There's a three-letter acronym that conjures up feelings of abhorrence in every supplier of products or services when they hear it. They roll their eyes in disgust and prepare to kiss a good part of the next several weeks (or even months) goodbye.
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It's the dreaded RFP or request for proposal. Used by purchasing agents of public-sector agencies, the RFP is intended to make purchasing transactions transparent, methodical, comparable, sanitized, fair and free from coercion, relationships, kickbacks and the like. Some for-profit companies also issue RFPs.
Intended to protect the buyer, the concept is a good one. But the process is flawed. Usually an RFP is comprised of numerous specific feature requirements that vendors are expected to respond to with yes or no answers and sometimes a short explanation. When the responses are evaluated, the scores are tallied and often divided by price, creating a feature-per-dollar score.
This approach works effectively for simple and easily defined purchases, but when the purchase is not so cut and dried, the process is more complex. Thinking about issuing an RFP for a complex product or service? Here are five tips:
A checklist is all that's needed to arrive at a good deal for a commodity. But when purchasing something multifaceted like software, consider it a strategic investment.
In cases like this, the vendor is as important if not more than the product itself. Unless it is going to have a very short life cycle over time, the product will have to change and evolve along with the company's needs and its industry.
A buyer should be confident that the vendor selected has the know-how and industry expertise to navigate such changes.
Many RFPs are little more than long lists of features. But there are hundreds of ways to do the same thing, some better, some worse, and it's rare for any two product proposals to approach a problem in the same way, with the exact same features.
By using use cases instead of feature lists, the company requesting proposals can set out what it's trying to accomplish and then let the RFP responder explain how its product or service would work. Not only does this approach let a prospective buyer compare outcomes more evenly. It also enables the company to improve its processes.
A company issues an RFP because it feels an external vendor can offer a better or more efficient product or service than what might be created in-house. So consider the vendors' expertise and let them explain how the task at hand should be tackled..
When making a strategic investment, value is not always directly proportional to cost. And it's definitely not proportional to the number of features. To be sure to maximize the value of the company's investment, set priorities.
Some requirements may be far more important than others, and when issuing the RFP have a clear understanding of what matters the most. I’ve often seen vendors win RFPs by jamming their product descriptions with small, cheap and unimportant features, steering clear of high-value, high-priority components that cost more to create and implement.
Sometimes in the interest of impartiality, companies invite people with little or nothing to do with the department to evaluate an RFP. While this makes sense in theory, this can result in a poor outcome because the reviewers might have little knowledge or understanding of how the product should work or the needs that should addressed. To counter this, only have people who will work with a product or service evaluate the RFP proposal.
Include a step in the RFP process when company representatives can look under the hood and examine what would be received. Will the product be engineered by the vendor in-house or outsourced? Do all the components work together seamlessly or are they bolted on in a piecemeal fashion?
To be sure to get full view of how the product works, include demonstrations, webinars and meetings in the RFP process. This is the best way to go beyond the product in theory and instead gain context and understand how the outcomes will be achieved. Be sure to do a thorough inspection before making a buying decision.
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