Is there a future for RFPs?

The tender industry is big business. Last year the Australian Federal Government spent more than $60 billion buying goods and services through Austender alone. Yet evidence shows that the process is sub-optimal at best, even flawed, in so many ways.

Organisations keep tendering out work, generating RFP after RFP, in spite of less than favourable results. This is often driven by risk aversion. As we speed through the 21st century and the nature of service delivery becomes about iterative measurable results, many argue that RFP's in their current form have little place in our future. There is strong sentiment and that change is in the wings.

In principle the concept of an RFP is sound. Potential providers are asked to complete detailed documents with information about their solutions - features, functions, company information, customer stories, pricing. The customer then selects a shortlist of preferred providers based on this information and conducts a prescriptive presentation. This sounds like a reasonable approach on the face of it; however the shortcomings are in the detail. A growing number of providers are turning away from RFP tender processes now, electing not to participate.

What are some of the issues with this process?

Everybody knows how time consuming a tender process can be, not just for the customer but for all concerned. It is a hugely expensive exercise compared with a less formal process. And most of the cost and delay sits with the customer. To take this on you had better be sure you are getting the best outcome! Are you?

Issues include:

It's very prescriptive. RFP's are mostly about ticking boxes. It seems to miss the most important element of a successful project - whether the people are going to work well together. Top reasons for successful project outcomes are: aligned goals, ability to be flexible, good communication and applied learnings. This is all about culture. How do you assess cultural fit based on a rule-bound RFP with stiff probity regulations?
It is defensive in nature. Even if an RFP asks the right questions, the decision is made for the wrong reasons. Decisions are made by people who need to be seen to cover all bases, rather than to embrace a shared vision or goal. This is dangerous, particularly as the single biggest factor to success comes from people working as a close-knit team under a shared purpose.
Decision making is based on consensus. There is no single person taking ultimate responsibility for the chosen solution - nobody is taking ownership. It's easy for the individuals to hide behind the process.
Potential suppliers will tell you what they want you to hear in order to get to the next round of selection (wouldn't you?). People play the system in order to get through. Providers hope that by the time concerns are raised about any part of their offering, the customer has invested too much time to go back (sunk cost).
Finally, where is the emotion or the intuition? Remember that success is 90% about people striving to get to an outcome, working together, using the tools and technologies at their disposal. The tools don't have to be perfect either. RFP's on the other hand are 90% about the tools.

So where to from here?

Acknowledging these shortcomings, what does an improved process look like?

What we know is that the process must:

Ensure providers bring innovative thinking to solve the business problem, rather than customers formulating their assumption of what the solution should look like.
Give a provider the ability to understand the business properly and to give sound advice based on their experience and intuition.
Allow the business to choose a provider based on cultural fit and how well the teams work together rather than a set of tick boxes.
Bring 'culture' front-and-centre in the selection process. The most important element is people, the solution will come.

Firstly, why not pick up the phone and talk to a group of trusted partners to get new ideas about tackling the problem and potential solutions. You will be surprised by how much you learn in a short time. Combine this with online research using Google, this is by far the most effective way of getting the background and understanding potential options. Most people find that their solution shortlist comes out of research and intelligent conversations.

The next step is to meet with prospective partners to discuss how they would approach the problem. Give them an opportunity to respond to questions that you raise in a workshop format. If necessary, you can even brainstorm with the providers concerned. This will give you an opportunity to see how they think and solve problems together with your team.

If you have a preferred provider, give them a small piece of work to see how they perform. Have them work with your team to deliver a low risk proof of concept or prototype. Even throw in a few curly challenges to see if they think outside the box. There's no better way to gauge cultural fit than in a real working environment.

I expect that future RFP processes will put 'people' at the top of the list. We know culture eats strategy for breakfast - at the end of the day you need to trust your intuition and those of your partners. Success is about people working together to achieve a joint goal. This approach will go a lot further than any time consuming formal shoot out.

Ready to say yes to profitability, happy employees and great customer service?

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