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Why RFPs are bad for business

on Saturday, 13th July 2013 - 10:26

Just say "NO" to the "Request for Proposal"
Todd Nienkerk @toddross

#NoRFPs - free information, don't know what they want, client defines problem and solution

Horror/Evil Stories:

When Stakeholders don't know each other and don't have agreement on scope of the project.
Pricing a project to gain leverage over an existing vendor
Free consulting: Get a blueprint, take it in house
Risk aversion: Displace responsibility to the vendor
Qualifying new vendors

Small shops, big projects - with RFPs (impress with response to RFP)

Practice "Safe RFP" - Approp. complexity to size of project, prioir relationship or internal advocate, if you can't afford to lose this project, you may not be able to afford to win it. Payment schedule is important! Insurance requirements (Umbrella policies).

Once under NDA, you can send the terms from procurement... ask in a non-confrontational manner.  Get started on legal paperwork right away.

Reasons for NO RFPs

  • 40-80 hours per RFP response
  • $7-14k opportunity cost
  • Legal fees, travel expenses, other people's time to review
  • Won only 1/5 contracts of the RFP-driven proposals we submitted (22%)
  • Only 16% of work resulted from RFPs

84% of work involved no RFPs - from word of mouth. 

Conclusions - Costs less to send a team to meet a potential client than to respond to an RFP.

Ask Magda: How many RFPs have we responded to, what is involved, how many sales did we win? Opportunity cost - expenses, cost of responding etc.  Weigh against project's revenue?  Likelihood of RFP win, reasons to take the project.  STRATAGIES

Alternatives

Stanford - Zach Chandler - Web Strategist - Overhaul of RFP and vendor approach

  • Do not start with a document; start with a converstaion
  • Expository sketch
  • Presentations
  • Consolidated Q&A
  • Proposals (only after all of the above)

Discovery

Enagge in a workshop or discovery phase to better define project requirements
Vendors and clients can build the project plan together (gets foot in door, client works with in limited way, decide on forward enagement afterwards - Can't always bid on project)

Cater the response to the project - consutancy scrum... in an outward facing way - budget is element controlled by client and not vendor.  $100,000 - I'll build you that but let's work backwards from there.  Hopes and dreams vs. meeting budgetary needs.  

MVP - Minimal viable product Kanban - NYC/lean/Kanban (Fail fast and don't mention MVP - what is the hypothesis you want to test?)  Testing, and hypothesis... instead of saying you're doing the 'minimal effort'... what's the fastest we can get you from point A to point B.

No open bids.

Research and prequalify vendors - get to know people, build your network.  Procurement - it's your job.

Salespeople should be facilitators not the mouthpieces of the vendor.  Talk to the team not just the sales people.

Relationships matter

Engage stakeholders, involved early and often

Struture contracts in small bites rather than a single, massive RFP.  Don't bite off more than you can chew. (Date before you get married - As long as they perform, win next phase, next phase, etc; Performance based clause)

Know your contracting options - there may be more than you think. (Preferred vendor groups)

Advice to vendors

  • Always offer alternatives to the process
  • Discovery phase rather than rfp, send rfi (information)
  • Always know how they know you (get an idea of how likely you are to get hired for the job) - analogous to "why do you want to work here?"
  • Did another vendor write the RFP?
  • Know all the stakeholders and decision makers - know who they are, hopes and needs, etc, who's making the decision
  • Procurement depts - they are judged by their performance by how much money they saved the organization (KPI)
  • Find an internal advocate
  • Has client ever done a project like this before (newbies)
  • Preparation and enthusiasm count
  • Consider cost of bidding
  • Play by the rules - do not ask your client to break any rules
Where do we go from here.
NoRFPs.org

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