As a company, we have been responding to briefs in all forms, including RFPs (Request for Proposal) for over 15 years, so we’ve seen the good, the bad and the ugly side of the vendor selection process.
Knowing what you need help with, and choosing the right vendor, is one of the most pivotal decisions our clients will make in determining their product's success.
Bad RFPs are one of the most costly and damaging things in our industry, to both vendors and clients.
In recent years we’ve increasingly been involved in helping our clients select the right partners to collaborate with, and we’ve looked at the factors that are key in the selection process.
In this series of articles, we share our learnings about effective RFPs with the aim to help readers establish better partnerships.
In our previous blog, we looked at the differences between an RFI, RFP, RFT and RFQ. In this post, we’ll share some of the things that we've seen in RFPs (good and bad) over the years, how to make them better and why everyone should take note of this.
Finding the right fit
RFPs are often viewed as cumbersome and overly complicated, both by those writing and responding - this doesn’t need to be the case. To ensure a meaningful and valuable process and outcome for all involved, it's important to be crystal clear what the motivations are for making use of this procurement process and ensure the right stakeholders are involved and invested throughout. Too often we have seen senior stakeholders involved too late in the process, causing misalignment with project objectives and business goals resulting in delays that impact costs and time.
The RFP process needs to provide transparency to those within the organisation alongside those external to the organisation on what is needed. It should enable accurate vendor evaluation and vendor selection based on overall value rather than price. Whilst price is important, the outcome of the RFP process should be a selection of the right partner based on the overarching business goals and strategic aims of the engagement in hand to ensure the right fit. The answer to this may be binary, but the complexity lies in the interrogation of the details to get this answer.
Let’s take a hypothetical example… Consider the below compliance matrix for sourcing a vehicle:
- Must feature an internal combustion engine
- Must have precisely four wheels, each with inflatable tyres
- The propulsion system must adhere to a rear-wheel-drive configuration
- The steering wheel is a mandatory component
- Must be painted in a vibrant shade of red, ensuring conspicuous visibility
- A requisite level of torque, indicative of robust performance, is expected
What is this RFP process aiming to procure? A roadworthy hatchback could fulfil all these requirements, but so could a farm tractor… These two solutions provide a suitable response but for very different purposes. Requirements alone can lose meaning without alignment to an overall process, wider context and ensuring wider factors are considered.
Real-world procurement can lose sight of the big picture. Some emphasise unnecessary technical details, overlook vendor fit, or solely focus on the cheapest price, leading to inappropriate vendors and costly feature gaps. For the RFP process to be successful, the wider landscape needs to be considered to ensure a good fit with the selected partner or why a vendor is not the ideal fit.
Unpacking motivation
The motivation behind issuing an RFP is usually the same as any purchase. There are three key reasons why organisations need to procure products and/or services:
- Increase revenue
- Reduce costs
- Minimise risk
We’ve often seen RFPs don’t make clear what their motivations are. It’s not uncommon to receive a plethora of requirements without knowing what they are trying to achieve. Within the RFP it should clearly outline the motivation, or motivations and priority of each, to ensure meaningful responses are received.
Increase revenue
Increasing revenue is one of the biggest, and most common, motivators for using the RFP process. Many strategies could be considered to do this, such as:
- New user acquisition - could include marketing, referrals, promotions
- Diversification of service offerings - adding new services or features, content, packages, recommendations
- Pricing optimisation - pricing plans, bundles, promotions
- Churn reduction and enhancing retention - loyalty programs, revised flow and design, promotional pricing
- Marketing - campaigns and targeting
- New territories and markets - transferring a successful service to other markets and territories
- Improving service quality - reliability of service, better experience, streamlining processes
Ensure potential partners can clearly provide details of how they would tackle your priorities.
Reduce costs
Reducing costs without impacting revenue generation is a tricky balancing act that often involves looking at the following:
- Infrastructure optimisation - duplication of functionality, optimisation of CDN etc.
- Automation - replacing and improving inefficient processes, make use of artificial intelligence and machine learning
- Outsourcing - moving roles or functions to external organisations to provide better efficiency
- Efficiency -There are many ways of approaching efficiency. One of them could include performing due diligence of existing suppliers, to make sure that they are delivering good value.
- Analytics - There are many types of analytics tools. Analytics provides a great way to understand many aspects of an existing business, including insights into how costs could be reduced.
Consider asking for a proposal that includes a review of your existing systems so that a plan of action can be developed.
Minimise risk
The mitigation of risk is often overlooked but is paramount to ensuring long-term success, and could include the following:
- Compliance and regulatory adherence - non-compliance with regulations can result in severe penalties and damage to reputation
- Information security and privacy - ensuring that an online service, no matter how successful, doesn’t get attacked
- Disaster recovery - planning for outages, cyberattacks
- Monitoring - tooling to continuously monitor usage, system vulnerabilities, feature and service effectiveness
- Supplier due diligence - ensure no surprises around supplier practices and adhere to required standards
Remember, you will need a way to measure and grade responses to questions on this subject.
Bigger is better?
It's a common misconception that the longer and more complex a document is the more effective it should be. The RFP should be laser-focused on obtaining the right solution, from the right supplier at an appropriate price. All information needs to be clearly understandable by the vendors so they can respond accurately.
It needs to provide potential vendors with a clear understanding of the organisation’s motivations and project requirements so they can provide their best response to address the need. Too much information can often sway the responses off brief. Stakeholders should be able to use the RFP to easily compare the vendors against a level playing field and a shared understanding of the aims of the engagement.
While there's a place for extensive RFPs with multiple lots, joined-up thinking is crucial. Each element, no matter how isolated, should align with the project objectives and organisational goals.
Stakeholder engagement and a shared understanding of what success means is also critical. Ensuring joined-up thinking and collaboration from the stakeholders will enable cohesive contributions from vendors and a clear path to successful vendor selection, and therefore engagement success.
This is much more important than the length of the RFP.
The Right Chemistry
In the midst of crafting and responding to RFPs, let's not forget the significance of client-vendor chemistry. It's the undercurrent that can determine the success of a partnership. It's not just about requests and proposals; it's about understanding and aligning with clients' needs and expectations throughout the journey. The right team dynamics can be make or break for a happy, successful engagement, and productive partnership.
Conclusion
Our experience with RFPs has uncovered valuable insights and lessons. A considered and cohesive RFP can be a powerful tool to attract suitable partners, drive innovation and ultimately select the right partner. A disjointed RFP missing the ultimate motivation for the engagement can be a time-consuming, costly and damaging experience for all parties involved.
RFPs are pivotal in business development, procurement, and project execution, acting as a bridge between organisations. Understanding the nuances can transform hurdles into growth, collaboration, and successful opportunities.
This article aims to help you avoid the common pitfalls and challenges and lead you to an efficient and productive RFP process.
Investing effort in crafting a well-structured RFP process brings substantial benefits; ensuring precision, thoroughness, and control, limiting the time it takes to choose a vendor and improving their qualification.
Vendor selection isn't limited to new projects; it also applies to improving existing services. Whether you're new to RFPs or refining your approach, Ostmodern can help equip you with the knowledge to navigate these processes efficiently and contribute to your success. Get in touch.
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