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Emerging trends in RFPs, tenders

There has been a change in the way requests for proposals are prepared, evaluated and processed.

Terry White
By Terry White, Director at CXO Advisor.
Johannesburg, 22 Oct 2013

Customers are recognising that 'the hard stuff is easy, and the soft stuff is hard'. Defining the solution is easy; and having bidders respond to 'hard' requirements is equally easy. But, in SA, it is in a mess.

Companies can't get the skills, they can't cope with all the new trends and technologies, and they're under pressure, as always, to cut costs. That's all 'soft' stuff. And customers are looking for partners to help them solve these soft problems.

So when an RFP asks questions like: "How will you bring thought leadership to the account?" and "Describe your continuous improvement process", and "Where do you see IT in five years?" this is not just filler material for the real solution. It's a matter of considerable importance to the customer. Having respondents ignore these questions, or supply a standard answer cut and pasted from their last bid, does no one any favours.

Spot the mistakes

And talking about 'cut and paste', there are far too many instances of obvious cut and paste issues in responses. They're easy to spot - sometimes the supplier's search/replace process has missed its previous client's name, and suddenly they're talking about ABC company instead of XYZ company. Often, there are movements of staff from one supplier to another - one change management specialist was tracked through three suppliers, because her methodology goes with her (sometimes leaving the name on the previous supplier in the response). Sigh.

But the biggest clue for cut and paste is in the sheer blandness of the response. It could apply to anyone, and frankly, evaluators will score this equally blandly. To score well, a response must solve the customer's specific problem. Customers spend enough time discussing themselves in the 'challenges', 'reason for this RFP', and 'current situation' sections of the RFP. So respond to these soft challenges when describing hard solutions.

Many clients are now weighting their RFPs differently as well. They usually assign 60% to the hard solution and 40% to the soft part of the RFP. So take the soft stuff seriously - that's where the bid is won. Hard solutions do not differentiate suppliers, or if they do, that differentiation is temporary.

Staying alive

There's also a move - allied with the above hard/soft shift - to living contracts and delivery assurance. To many customers, the SLA represents only 30% of what they want. To cope with the soft stuff, they are writing into contracts such factors as: account management, price visibility, thought leadership, continuous improvement, strategic input, and so on.

These are all difficult to contract, because they are by nature changing requirements. So the contract becomes a living document. Many customers are reviewing their IT contracts on a three-monthly basis, and demanding action plans for each of the soft items. These plans are measured and tracked on a monthly basis. So the contract, in essence, becomes a relationship-steering document.

Take the soft stuff seriously - that's where the bid is won.

There hasn't been much of a move towards automation of RFPs and responses, although it is on the horizon. There was one instance where 27 RFPs were published, evaluated and contracted in a four-month period, but only because the RFPs were published online, responses were compiled and submitted online, and evaluation was conducted by different people around the country - once again, online.

This isn't a standard procurement system - those systems deal really well with commodity products - paper, office supplies, and in some cases, hardware. But most IT solutions are much more complex than that - remember the soft stuff...

So the online RFP system has to be a workflow, collaboration, template, document management, audit and control solution. It must allow a team to prepare an RFP, and an RFP supervisor to supervise the workflow and versions. It must also allow bidders to do the same, while maintaining confidentiality and good governance.

The RFP system must allow for evaluation, and all the vagaries of evaluation scoring and weighting. Then the system must allow the RFP and the winning response to be crafted into a contract. Finally, the RFP system must integrate to both the procurement system and the ERP. And if the contract is to be a living one, the system must allow flagging of soft clauses for ongoing review and management. This kind of system does exist, and it will revolutionise RFPs.

I find the world of RFPs fascinating. It's so much more than a "this is what we want/this is what we supply" dynamic. The problem is that too many customers and suppliers are operating under the old paradigm.

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