RFP PROCESS
YOUR RFP PROCESS: HOW TO GET IT RIGHT IN A FRACTION OF THE TIME
A request for proposal (RFP) is simply a way to ask potential vendors to describe how they would help you solve an important unmet need, so you can make the best buying decision. We break down the RFP process and provide insider tips, tools and templates you can start applying immediately.Whether you need to buy stuff, or software, or services, this is about getting it done as efficiently as possible. In fact, there is only ONE critical insight you need to master the RFP process. Just one. And it’s barely mentioned anywhere in countless articles about RFP “best practices.”
Jump to the answer here, or read on– there’s plenty to learn along the way.
To be clear, you don't have to be a procurement pro to issue an RFP. It doesn't have to be complicated, either. In fact, an effective RFP process helps you find better solutions faster than you could without one. If that's surprising to you, you're not alone. Studies show people often think RFPs are too time-consuming, complex, and bureaucratic. But it doesn’t have to be that way.
Your RFP process should chart a straight line path from unmet to fulfilled needs as quickly and reliably as possible. Nothing more.
The Essential Steps of the RFP Process
- Define Problem, Scope and Desired Outcome
- Develop Evaluation Criteria
- Invite and Assess Proposals
- Finalize the Contract
- Evaluate the Outcome
We’ll delve into each step below. While it may be tempting to think more steps are better, and that a “good” RFP process should be eight or 10 steps, each new step invites you to undertake more work than may be necessary, without improving your chances of an ideal outcome. A lightweight framework allows you to run an efficient process, while flexing to be more detailed only when necessary.
We understand that RFP "best practices” can be pretty cumbersome to manage, which makes the prospect of issuing your first one rather daunting. We're here to show you how to keep from falling into that trap.
Pro Tip: Most RFP resources you find online are not written for your benefit. They are written for search engines. That's why popular RFP content doesn’t always equal good advice. It’s common for articles to spell out processes in excruciating detail to give the appearance of good advice. Your process doesn’t need to be complicated.
WHAT EXACTLY IS AN RFP?
A request for proposal is much more than a document. When you understand that, your RFP process becomes dramatically easier to manage.
As we stated above, RFPs are for solving problems, not creating them, and RFP definitions that focus on the notion of a complicated document miss the bigger picture. To break down why the document-centered approach is flawed and causes large amounts of unnecessary work, let’s take a look at the standard definition.
The Traditional Definition of an RFP
An RFP is a formal document issued by an organization that outlines a specific problem or need, and invites potential vendors to submit proposals describing how they would address that issue according to certain requirements.
Vendor proposals are similarly formal and presented in ways that highlight their fitness for the project, how well they meet the requested requirements, and the price they would charge. Proposals are used in the procurement process to gather a wide array of information from various suppliers to enable organizations to compare offerings and select the best solution in a systematic and objective manner.
That may sound hard to do and possibly ineffective, because it can be. There are several problems with this approach.
Problems with the Traditional RFP Process
- It’s based on a document. The RFP itself is often shared as a PDF, which is static and hard to change, so lots of work goes into “getting it right” and agonizing over boilerplate content, formatting, details and managing versions as edits are made.
- You need lots of input from stakeholders to gather requirements. That usually means meetings, emails, chasing people down and then struggling to come to an agreement to finally issue the RFP. Actually getting a complete RFP out can be a massive undertaking with so many cooks in the kitchen, or cats to herd or… you get the idea.
- Proposals are onerous for suppliers, too. In the same way that the RFP is hard to build, proposals are equally daunting, and resource-intensive, without a guarantee of winning the work. This hurdle causes suppliers to pass on opportunities, which in turn limits your options. It’s no wonder services that aid in crafting RFP responses have grown into a billion dollar industry!
- How you frame your RFP can affect supplier responses. Do you really know up front what defines your ideal solution? Your own RFP could lead to a less-than-ideal outcome if suppliers feel compelled to skew their responses, rather than propose what they might otherwise offer.
