The year was 1997. Spice Girls were topping the music charts. Titanic won the Oscar. Bill Clinton was president. The Chicago Bulls were the NBA champs. It was also the year of my first experience with an RFP. The document was four pages with several paragraphs of instructions and definitions that comprised the first three. The final page provided a list of job titles, and next to each one was a small box where we provided our price. With instructions on approved fonts and type sizes, we were given a mere three weeks to complete this RFP.
A lot has changed in15 years; not to mention my hair was also a lot longer,and my skirts a bit shorter! Today, companies want to evaluate their workforce programs locally and globally, identify new ways to save money, create efficiencies, streamline operations, understand trends, predict the future of their labor pool, and determine the right mix of workers. These companies now leverage “Request For” (RF) process to do just that.
Whether it is a request for a proposal (RFP), information (RFI), information online (RFX), or quotation (RFQ), the “RF” process is the common toolfor soliciting competitive bidsin search of the best workforce management partner. But the requirements haven’t gotten any easier over the years. RF requests can be hundreds of pages in length, with multi-tab spreadsheets andthousands of cells of required data. Companies expect their vendors to dissect their mark-ups and justify overhead. You name it, companies want it. But the essence of what companies want to know is the same. Who are you? What do you do? How much can you save me? And most importantly, why should we choose YOU?
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For suppliers interested in earning a company’s business, responding to a formal request represents a significant amount of time and resources. This comes in the form of labor, strategy sessions, engaging subject matter experts, cost modeling, executive consultation, and meeting with potential partners. On average, a minimum of 100 collective hours will go into preparing the “perfect” response. And if you make it to presentation, all in, the investment is about one percent of the value of the opportunity, according to Government Express (www.governmentexpress.com).
No, RFs are not for the faint of heart!
Make no mistake, it’s a serious investment for the client company too — preparing and editing the RFP, managing confidentiality, establishing the appropriate team of stakeholders, creating a timeline, reviewing responses, attending and evaluating presentations, discussing best and final terms, negotiating pricing. Then there’s contracting and legal involvement which can add many hours to the process of finalizing the agreement with the perfect partner (crossing fingers you won’tneed to go through this again in three years!)
Without question, RFs are serious business. They represent the quest to find that ideal partner, the one who understands your business strategy and your short- and long-term business objectives. RFs represent millions and sometimes hundreds of millions of dollars. There’s a lot at stake in identifying the best company to manage, oversee and make recommendations regarding your most valuable asset — your people.
So client companies, please keep asking questions. Ask them two or three times if you want. Continue to create spreadsheets (do they really need 24 tabs with 700 lines of data though!??) Define your requirement around your business circumstances. Provide information on your technical requirements. Create an easy-to-use format. Make certain you’ve adequately explained your challenges. Precisely state your scope of work, and advise how the proposal will be evaluated. Make sure you have organizational buy-in and that the legal issues have been addressed. Be clear on your expected outcome.
In 2016, we have Beyonce, Obama and the Golden State Warriors. RFPs remain in a state of evolution. Whether we long for the days of the four-page, pricing-only approach, or we’re excited by the more detailed, strategic way of conducting an RFP process, one thing that hasn’t changed for our prospective clients. We, your enthusiastic, earnest, potential partners are up to the task, ready and willing to jump through the hoops. All the hoops. Even hoops of fire. We will do whatever it takes to prove that we are the ONE.
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Well said Kim. My best guess is the average RFP now costs a responding company around $4,000 to respond. And as you said, that’s before any presentations and best in final. So clarity and simplicity in the process is key.
What’s more costly however is the trend towards dictating the margins a supplier “should” make. Asking for specifics on every element of their costs is now the norm. And while I fully understand that, often this approach to pricing gets overlooked when it comes time to address new costs (like ACA or SUTA increases).
To be fair, clients have EVERY RIGHT to decide exactly how pricing will be done and on what terms they will award the business. As it should be. But my experience has shown that true value and success occurs when both parties work toward a mutually beneficial relationship – and that only comes from understanding the challenges of both sides.
Later this year SIA will be hosting a new conference, “Collaboration in the Gig Economy”. I think this will be a fantastic venue to openly and constructively share the inner workings of all parties in an attempt to improve the entire ecosystem.
Thanks for sharing the conversation.