By Michael Brandofino | Video Advisors
Request For Proposals (RFPs) are the favorite way for companies to select products and vendors to deliver solutions the company is looking for. The intent of an RFP is to use a formal process to put everyone on the same playing field and objectively choose the winner by evaluating their response. Reality is, RFP’s often become a race to the lowest price with procurement departments caring more about the lowest price than the best solution. The following is a list of the top ten mistakes companies make as it relates to the RFP process.
- Poor Requirements and Expectations Definition – too often companies throw together a few pages of their wish list and do not take the time to adequately prepare a current vrs desired state analysis, coupled with a feasibility to see if what they want even exists. Preparing a Solution Requirements Document clearly defining the critical must haves and the “nice to haves” will help vendors respond more effectively to the RFP.
- Cut and Paste – We recently saw an RFP (written in 2014) that had verbiage related to year 2000 compliance. Many companies try to cut corners by cutting and pasting from older RFP’s to create new ones. This results in requirements and sections that have absolutely nothing to do with the services or solutions being requested. One survey found that it costs a vendor approximately $8000 in man hours to respond to an average RFP. Wasting time responding to inaccurate and poorly written RFP’s is unfair and costly.
- Reverse Auctions – In a recent RFP process for a 5 year Managed Services contract the incumbent lost because they refused to go below a certain number. Since they were the incumbent they had the actual volume detail which wasn’t included in the RFP. The winner and the customer quickly found out that the lowest price didn’t cover the volume of work. Reverse auctions are merely a race to the bottom, Which leads to number 4.
- Lowest Price Doesn’t Mean the Best Solution – While price is a good metric in apples to apples comparison of physical equipment it is a poor metric for evaluating services and software solutions. There are so many factors that determine success and price is not one of them.
- Procurement Runs the Show – Many times Procurement departments are the drivers of the RFP process. That generally means they only care about the lowest price. I ask all those who approach RFP’s this way to keep this in mind “why is there never enough money to do it right but always enough to do it over”
- Not Enough Detail About Current State – Many companies either don’t have or are unwilling to put the effort into getting an accurate picture of the current state. This puts vendors at a disadvantage as they need to make assumptions about things like volume, usage and current performance metrics. This will undoubtedly result in either an over bid, because they are protecting themselves or an underbid, because they underestimated.
- My Way or the Highway – This is the situation where the customer did not leverage experienced subject matter experts to develop their requirements document. Often an internal person developed the requirements based on their own research and the RFP stipulates they must respond to the solution as defined. While this is intended to level the playing field and create an apples to apples comparison, it restricts vendors from providing creative solutions that the customer may not even know exist. Allowing creative out of the box responses can often help the customer find a better solution then they originally intended.
- The Manufacturer Said It, So, It Must Be True – Contrary to what the marketing departments of most manufacturers would have you believe, manufacturers don’t always provide the whole story about their product’s pros and cons. Customer’s who rely on manufacturers to help them write their RFP and design their solution, may be limiting themselves and tying themselves into a technology platform that will not meet their needs. It is much better to have an independent expert who doesn’t benefit from the sale of the manufacturer’s products, evaluate what they are claiming before believing it is true.
- Keeping a Distance Makes For an Objective Decision – There seems to be this prevalent thought that if the company maintains some distance from the vendors during the process that they will be able to keep a more objective approach. This approach usually means individual vendors can’t ask questions after a certain period and any questions asked will be sent to all vendors. This thinking doesn’t give credit to the vendors who have spent the time or have the experience to ask the appropriate questions to gather the information required to provide a thoughtful comprehensive response. Which leads to number 10…
- People Don’t Matter – Customer’s who don’t think the people are often the most important part of the equation when selecting a vendor are missing a huge piece of the puzzle. Knowing the teams and depth of talent of the supporting resources can be as important as the technology itself. People do business with People, not companies.
