Why Does the RFP Process Doesn’t Work for Most Companies?Posted by: Mariya Parackal | On: 21st Jan, 2020 | Startup
You are about to start a major project. But you are not an expert in any of the development areas, strategic planning, campaigns, or technology related stuff.
So you decide to find a consultant. For that, you need to create an RFP to have consultants bid on the work.
But in today’s agile business environment, RFP is a complicated process for selecting outsourcing vendors. It is also a waste of time, effort, resources and money from both clients and agencies.
There are reasons for why RFPs are ineffective. We have to consider the RFP alternatives to form a long-lasting client-agency relationship.
Let me tell you why the RFP process doesn’t work and what to instead of it. We can start with the basics.
What is RFP?
A request for a proposal is a business document that describes the needs of a project and asks for proposed solutions from qualified vendors who will help to complete the project.
An RFP for a specific program requires the company to review the bids, feasibility, the fitness of the bidding company, and the ability of the bidder to do what is proposed.
When an organization needs help to finish their specific project, they use RFPs. The document describes details of project, requirements, timeline and it defines the roles of contractors.
Why do companies create RFP?
By explaining your company’s needs in an RFP, it helps the vendor to easily understand the project. An RFP can be used to measure the success of the project. The government agencies, businesses, and non-profits use the RFP process to request bids from vendors and to identify which vendor is qualified to complete the project.
The intention of RFP is admirable. But what went wrong with RFP?
It is not reducing the risk of companies and at the same time increases their chances to find an outsourcing partner.
What are the problems with RFP?
As with any process, the results are dependent upon how the process is used and the expertise of those who use it. Here are several common problems of RFP:
- RFP is a Slow Process
If your organization needs to make any purchase using the RFP process, it will take a minimum of six months.
- No reliable results for the hard work
The first step of RFP is to set a team to research and find project specifications. The team prepares the document and gets it approved. After approval, the team has to find potential vendors. Once your RFP gets responses, there is no guarantee that those responses from the vendors can meet your actual requirements.
- RFP is not flexible
We know that technology is moving so fast. Every time newly built software is launching. Writing an RFP of an outdated program by the time it runs is the most frustrating thing. So you must be updated about the new arrivals in your field.
- Need full of compromise
RFP process may lead to more significant compromises. It requires some kind of compromise between what you want and what you can afford. Sometimes vendors ignore your specifications in order to offer their solutions.
- RFP depends on communication
There are efficient ways to communicate between buyer and seller. But, RFP depends on documents composed by the team through the mail without any kind of communication to simplify the specifications.
- Time Consuming
The companies have to build requirements, methodologies, and strategies. After preparing, you have to send an invitation to bid to potential vendors. Then you have to respond to the questions of the vendor. Thus, the RFP process takes too much time.
Because of developing and evaluating the time taken by your team, it will be expensive for customers and potential bidders.
What are the solutions for RFP?
It is pellucid that the current RFP process has many problems. So the question is, do we have a better solution for this process?
I’m not sure that you will get perfect solutions for each of the outlined problems. But I have a better start. The basis of my solution is open communication, varying solutions, and people over process. Let’s take a look at the steps:
- You have the desire to act on the problem your organization needs to get solved.
- You can hire a consultant who is expertise in strategic planning, technology, and design. It will help to analyze their problems and to propose solutions.
- You have to create a simple one-page document defining your Company, Problem, Timelines, and Submission date.
- You can submit the RFP document to the desirable agencies.
- Agencies that are interested in your project have to submit their desire to participate before the deadline.
- Your organization can sort the submitted agencies that do not meet the basic criteria. And you can schedule a direct meeting with the selected list of agencies.
- This meeting is to learn more about each other. If the agency has any questions or doubts regarding the project you can make them understand. Later, you can refine the list by cutting the agencies that won’t fit your project.
- The selected agencies have to submit a proposal before the given deadline.
- The given period will be less than 2 weeks. In this period the agencies can contact the stakeholders of your organization for further questions and present ideas.
- Each agency has to present its final pitch and it should be reviewed by your stakeholders and newly hired consultant.
Things to improve the RFP process
Here are the six things you have to consider for improving the RFP process.
- If you are not sure what you need which means you are not ready to issue an RFP. So be clear about your requirements.
- Try to denote as mandatory attributes and features, so if there comes any debate you have more internal works to do before issuing RFP.
- Before issuing an RFP you have to build strategic choices.
- Try to mention the only features you need. If you are not sure about the required features then you should not issue an RFP.
- Due to any delays from your side if implementation takes longer then vendors may bill you more. So, communicate at actual timelines.
- Before submitting an RFP make sure that you have documented all the specific objectives of your project. If your team is confused about the price, risk, and security then you are not supposed to issue an RFP.
What are the alternatives to RFP?
A client needs solutions for their problems more often than everything you know about RFPs are not the only solution. It is actually a waste of time, money, resources and effort.
It is useful for larger and long-term marketing initiatives. A client can pay an agency to get a business marketing strategy and internal marketing processes. The out of RFP discovery will be raw data, analysis, and findings of the agency.
Give a sample project to the agency. So you will get the idea of what is their strategic planning and what are the creative steps they have taken. Then you can analyze whether the agency is fit for you or not.
Talk With Partners
Ask for a brief conversation with potential agencies. Give compensation to the team leader for their time and award the agency with the best idea. Try to maintain a relationship with the list of agencies. A conversation will help both parties to understand the needs and capabilities of each other. And hence you can determine if it is fit or not.
Seek External Referrals
Use trusted referrals from sources like team members from past agencies, current networks, or resources like Armia that have expert agencies.
RFI means Request For Information which acts as a fact-finding document. It asks the agency to answer questions about their qualifications, offerings, case studies, and examples of their work. This process will help the client and agencies.
Most of the industries are slow to move away from the RFP process. The process I have mentioned above are some of the better solutions. Through open communication, agencies will get a deep understanding of the organization, their problem and how to solve it.
Thus they can easily generate their ideas and solutions. This process is faster, cheaper and more attractive for agencies to provide better results. I would love to hear from you If you have any better ideas to change the way of RFP.