Improve and Optimize Enterprise Technology Purchasing: Say Goodbye to the Traditional RFP Process
When it comes to enterprise technology investments, the request for proposal, or RFP, is a decades-old tool used every day worldwide. Indeed, thousands of businesses and organizations of all sizes go through the RFP process to collect and organize enterprise data, make strategic IT purchasing decisions, and find the best vendor.
Despite its pervasiveness, the RFP process continues to be frustrating for many departments due to its complexity and lengthiness. Not to mention the pressure and fiscal responsibility of selecting the best vendor for a mission-critical, high-value project on which your organization depends.
Fortunately, with preparation and direction, you’ll be able to navigate the RFP process while adhering to best practices, securing competitive prices, and mitigating risk. There’s a lot to cover, from asking the right questions to scoring RFP responses to looking at how agile technology tools can help you navigate the complexity of RFPs. Let’s go!
Rethinking the Traditional RFP Process
Unpacking the RFP Basics
What is an RFP?
An RFP is a formal, questionnaire-style document issued to prospective vendors by an organization that intends to purchase a product or service. The RFP collects vendor data in a standardized and organized format. Although the RFP process intends to enable faster and easier vendor comparisons, it only sometimes delivers on this promise. With so many software solution vendors on the market (over 300 in some cases), manually looking at how all vendors meet your needs is overwhelming.
The process is designed to be an objective and systematic approach to sourcing and purchasing. But because of the lengthy nature of the RFP process, it can be convoluted and riddled with bias. The traditional enterprise software selection process can range between 6 and 18 months and span multiple IT project phases.
Who is involved in the RFP Process for Teams Sourcing Enterprise Technology?
The IT department is heavily involved in the RFP (Request for Proposal) process for teams sourcing enterprise technology. They work closely with teams to identify needs and requirements, research potential solutions, develop the RFP, evaluate vendor proposals, manage implementation, and provide ongoing support. The IT department is critical in ensuring that the sourced technology meets the teams’ needs and requirements and that the selected solution is successfully implemented and supported.
Relevant Business Stakeholders
RFPs are frequently initiated by an individual, department, or team requesting a solution. Often, input from relevant stakeholders directs the project. Having engaged stakeholders improves project outcomes. Often these business stakeholders contribute to the RFP.
Procurement teams are critical to success because they are the architects and managers of the RFP process. They then make it easier to create, distribute, and evaluate RFPs. They collaborate with vendors throughout the process to track progress, answer questions, and provide feedback. Procurement managers and strategic sourcing managers often make up the procurement team.
A procurement consultant may be hired by an organization that lacks the expertise or bandwidth to navigate the RFP process. Before making a recommendation, they interview the organization to understand its needs and then use their expertise to select qualified vendors, manage communication, and assess results.
An executive, chief procurement officer, or chief financial officer is usually tasked with providing final approval for a high-cost, strategic procurement project. They will consider the cost, the expected return on investment, and the alignment with organizational goals.
CFOs, and finance teams support the company’s strategy development by helping key business leaders quantitatively analyze financial implications. As such, the CFO and finance team act as stewards of future value in the RFP strategy process by critically examining the risks to, and expected returns on, different vendor alternatives.
RFPs should not be siloed to procurement teams, they need a more holistic approach. Various department heads should also make up the overall involvement process. Some companies have executives who manage RFPs by working with department heads. Many times, department managers issue RFPs related to projects in their departments. Some companies appoint committees made up of members of the finance, sales, legal, product and marketing teams to handle RFP-related tasks.
Organizations invite vendors to respond to an RFPs. Traditionally, Vendors create a proposal that addresses the RFP questions, emphasizes their differentiators, and, ideally, persuades the buyer that they are the best fit for the project.
Why Must Organizations Issue RFPs?
Simply put, organizations issue RFPs to select the right vendor to meet their specific criteria. This includes factors such as:
- Accounting for complex considerations: When an organization needs to make a high-value purchase, they must take multiple considerations into account, such as a vendor’s experience, technical knowledge, security practices, and product quality. The RFP intends to synthesize this information from multiple vendors in one document. However, it often falls short, resulting in information overload that can be difficult to navigate.
