In enterprise software and services, procurement’s use of a Request for Proposal (RFP) is meant to compare competitive product offerings against a set of requirements. The intent was to create an environment where vendors could respond with functionality, price, implementation details and unique offerings. Unfortunately, the RFP process has largely failed for several reasons. Today, the focus is on innovation and speed to market, which can rarely be achieved in a standardized RFP process that can take months to complete.
Request for Proposal (RFP)
Having sold more than $980 million in outsourcing deals in my career and having played a key role in structuring more than $22 billion in outsourcing deals across every industry and virtually every process, it seems the more things change, the more they remain the same.
I won’t add to the dizzying array of endless terms Business Process Outsourcing (BPO) companies develop to differentiate their offerings, but in this article I’d like to discuss some of the commonalities across all of them.
The SOW services procurement value equation is straightforward: clear need + sufficient budget + right service provider + right price + excellent delivery = best outcome
If you look more closely at that equation you will realize the best outcome can only be achieved if the individual elements are in balance with each other. Consider the following:
Supplier diversity. These days, it’s more than a buzzword. It’s rapidly become a top priority for many organizations.
Keith Hausmann, Chief Revenue Officer, Globality, explains how the AI revolution is transforming the way companies source complex categories – typically services, delivering faster, better decisions; more autonomy for stakeholders; and greater opportunities for procurement professionals to drive innovation.
In March 2020, Pedernales Electric Cooperative (PEC)—the largest electric cooperative in the United States, servicing more than 346,000 accounts in Central Texas—had to go from being fully in-office to fully remote virtually overnight, like many organizations across North America during the COVID-19 health crisis.
Knowing the behavioral history of a supplier prior to negotiations is essential to understand the reasons why a supplier is likely to offer optimal prices and service level agreements (SLA).
In the past, siloed and in-person negotiations often revealed insights about supplier behavior, but these insights were usually ignored because there was no empirical way for a sourcing professional to capture, share, and leverage this behavioral data cross-functionally.
- They decide they need a new procurement solution.
- They conduct research and begin to engage with appealing providers.
- They create and distribute an RFP.
- They score the RFP responses to narrow things down.
- Supplier Pre-Qualification
- Bid Strategy
- Request for Proposal/Solution/Partner Development