The traditional Request for Proposal (RFP) and RFP’s sister the Request for Quotation (RFQ) were once the ONLY way to properly seek out potential vendors for products or services. Yet the RFP and RFQ have come under increasing scrutiny. The RFP process is no longer considered the best way to select a vendor, regardless of industry. Remarkably, we still see companies relying on the traditional RFP when searching for a software development partner. In this article, we will review why RFPs became so popular, why they fell out of favor, and why delegating the task to a dedicated advisor is the best way to find an ideal provider.
Why Companies Used an RFP Process
In years past, the RFP was considered to be THE procedure to follow when selecting a vendor for a new product or service. The rationale was that an RFP promoted transparency, objectivity, reduced risk, and established clear requirements. Further, it was assumed that companies who responded to RFPs represented a valid representation of the universe of suppliers. The customer who distributed the RFP, in turn, received an accurate understanding of the relevant vendors and the potential solutions in the marketplace..
Many companies conducted an RFP process with earnestness and pure intentions. Those companies expected - and sometimes found - a hidden gem of a vendor in their search.
Other companies, however, distributed RFPs more cynically. For these companies, it was rigged game which allowed management to appear open-minded, when in reality they weren’t. These companies went through the motions of an impartial RFP process, while knowing the decision had already been made.
The original intent of an RFP process was certainly admirable: conduct a candidate review that would be objective, impartial, and efficient. But, something went horribly wrong. RFP processes are not reducing risk for companies and increasing their chances of success in finding an outsourcing partner.
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What went wrong with the RFP Process?
RFP’s no longer fulfill their intended purpose as an orderly means to evaluate several companies using objective methods. As we meet with companies, we see and hear of the limitations in a classic RFP:
- RFPs are time consuming
- RFPs are expensive
- The best software development companies don’t respond to your RFP
- The requirements don’t support your goals
- The selection methodology is flawed
- The selection team doesn’t have the right members
- The proposed engagement is too big
RFPs Are Time Consuming
The RFP process takes too long. Companies usually build the requirements, evaluation methodology, and potential bidder search strategy from scratch. After these items are created, you must send out an invitation to bid to potential vendors and issue an RFP. Then, you must receive and respond to vendor questions about the RFP in an orderly manner, Finally - you must to wait to receive, then evaluate the responses.
Modern businesses need to be nimble. That need to be nimble extends to deploying a software development team for mission critical software. B2B companies, for example, are usually part of a supply chain. No company in that chain can wait while other parts of the chain go through a lengthy vendor selection process - THEN wait on needed software to be developed by the selected vendor. Too often, incumbent software development providers are chosen by default, because it’s the only way to get through a selection process quickly enough.
RFPs are Expensive
The RFP process is expensive to the customer because of your internal team’s time commitment to develop and evaluate. But RFPs are expensive to potential bidders too. Have NO doubt... vendor-incurred expenses will make their way into the price you pay for the goods or services you procure in an RFP. Think about the math: If 5 vendors submit bid responses to your RFP or RFQ, one wins your business, then 80% of total vendor time has been wasted. Many subject matter experts on the vendor side have been diverted from revenue generating activity. That’s a double-hit for the losing vendor: wasted energy on a sale that didn’t transpire AND billable hours that weren’t achieved.
As a customer you may not pay directly for the wasted time but all customers pay indirectly. Vendors who participate in RFPs as a normal course of business maintain the overhead cost of bid response teams.
The Best Software Development Companies Don’t Respond
“If you build it, they will come” just doesn’t hold water. Just because you put out an RFP, doesn’t mean the best provider will respond. You may never MEET - let alone choose - the best-fit partner using a traditional RFP process.
A Rigged Game. Too many capable vendors are suspicious of the RFP process, so they don’t respond. Their attitude is “Why bother?”. Unfortunately, it is true that some companies go through the motions of a legitimate RFP process when, truthfully, the selection decision has already been made. The RFP process may be a charade whose only real purpose is to provide what’s known as “column fodder”: a list of companies who will be reported as candidates under consideration - but never really stood a chance of winning the business.
Inadequate Search. Other vendors who could be a great fit will NEVER KNOW about your search for a qualified partner. Why? Because your search process just isn’t robust enough to seek out the talent you need - especially if you seek outsourced software development assistance.
Wrong Vendors Respond. Finally, we find that too many vendors who respond to RFP are the exact kind of company you would never want to partner with! Some will made grand promises but don’t have the real experience or depth of technical talent to get the job done.
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The Requirements Don’t Support Your Goals
It might surprise you to learn the requirements in your RFPs may not really support your goal of landing the best software development outsourcing vendor to accomplish what you need. In our experience, we regularly see companies make these mistakes.
Describe the legacy system. We often see that companies will tend to create a specification that mirrors an existing solution. Rather than focusing on the business goals and partnering with an innovative software development partner, the specifications in the RFP are tedious - and perhaps even restrictive thereby disqualifying creative solutions before you ever hear about them.
No expression of vision and business objectives. The software solution you ultimately want developed should be aligned with a larger company vision and business objectives. If you can’t express these - then you aren’t ready to send out an RFP. A good vendor partner will want to understand “the WHY” behind your company’s RFP. Your business objectives for the software solution should result in measure outcomes (benefits) that your organization receives from successfully developed software. RFP requirements must describe these expected outcomes.
Boil the Ocean. Companies will also try to cover every conceivable base of current, future, and potential future need; they try to “boil the ocean” with their requirements. If indeed a vendor can respond with a solution, it will be far more expensive than what is really needed. Some very innovative software development companies with exciting new ideas simply cannot afford to respond to big RFPs. The result: your company may unintentionally exclude the potential perfect-fit vendor.