- Competitive pricing: RFP purchases are frequently hefty investments. As a result, it’s critical to work with the right company while keeping costs as low as possible. RFPs are competitive by definition, which encourages each potential vendor to present their best offer. However, please remember that a vendor’s best offer may not be the best for your specific criteria. This is where streamlining your RFP with the right digital tools will come in handy. (more on that later)
- Aim for a fair and unbiased process: RFP advocates claim that data collected in the RFP process ensures objectivity. Although it does allow you to gather consistent data from prospective suppliers, the process does not come without its fair share of favoritism, bias, and unfair comparisons. For example, many organizations will look for top-rated vendors on G2 or Gartner, and automatically assume that the highest rank vendors are the right ones for their organization. However, just because vendors have received five star ratings, doesn’t mean that they’re the right fit for your organization.
When To Issue an RFP
RFPs aren’t appropriate for every IT purchase because of the time it takes to create and manage them. Remember, the purpose of the RFP is to save money and protect your company. So, if you are making a small, one-time purchase, the risk is likely to be low, and the time investment in preparing an RFP may outweigh the potential benefit.
Organizations commonly include a cost threshold in their procurement policy to help provide guidance. An RFP must be issued if the project budget meets or exceeds the specified amount. The threshold varies depending on the size of the organization, but it is typically between $5,000 and $250,000. Traditionally Enterprises wouldn’t bother with RFPs for smaller purchases, due to the time and effort investment, however with recent understanding of Shadow IT threats, it’s wise to consider a solution to maintain effective RFP processes internally.
Breaking Down the Traditional RFP Process
The RFP process can be broken down into three core steps of creation, administration, and evaluation:
- Creation: The first step in the process is to create an RFP. Planning, stakeholder interviews, research, and writing are all part of the process.
- Administration: The second step of the RFP process includes selecting vendors, issuing your RFP, answering questions, waiting for proposals and following up as the deadline approaches.
- Evaluation: The last step of the RFP process is to review the vendor proposals, compare them and select a winner. It’s crucial to engage stakeholders in this process to provide their perspective and expertise.
Traditional RFPs can have endless requirements, but they use a manual process to consolidate this information into the purchase decision. RFPs that use Word or PDF documents lack the ability to consolidate the information. Although spreadsheets are more efficient than documents, they are also more limited and manual. While spreadsheet RFPs can use macros to aggregate product response scores, this requires coding expertise. Spreadsheets are useful for evaluating a small number of requirements, but they do not scale to enterprise software selection projects.
For both documents and spreadsheets, there is no way to compare multiple products. Each RFP response stands alone. Information collected on different RFPs must be manually consolidated, which is tedious, error prone work. The people doing this decide what is or is not included, and their biases can affect the selection decision. At the end of the traditional RFP process the software selection team may reach consensus or vote. The hope is that individual biases cancel each other out. Hope is not a rational approach to selecting software.
There is no easy way to compare multiple vendors in documents or spreadsheets. Information gathered from various RFPs must be manually consolidated, which is time-consuming and error-prone work. Furthermore, the people responsible for making a decision have biases that can influence the selection decision. The hope is that individual biases cancel each other out; but as we know, hope is not a rational approach to selecting software.
Improve and Optimize the RFP Process with Olive
Innovation exists for a reason. Using new technology to add value to an existing idea or product and push boundaries further. The RFP process in particular, is in desperate need of innovation.
We’ve helped countless organizations go from wasting months on the evaluation process to getting quick, streamlined results with Olive. For example, Chris Abram, Director of Innovation at Dewey’s Pizza, shared how Olive helped the company transition from multiple spreadsheets and documents into one centralized platform.
Instead of wasting time and money with outdated RFP platforms – choose Olive and experience the benefits of modern, efficient online RFP software.
Olive Provides an Agile Collaborative Online RFP Process and Experience
Beyond creating RFPs, Olive users can manage the entire vendor selection process in Olive. From gathering requirements to collaboration with departments, keep all your data and insights in one online app. No more spreadsheets, email threads or redundant meetings.
Vendor Collaboration & Engagement
Build better partnerships from the beginning. Collaborate with vendors within the project itself at the requirements level. Manage and maintain vendor conversations within the app. Responses are automatically saved for traceability and due diligence.In-app chat allows stakeholders to review, score, and discuss vendor responses internally without the need for meetings and spreadsheets.
Traditional RFP vs. Olive
The RFP process is a commonly used method for organizations to solicit bids from tech vendors.
However, the process can be time-consuming, complex, and often results in unsatisfactory outcomes.
Olive is challenging the status quo, helping enterprises embrace technology to automate the RFP process to reduce costs, and increase efficiency.
We help organizations focus on outcomes, build relationships with vendors, involve stakeholders and increase user adoption on solutions chosen.