Over the years we at Z-Solutions have been involved in many RFP processes. Some of the RFP’s were good, and others frankly left much to be desired.

Going through a Request for Proposal (RFP) process is not a job to be taken lightly. It does not matter if you are planning to re-launch the corporate website, purchase new office furniture for the whole company or exchange the legacy PBX with a VoIP PBX. You still need to know what you are doing and we are not referring to the technology but the method behind writing a good RFP. Downloading a template from the internet is simply not going to make the cut.

You need time and planning to be able to write a well thought through RFP because you need to ensure that:

• your requirements are clear
• the proposals from the vendors are comparable
• the vendor deliverables are clear
• you can make a decision on the date you have indicated in your RFP
• you have made it clear to the vendors under which circumstances and according to what standards you will be evaluating their proposals and in the worst case disqualify a vendor from the process

Being clear is one of the most important success criteria when writing an RFP.

What is the RFP good for anyway?

The RFP process is used to get proposals for a solution. The goal is not only price (If it is then an RFQ would be more appropriate – see below), but also to get suggestions from possible vendors on how to solve specific problems. The RFP process allows you go gain detailed information from a range of vendors thereby educating yourselves or your business in that specific area.

You will be able to discuss solution proposals with different vendors thereby positioning yourself to better understand what kind of solution would fit your current and future requirements in an optimal way.

What are the differences between RFI, RFP and RFQ’s?

At the first glance they seem all the same, but they serve different purposes. Here is a brief definition:

Request For Information

The RFI is as the term says a request for vendors to provide suggestions and information about the feasibility of a project or solution you are thinking about. RFI’s are often used by companies to gain more knowledge (self-education) about a specific area while getting a feel for which vendors in the market might have competence in that area. RFI’s are in some cases not taken very serious by vendors because they think it is too expensive to invest time in something which is too loose.

Some RFI’s has as a pilot or proof of concept as the outcome or simply invited to participate in a RFP or RFQ. The RFI is excellent for you as a customer to educate yourself and find out which vendor will really work with you to achieve your goals. The result of an RFI can also be a shortlist of vendors who are invited to first of all participate in an RFP but also to conduct a Proof of Concept to show that their solution will do what you want it to do.

Request For Proposal

The RFP is more detailed than the RFI. You basically know what features or functionality you want. You could say that you have a general idea of what the final solution might look like, but you do not have a detailed design or you don’t want to dictate one when asking for pricing because you want to leave it up to the vendor to come up with the best possible solution. Sometimes businesses opt for the RFP to continue to educate themselves about the options available in an area they are less familiar with. The vendor presentations will enlighten them and enable them to ask the right kind of questions. Ultimately it will enable them to select the vendor best able to provide the service or product they want.

RFP’s are excellent for complex solutions in e.g. the technology area. If you want to exchange the LAN but you don’t know what the best design for the new LAN will be, you can issue an RFP and tell the vendors what your Key Performance Indicators (KPI’s) look like and what requirements you have, but leave it up to them to design a solution.

During the evaluation, you will focus on the vendor’s ability to cover your KPI’s and your requirements. This is the reason why you need to make it clear to vendors that you might chose NOT to go with the lowest offer but with the offer that offers the best fit to your requirements in your opinion (Make it clear that it is your opinion that counts!).

Request For Quotation

The RFQ is usually a very specific document. You know exactly what you want and you are able to list it for the vendors.

If we continue to use the example with the new LAN from above, it would mean that you already have a detailed design when issuing the RFQ. Maybe you had a consulting company draw up your new LAN and now you are ready to locate the vendor with the best prices

You will list specific LAN equipment, their specific configuration (Expansion cards etc.) and how many units of each, you are going to need. The vendor is not required to make any suggestions or proposals as to design, choice of units etc, though you can of course request that they look through your design to ensure that they can deliver it as you have outlined.

An RFQ usually also indicate to the vendor how you are going to rate the offers and how you are weighting the different elements. Not in detail but high level, to give an idea what is important to you, thereby showing the vendor what to focus on.

Step 1: Time for Homework

Start out by getting a clear scope for the RFP. If you are replacing furniture in a company, get a clear definition on what has to be exchanged and get the limits signed off. If you are writing an RFP for a new telephone system, you might only be asking for the PBX. But if the new system is Voice over IP (VoIP) based, you might also be asking for a proposal for a new Local Area Network (LAN) since the existing solution might be inadequate for VoIP. So a clear scope is important.

Get the right numbers. How much growth is expected in the lifetime of the solution? If you are buying a new CNC machine for the manufacturing unit in your company, don’t buy one with all of the bells and whistles, which can produce 5000 units per day when your company never did more than 200 per day and don’t expect to grow more than 20% in that area in the next 3 years.

Step 2: Identify Stakeholders

First identify your stakeholders. A stakeholder is someone who has a stake (interest) in the product or solutions being purchased. Sales might have a stake because they want future products or solutions to fulfill certain requirements. IT might have a stake because they have to support it and so forth. Find out who have a stake in what you are buying and why. Conduct stakeholder interviews to find out what they see as important and why.

Step 3: Collect the requirements, write the requirement specification and decide on how to rate the offers

This is one of the most important phases in the RFP writing process. Collecting requirements usually takes the longest in the RFP writing phase. You need to be sure that the requirements are clear. They need to be rated to make it clear what requirements are a must and which ones are “Nice-to-have’s”.

Don’t make requirements towards how your solution works (Unless this is important to your business), but focus on the outcome, or what it does.

It is often best to list the requirements in a spreadsheet because it makes it easier to apply your rating to it afterwards.