Too Restrictive. Be careful not to make your solution parameters too narrow - especially architectural requirements. A key reason that your company may choose to outsource software development is to tap into expertise that doesn’t exist within your staff. Give RFP respondents the flexibility to describe creative solutions to your needs… you may be pleasantly surprised!
The Selection Methodology is Flawed
Effective vendor vetting has science behind it, You would never think of writing your own IQ test, why would you try to cobble together a vendor evaluation by yourself? We see first-hand that company employees who write code well don’t necessarily know how to create a good vendor assessment.
You need to know what questions are relevant to your decision-making process, rather than creating a check-the-box exercise. A numerical scoring system for the responses may seem practical, however, it can mask the true value of a potential partner.
“Trust, but verify” was a slogan used by President Ronald Reagan. In evaluating a vendor, you cannot rely solely on the vendor’s self-assessment of their abilities or their business situation. It is far better to see and assess your prospective vendor’s capabilities in person. Without an on-site evaluation, you risk making a wrong selection decision; you may end up with a partnership that could jeopardize the successful outcome of your project.
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97% don’t meet our criteria - and shouldn’t meet yours.
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The Selection Team Doesn’t Have the Right Members
You would never develop a mission critical software solution without Business Stakeholders and SME’s to help design the system and then certify it in a UAT. Yet, many companies put blinders on when developing a team for building and running a successful RFP process. Get a better understanding of who is ‘important’ before you start the RFP process. Ask yourself:
- “Who needs to be involved in the decision-making process"
- “Who holds important intellectual capital that must be infused into a system design"
- “What group(s) would a software development outsourcing team interface with"
- “Should they be actively involved in an RFP process or just have input on areas relevant to them - or perhaps a vote on the the final decision"
Shared involvement will help ensure that you get to a RIGHT decision, and will ultimately pay dividends in the commitment to the actual software development project when it commences.
Mitigate Your Management Risks
The Proposed Engagement is Too Big
We often advise our Clients to “start small” with a new software development outsourcing relationship. You may have larger aspirations for your new partnership, but there’s wisdom in modestly sizing your initial project together. By starting with a smaller scope, you will learn how to work effectively together, without the pressure from an “all hands on deck” initiative. You may realize your company needs to adjust key objectives or assumptions for future work, based on what you learn in your first joint project..
Best Alternative to the Traditional RFP Process
A traditional RFP can be time consuming, expensive, and ultimately flawed… leaving you with the wrong partner for your needs or the wrong approach. Your company should consider whether a formal RFP process is really the best approach...or perhaps you can find a better way. The best alternative is the power and effectiveness an advisor can bring.
Accelerance is the leading authority on software development vendor selection.
Vendor Selection Consulting Service
For more than 15 years, Accelerance has led rapid and effective search processes for our Clients - done the way such an important process is SUPPOSED to be managed. You get incredible value in partnering with Accelerance.
- You address risks inside your company. Before you evaluate a single vendor, Accelerance guides your team in a self-evaluation of your organization’s readiness for outsourcing. We do this by examining with you 15 Potential Risks that could derail your outsourcing initiative, regardless of the capability of the vendor you ultimately choose.
- You leverage our partner network..Your company can’t create and maintain a global network of capable offshore software development partners across every conceivable technology solution. But, that’s what we do every day. Accelerance is continually evaluating and identifying the top software vendors with our proprietary Accelerance Certified Partner Program.
- We help you create a custom selection criteria. Accelerance helps clients describe and document the important elements of the solution you need. Then, we layer on our proven criteria for matching you with perfectly aligned global software development companies.
- You save time. Most companies take 5 months to identify a software development company. Accelerance cuts that search to a fraction of the time you would normally require. We’ll provide the shortlist from our Certified Global Network and guide you through choosing a partner. You’ll have your perfect partner in days, not months.
- On-Site Inspection: There is no mystery about an Accelerance Certified Partner. We personally meet with the companies onsite at their company headquarters. You have first-hand accounts of their office situation, our assessment of their management team, and ability to attract and retain technical talent.
The Accelerance RFP as a Service Approach
Accelerance is committed to your success in building high-performing tech teams. That is why through our RFP as a Service (RFPaaS) we employ a thorough, comprehensive process in Partner selection. Our process is robust, and yet it still reduces time and cost.
Our work begins with evaluating your company’s readiness to outsource. More than finding a technical solution to a technical problem, this evaluation includes equally critical Business and Management aspects that can threaten a project’s success if not properly aligned.
That completed, we then review the project under consideration. We establish a roadmap by which your software outsourcing relationship will mature and scale, including skill sets, metrics of success, etc
Next we identify important “soft” criteria including ideal partner region/country and company culture. This is assessment happens in a two day workshop involving key stakeholders and key participants, with findings summarized in a detailed report.
Accelerance then matches your criteria against our database of Certified Partners around the world. We have already aggregated the 8,000+ global service providers. You’ll receive a shortlist from the top 1% - the best software development companies in the world will arrive in your inbox.
With Accelerance as your guide, you’ll experience the preparation, search and selection process more quickly and cost-effectively than you could ever do on your own.
Kill Your Dated RFP Process and Get Better Vendors
Kill your traditional RFP process - and embrace a process that is truly conducive to aligning you with the right outsourcing vendor to develop your important technology solution. At Accelerance - we’ve found a better way… and we want to share it with you!
Discover the best way to select the best software outsourcing vendor