The Request for Proposal (RFP) process gives project managers challenges that aren't always available in internal systems development. Andy Makar offers a five-step approach for improving the RFP process.
The Request for Proposal (RFP) process is used to elicit service provider proposals for a specific product, service, or solution. In IT, this often translates into the purchasing of IT services, software, or the combination of both. If you have ever been through an RFP purchasing cycle, then you know that managing the RFP process can be a project in itself.
In enterprise IT organizations, an RFP can be worth millions of dollars to a supplier and represent a strategic effort for both business and IT organizations. Leaders of organizations want to know they are getting the best solution for their dollar, and suppliers want to compete fairly for the business. Price isn't always the deciding factor in an RFP, and the following five tips can be applied to improve the overall process and ultimately the decision.
1: Define the evaluation criteria upfront
A lot of effort is placed on defining the goals, scope, and project details in an RPF package. There can be a lot of pressure to issue the RFP, make a decision, and get started with the project in an effort to deliver business value quickly. However, project managers should take the time to define the evaluation criteria, so the selection team and the suppliers understand all the areas that will be evaluated.
It is also important to share the evaluation criteria with the suppliers, so they understand how the response will be evaluated. The project manager doesn't need to share the criteria weighting, but it is helpful to let a supplier know the criteria. If project managers don't include the criteria, a supplier may provide an inaccurate response and overstate one aspect of the proposal while understating another area. When suppliers receive feedback on the RFP decision, they may feel like they've missed an opportunity to highlight the benefits of their solution if they had known the criteria earlier.
2: Include a cross-functional section of RFP reviewers
In a RFP process, the decision makers need to include more than just the business lead and the project manager; it is important to include a cross-functional set of reviewers from purchasing, IT, the functional business organization, finance, and legal. By engaging a cross-functional team, you will get greater input into the price, contract, and financial issues associated with the purchase decision.
As IT managers, we are often challenged to move quickly -- no one wants to spend more than they need to deliver IT services, and each party wants to ensure the contractual and legal obligations are understood. By including a cross-functional team, you'll have appropriate representation to handle issues and concerns that can affect the entire organization.
3: Conduct reference calls and site visits
Reference calls are an eye-opening experience. As you narrow down the prospective suppliers, remember to ask for customer reference calls. It is important to get candid and honest feedback from other organizations that have used the potential supplier's products or services. The prospective supplier should be more than happy to provide client references and any other information needed to make an informed decision. The supplier should not attend the call, so you can have an objective, open, and honest dialogue. By conducting customer reference calls, I've been able to identify additional risks and lessons learned and apply them to my project.
If required, you should ask for a site visit to learn how the supplier has implemented a specific product or a service. During one RFP outsourcing project, I travelled to several sites to understand how a supplier's technology was implemented, as well as how the business used the solution and the services. It is another opportunity to understand how a customer is living with the solution.
4: Send all requests for communication to one person
With potentially millions of dollars in sales on the line, project managers and other members of the selection committee will often get calls for status updates and any information to indicate a decision. Purchasing organizations usually have strict guidelines on communication with suppliers during an RFP selection process. It is best to send all requests for RFP questions to one person (usually a purchasing representative) authorized to provide status updates. In IT, relationships with your software and solution providers are critical, and even though it's "just business," you want to ensure each supplier is treated fairly in the process. Information leaks can also damage the negotiation process.
5: Incorporate promises made in the sales presentation into the contract
Suppliers will usually present their solution to the RFP selection committee. During these presentations, additional discussions and commitments may be made. If additional commitments or promises are offered during the presentation, you need to make sure these commitments are translated into the written contract. Even if a commitment was made in a sales presentation, if it isn't incorporated into the contract, it was never really a commitment.
Working on projects that leverage suppliers and external solutions are exciting projects. The RFP process provides the project manager with a new challenge that isn't always found in internal systems development. If you get the opportunity to participate in an RFP, remember to treat it like its own mini-project because the issues, risks, and timeline all needs to be managed.
If you have additional tips for effective RFPs, please share them in the discussion.