Top 9 Ways to Master Your RFP and Vendor Selection Process

person writing 9 ways to improve on an RFP envelope

Companies are always looking for ways to improve their processes and lead with more efficiency.  One of the most productive tasks your organization can tackle is to review your templates and approaches to your vendor selection and RFP processes.  Below are nine techniques to improve your RFP preparation and execution approach.

Steps to Improve Your RFP Preparation

  1. Classify Your Teams into Influencers, Reviewers, and Decision-makers

Problems with talent can start as early as the RFP phase, so it is crucial to nail this down at the start of your program.  If you’re a large, global, or decentralized organization, you run the risk of too many “cooks in the kitchen” when it comes to those that participate in your RFP process.  You want to get a holistic estimate from your SI of the participation expectations from your company.

Then, set clear roles and responsibilities up front for who provides input to your RFP and feedback on responses, who scores proposal responses pre- and post-orals, and who will make the final decision in the vendor selection.  Doing this will help set expectations as you begin to execute your RFP process.

  1. Gather Existing Metrics on In-house and Incumbent Performance

Knowing your history, especially when it comes to application management support (AMS) and infrastructure support RFPs, is key to creating a smooth RFP process.  Ideally, you want to gather over 12 months of data on ticket counts, service level metrics, and SLA performance.

Understanding your current scope and current performance levels will help to solidify requirements, set expectations for the level of support you need and prevent your providers from re-baselining performance if it’s already established.  By knowing what those metrics are and being able to create the alignment to your demand forecast, you can go to market in a way that you’re asking for specific price points against your metrics and quantification of your environment.

  1. Know the Market

When going to market to select a technology, do as much research as you can.  RFQ, if necessary, to know what features, functions, and services the market has generally available.  Additionally, learn what the product roadmap looks like for the technologies you’re most interested in.

Look to map your business requirements first to those products that provide the most out-of-the-box functionality and that have strong roadmaps to add more features that align with your long-term business objectives.  Selecting providers with the best out-of-the-box fit is a great first step to minimize the risk of investment and cost of implementation.

  1. Validate Current and Forecasted Demand

Gather as much detail as possible on the vendors you intend to invite to your RFP to understand the scope of their existing footprint within your organization, your current demand for products and services in other areas of your business, as well as any forecasted demand over the next 3-5 years.  Assess what value this opportunity presents to any incumbent vendors can be used as a lever in negotiations of your relationship with potential upside on renewals and other areas of current spend will help inform your positions in response to key terms and commercial expectations.

  1. Secure Supporting Market Intelligence

Whether obtained internally or through engagement of a third-party, secure the talent and commitment of resources to support the facilitation and execution of your RFP process.  Ensure you have access to the proper level of market intelligence to vet and validate your commercial terms, service levels, rates, contract terms within your industry, and against your chosen vendor’s prior deals within similar spend ranges.

Steps to Improve Your RFP Execution

  1. Set Proper Expectations on the RFP Timeline

Allow at least 12 weeks from issuance to complete your selection, negotiation, and contracting process.  You should add at least 4 weeks if using outside counsel as it will take time for those legal resources to understand your objectives, expected outcomes and risk tolerance. Too often the timeline is either not fully communicated or proper expectations are not set with all stakeholders.  Afford yourself the time to do a proper evaluation, communicate progress, gain consensus, negotiate the commercial and contractual terms, and get your deal fully executed.

  1. Control the Process

Don’t let vendors control the message — have them follow your script.  There is a time to let vendors control the message and share their differentiation in the market.  Provide that opportunity to your vendors as part of your pre-RFP screening.  This should be completed prior to selecting those you choose to participate in your RFP process.

Once you are in the RFP process and at the time you are ready to bring your subset of vendors in for oral presentations of their proposals, make sure you take control of the message with a scripted Agenda for all vendors to follow.  Taking this approach will greatly mitigate “presentation bias”.  Presentation bias, where companies allow the vendors to use their oral presentation time as they see fit, restricts a company’s ability to ensure each vendor shares those aspects of their proposal that are most meaningful to them.

To maximize your resource investments in the evaluation process, seek out questions and clarifications of your key RFP stakeholders / reviewers that they should address in their oral presentations of their solutions.

Additionally, build a scripted agenda focused on use cases of how each vendor’s technology will be used in your environment.  Dive deep into their effort estimates and how they propose to implement their solution as well as challenge them to show you how they will mitigate risk, deliver on-time and deliver with quality.

  1. Prioritize Evaluating Features, Capabilities, and Ability to Deliver

Too often I’ve seen the first down-selection of vendors made on price alone before the merits of the vendor’s solution or services are fully evaluated for fit.  In one particular instance, the first vendor that was thrown out solely based on being the highest priced was later brought back, as no other vendors had a solution that met the needs of the company.  The deal that was ultimately negotiated was equal to the lowest initial competing bid, but the process took 2 months longer as a result.

At the end of the day, all vendors are aware of the market price for their products and services, but their negotiation tactics differ widely and responding to your RFP doesn’t preclude them from taking a direct or indirect path to get there.

Before you even get to pricing, vet the features, capabilities, and ability to deliver first.  Once you’re satisfied and you have 2-3 solid vendors that can meet your needs, then you can start to negotiate on pricing.

  1. Secure the Contracts Before the Decision

The single biggest lever you have in any negotiation is uncertainty.  So long as the vendors believe the decision has not yet been made, you maintain your leverage.  Commit to preserving that leverage beyond the response to the RFP and beyond the negotiation through proposal revisions. Maintain your leverage until you secure all material positions agreed to in contract form.

For most, that means a mature Master Agreement, a final acceptable rate card or discounted software price sheet, a mature and executable quote with correct quantities, pricing and terms and a mature statement of work for services where applicable.

Securing the proposal commitments in contract form before making your decision protects companies in two ways.  First, it keeps all selection options in play and ensures you maintain your leverage up to the point of agreement to all major contract terms.  Second, it exposes and allows you to address and avoid the gaps or disconnects that may still be present in the understanding of the proposal commitments and the terms and conditions under which contract commitments are made.

The Bottom Line

Setting yourself up for success at the RFP phase can only help your program in the long run. Aiming to implement these RFP best practices into your process can maximize your efficiency and prevent problems from arising further down your program timeline.

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