I’ve been working in the technology space for over 20 years, in my current role at 1904labs we help leaders at Global 2000 companies turn their ideas into solutions. In all this time collaborating with enterprises, I’ve been through a lot of RFPs and have seen them destroy innovation.
The RFP Conundrum
Request for Proposals (RFP) set out with the best intentions every time. No one in the history of the world has ever said, “let's slow down the buying process” or “let's find a way to select a vendor that can’t meet the needs of the business” -- that’s never happened. Yet, on the back end of projects, the humans responsible for delivering results frequently find themselves in the following situations.
We got off to a late start, so we need to do more in less time.
We did not fully understand our objectives, so we needed to complete a change request.
There was much more to this project than anticipated; we needed to push the date.
The primary goals of the RFP are simple:
- Document the primary objectives
- Solicit bids from one or more well-qualified vendors
- Select a vendor that can meet the strategic goals without overpaying
There is nothing wrong with those goals; the process implemented to achieve them is where we get into trouble.
Over the past 20+ years, I’ve responded to countless requests for proposals (RFP), and in that time, I have concluded the process is antiquated.
Where Does the RFP Process Break Down?
Break Down One: Communication
When an RFP is initially issued, vendors typically receive either:
- A high-level overview with full details to follow once we respond with our intent to reply.
Or
- A detailed description of deliverables, skills needed, and a timeline committed to completing the described work.
This documentation often leaves vendors with more questions than answers. Questions that are impossible to answer in written form or during an hour “all vendor” Q&A. Why? Because RFPs are issued when a company faces a complex problem requiring assistance. Complex problems require detailed understanding before one can begin drafting a solution.
Often key questions are avoided, and vendors receive responses like:
- We expect the vendor to include that information in their response
- Providing that level of detail would create an unfair advantage
- Taking steps to provide a detailed response is outside of the scope of this RFP
- Once the RFP awards, we will provide this information
Limiting communication causes confusion which results in unnecessary conflict downstream.
Break down two, costs.
When too much focus is on the price, pitfalls occur.
Low Bid - High Bid - No Bid
- Low bids result in hiring a vendor that can not meet stakeholder expectations without changing expectations.
- High bids build in an unnecessary buffer that ensures the vendor will meet their targeted margins, even if things go off course, or they will exceed margin expectations if things go well.
- No bids eliminates vendors whose ethos demands they understand ahead of making commitments.
What’s the solution to these breakdowns in the RFP process?
Before thinking about how to fix the RFP process, let's spend some time thinking about four critical bi-directional traits that stand out after any successful engagement:
Empathy- Capable - Dependable - Trustworthy
In addition to replying to countless RFPs, I’ve also had the good fortune to participate in numerous successful projects. Upon reflection, these four traits were present across the board in all of them.
So the question becomes, how do we meet the primary goals we set for ourselves?
- Document our primary objectives
- Solicit bids from one or more well-qualified vendors
- Select a vendor that can meet our strategic goals without overpaying
While in tandem, ensure you are setting yourself up for a successful engagement that consists of bi-directional empathy, capability, dependability, and trustworthiness.
Here is a three-step process that will help you do just that:
Phase 1 - problem statement
Before identifying a solution, they must first understand the problem they are trying to solve. Imagine calling the doctor to set an appointment only to find they have already called in a prescription. You wouldn’t trust that diagnosis that hasn’t taken the time to see you yet, to understand you.
Working together to draft a problem statement that everyone understands is a critical first step. It would be challenging to gain mutual understanding with words alone. But, maybe you have heard the adage, a picture is worth a thousand words. In the case of entering into a new partnership, an image can save you a tremendous amount of time and money.
The pictures we use are:
- What is the current situation -- this is the “as is” state.
- What should things look like at the conclusion -- this is the “to be” state.
- How will we get there -- this is the “strategy overview.”
This level of effort will force understanding. Imagine finding out before spending dollar one that:
- One or more stakeholders are not aligned.
- The vendor doesn’t understand or agree with your desired end state.
- You and the vendor experience friction in completing this task.
Once all relevant parties agree on these three images, you are ready to proceed to the next phase with confidence.
Phase two, solution engineering
This conversation will ensure:
- Both parties understand how you will work together
- Determine if the vendors you are evaluating have the required skills and experience needed to do the work you are discussing with them
- Often I’m asked for references, which I am happy to provide. References are good, but every engagement I’ve worked on is unique. As a result, spending some time understanding how we will work together talking about how we’ve solved similar problems is a dramatically more effective use of everyone's time.
- These brief conversations can provide powerful insights when considering case studies and/or references.
- Identify potential pitfalls (there will be some, but not all have to cause friction, going in with your eyes open will allow you to work together to correct before they take you off course.
Phase three, proposal
Once the first two phases are complete, all parties will have the required information to provide a well-informed proposal. Clients should have the ability to evaluate each vendor's approach to this process to determine four things.
- Do they understand what we are trying to accomplish
- Do they have the skills to get the job done
- Do we want to work with them
- Do we feel like the proposed cost is a good use of your funds
This process can happen quickly or over a period of time. The key is going as fast as possible while ensuring you do it right. Both parties will make and keep meaningful commitments to one another during the process which provides an excellent opportunity to determine what it will be like to work together.
If the answer to any of the four above questions is “I’m not sure” or “no,” your answer is simple: walk away.
Retrospective on RFPs
In closing, I want to state again that I am certain no one begins the RFP process with anything other than success in mind. There comes the point, in every process, where pausing to ask yourself if the process is working is required. The three phases outlined in this blog have formed after completing multiple retrospectives. We worked with our clients to learn what works and what doesn’t across the engagement lifecycle. We found common themes and developed a system that works for project stakeholders, procurement groups, and vendors alike.
If we are in the same or a similar field and you would like to discuss this topic further, I welcome the opportunity to do so.