Develop your rating mechanism as part of the requirements writing process. How are you going to rate the proposals? What elements are going to be important and which ones are less important to you? Keep working on the rating throughout the writing process to ensure that you have a rating mechanism which will reflect what you think is important at the time you are ready to send out the RFP.

Take issues like adherence to your RFP guidelines, delivery on time etc. into consideration. We generally recommend to reject any proposal delivered too late basically because we believe that it shows a flaw in the ability of the vendor to deliver on time. Excuses like – we were stopped by traffic etc. are unacceptable. The vendor should have made provisions to deliver the offer in time.

No rule without exceptions – If your area are experiencing a whiteout, ice storm or other force majeure issues which a vendor could not have foreseen, we recommend accepting the offer anyway, especially if the offer was shipped with a courier service where it was to be expected that it would arrive on time. The goal is not to be unfair, but make a clear statement to the vendor that you only want to work with vendors who can keep a deadline.

Step 4: Document outline

Start to think about what the RFP document should look like. Here are some of the things a vendor will expect to see in your RFP:

Preface

Instructions

Requirements

Process and Timelines

Let’s go through each element

Preface

Describe why you are issuing an RFP and what your goals are. Be specific about what you are trying to achieve, so the vendors can understand what you want to have. You want a vendor that can provide you with a solution, not just cover the requirements. Remember that you might have to work with the selected vendor over an extensive period of time, so the better the RFP the better the basis for the selection is going to be.

Instructions

The instruction section is the “Rules and regulations” section of your RFP. Here you will define:

When the proposals due?

How proposals must be delivered (Electronic, on CD or paper based)

Whom vendor questions can be directed to, until when and in what format.

How questions are answered, in what format and until when

The accurate address which proposals must be delivered to

It is a good idea to make it an obligation for a vendor to confirm that they will deliver a proposal by a specific date (opt-in). If you do not have a minimal amount of confirmations on that day, you can extend the deadline, include more vendors or postpone the process – remember to make provisions for such a decision in the instructions. Some companies ask vendors to opt-in e.g. two weeks before they issue the RFP to ensure that they have enough vendors interested.

Reserve the right to not award the project to the lowest bidder. Nothing “ticks” off a vendor worse than not getting a project despite being the lowest bidder. Make it clear that you will go for the best suited vendor (If that is the case) and that decision will be taken solely by you. Make it clear that it is non-negotiable. You should also reserve the right not to select any vendor or to stop the process and restart it with another group of vendors at your discretion.

Make it clear that any attempt to contact the members of the RFP team outside of the authorized channels or trying to leverage “good contacts” or “Insiders” in your company will lead to instant disqualification. You have made it clear how questions so there is no reason to ask questions anywhere else or attempt to influence anyone. Also make it clear that attempts to “bribe” any members of staff in your company will lead to disqualification.

Requirements

The requirements as you have prepared them are to be included in an easily addressable format. You want to control the way a vendor provides answers to ensure that the proposals can be compared afterwards. Be specific about what you want. If you are asking for a service, specify what the minimum requirements for the service are. You might be sourcing products which require a yearly maintenance visit from the vendor’s engineer. In this case you should define what you understand as the basic service. What elements are included. Which elements are free of charge (or included in the maintenance fee) and which elements can be charged for. Statements like “Yearly maintenance visit has to be included in the maintenance fee” are not specific enough and the offers will not be comparable. You need to make statements like “The yearly maintenance visit by your service engineer will encompass driving time to and from our site, engineers work time, all spare parts and software updates but not software upgrades, which are to priced and offered separately. All cleaning agents, recycling fees and waste disposal fees must also be included along with any other costs associated.”

Make it clear to the vendor which requirements are nice to have and which are deal breaking requirements if not fulfilled. The vendor has to be able to evaluate if they can deliver the solution you require and opt-out if they cannot.

Process and timelines

Finally you need to explain the vendor how the RFP process will be conducted. When are the proposals due (recap from your introduction), how long time are you going to take to evaluate the proposals? Evaluation of the offers as being “responsive” meaning have the vendors followed your guidelines? Disqualification of any vendor who have not followed your guidelines etc.

Explain how the scoring will take place ie. “All responsive offers (all offers who have adhered to the RFP guidelines and have all deliverables included will be scored in X categories)

When is the shortlist going to be out? Explain what the process will be for companies who have been shortlisted? Will they be required to conduct a vendor presentation? If so, by when for whom and for how long? What will be the focus of such a presentation? If it a presentation of their proposal, company or solution? Maybe of all three? If so, help the vendor by assigning a certain amount of time to each topic.

Finally by when will you take a decision? How will it be communicated and what does the debriefing process for the unsuccessful vendors look like? Yes, debriefing – it is not pleasant to communicate bad news but each vendor has the right to get feedback. If they don’t want it, fine. But they should have the option. We usually offer them a conference call and the focus in on their offer alone – nothing else.

Step 5: Write the RFP

When you have done your homework and have invested the time needed to define requirements, rating matrix and the general terms and conditions for your RFP, writing it should be a simple thing. Feel free to download a template and use some of the fancy language from it, but be sure that your RFP remain yours and that it reflect your business and your business critical items.

Step 6: Send out the RFP

Run your finished RFP by the stakeholders, relevant senior managers etc. to ensure that you have buy in from all sides. Arrange the review meetings with the people involved and work with your purchase department to find the best way to conduct the vendor negotiations when the vendor has been selected.

Then start the process by issuing the RFP to the vendors selected or alternatively to the vendors who have opted in when asking for their interest in participating.

Epilog

It isn’t over yet – now the fun starts. You have to answer vendor questions, arrange vendor meetings and select the successful vendor. How to do that was not a part of this article, but I might write another one on that soon.

Feel free to contact me with any questions you might have – simply select the contact us section on the Z-Solutions homepage (www.z-solutions.net).