able to request different requirements from different teams at the onset of the RFP, responders must work cross-departmentally to adhere to the strict requirements in the scope of work. It is commonplace for RFPs to state that deviations from the proposal requirements will automatically disqualify a respondent from being chosen. If you can’t compare apples to apples, the objective of the RFP becomes null and void.
Price is not the only thing that matters:
With digital solutions, price is not the only factor that is evaluated when choosing the best solution. For instance, you may be more concerned with the functionality and flexibility of a platform, over the initial implementation cost. Alternatively, you may be primarily focused on the platform’s business continuity and data security, rather than the cost of such features. With an RFP, you can state what you are most concerned with, and have respondents tailor their responses to what you want and need.
Depending on your industry, your procurement may have vast and stringent legal and regulatory implications. For instance, if you promised to keep your client information confidential, then procuring a data security solution would require you to demonstrate you chose the best possible solution in the marketplace should there be a data breach in the future.
Auditability in the RFP process is important:
Procurement teams concern themselves not only with ensuring that the solution is the best in the market, but also with how they can communicate that to their managers and other stakeholders in the organization. The ability to audit is not something a sales pitch normally provides. And even if the salesperson knew to touch on it, what would you do with that information? For instance, what if there’s a disaster during the implementation phase of the solution you chose? And a senior manager wants to know why this solution was picked over another solution? It would be very difficult to explain this without all of the information in writing in an RFP.
By having an RFP process in place, you would easily be able to explain the selection process. All respondents’ answers, as well as the scorecards and any communication would all be at your disposal. The methodical procurement of the solution creates auditability as well as assistance.
RFPs keep you organized:
As previously mentioned, procurement executives usually have the responsibility of making purchasing decisions for more than one solution at a time. Keeping all notes and information in order would be increasingly difficult without responses in writing that were contractually obligating the respondent to their answers. Imagine a company is bidding on two different projects at the same time, both of which you are responsible for evaluating. The overlap can easily create room for unintentional error or oversight.
Also, without expertise in each and every industry a procurement executive is purchasing for, it makes sense that detailed reviews would be necessary. Perhaps the procurement executive is trying to determine the best provider for dialysis equipment and the RFP mentions a medical term the executive hasn’t encountered before. The written nature of the RFP allows for research without missing key information.
Timing is paramount:
The RFP process put the power in the hands of procurement executives as they have the ability to dictate the timing and priority of the project. Ordinarily, RFPs will allow for questions to submit by a stated date. This is so that the procurement executive has the due time to find the right person to answer the questions so the subsequent respondent properly answers the objectives as outlined.
Additionally, the RFP process rarely, if ever, allow for late submissions. Given this strictness, you have an informed indication of how long it will take you from solution inception to completion. Because the RFP is contractually binding, respondents will have little leeway for lateness. On the other hand, should the priorities of the procuring party change, RFPs typically provide wording indicating that the procuring agency has the authority to shift the timeline in their favor.
In today’s world, most people would agree that governments and large corporations are having to answer to the public more so than ever before. This, coupled with the increased complexity of the digital age, necessitates keeping procurement efficient, fair, and transparent.
The Bid Lab was founded after we identified a need in the market for a player to assist small and medium-sized businesses in curating bid responses. We complete RFPs, RFIs, RFQs, etc. across all industries and specialize in helping companies expand the market for their competitive products through both public and private contracts. We also help procurement folks like you draft, develop, and manage your bids.
Don’t just ignore the RFP process or view it as a burden, but instead, turn it into a competitive advantage for your firm to procure the best solution in the marketplace.