- Comparing vendor responses is hard. They propose different things in different formats, which requires a lot of work to extract how they stack up against each requirement, and then decide how to weigh many different factors at once, especially if there’s disagreement among stakeholders.
- Documents and more documents. Yes, the problems begin and end with documents: email attachments, downloads, uploads, PDFs, Word docs, Powerpoints. These formats may feel good to the party creating the presentation, but they’re made for not for comparing side-by-side or having a two-way conversation about the details they contain.
This default to a document-centered approach is the root cause of most problems throughout the RFP process. So, while there are many good reasons to issue an RFP, the process itself needs work.
Pro Tip: Streamline your RFP process by working in collaboration tools, not documents. Presentation documents slow down the process of sharing, comparing and discussing detailed information between buyers, suppliers and across teams. PDFs are not your friend.
Problems with the Traditional RFP Process
Like we said above, when done right, RFPs can help you find better solutions faster. When your organization can’t solve a challenging need with internal resources, it’s valuable to seek proposals from those who can. Ideally, the RFP process ensures you find the objectively best match to your needs.
Receiving comprehensive information from potential vendors enables you to make well-informed decisions based on detailed comparisons. This process helps to minimize risk, maximize value, and foster long-term partnerships with suppliers.
A given organization may even be mandated to demonstrate a transparent, unbiased procurement process, as is typically the case in government and government-funded organizations.
In addition, RFPs can help organizations achieve their strategic sourcing goals, not just by solving a particular need, but also by matching to broader organizational objectives, including ESG (environmental, social and governance) objectives..
HOW DO YOU DECIDE WHEN AN RFP IS NECESSARY?
Before initiating an RFP, know the potential drawbacks. It does take time and resources to manage the process effectively, no matter how well you streamline it.
If the procurement is relatively simple, well-defined, or involves a commodity product or service, a Request for Quotation (RFQ) might be all you need. On the other hand, if your issue is not clearly defined, or maybe you don’t know how to budget properly for it, a Request for Information (RFI), may be more appropriate to better understand your options.
Ask yourself if opening up the process of gathering requirements subjects you to more opinions, input or approvals than the decision warrants. The RFP process isn’t only complicated by engaging with several outside vendors, but also by looping in more people inside your organization, if their potential contributions aren’t enough to justify all the extra emails, meetings and time they entail.
Consider “opportunity cost.” Is speed of the essence? Or would it cost you more to develop an RFP and evaluate responses than it would to solve the problem quickly? You may find that solving the problem well enough (and quickly) is more important than taking your time to get it exactly right.If you are leaning toward an RFP, here are some key considerations that can help you decide:
- Complexity: If the project or procurement is complex and involves multiple components, it may require a high level of customization and planning that you can’t buy “off the shelf.” An RFP can provide a means to engage with suppliers to address your specific needs and challenges.
- Expertise: When the product, service, or solution requires specialized knowledge or expertise that is not available in-house, an RFP may help surface qualified suppliers in a way that helps you “know what you don’t know.” The process uncovers important areas of consideration that you can validate by speaking with several candidates.
- Compliance and Transparency: In some cases, organizations—especially those in the public sector or receiving government funding—may be legally required to conduct a transparent procurement process. It may also be required by an internal governance standard. Either way, an RFP can ensure compliance with these regulations and demonstrate a fair, competitive selection process.
- Structured Evaluation: If the project is complex, requires a high level of expertise, or you are mandated for compliance and transparency reasons, structured evaluations are always useful. Beyond those factors, however, you may simply feel ill-equipped to make a good buying decision without a clear rubric. Perhaps there’s disagreement about priorities between departments, for example. You might need to back up and detail what the evaluation criteria really should be and how those affect the final decision.
- Big Spend on a Tight Budget: No one wants to pay too much, but when the value-for-money equation is critically important, an RFP can help. It gives suppliers the opportunity to propose alternative, cost-saving approaches that you might not have considered.
- Risk Management: For projects or procurements with high stakes, an RFP can help minimize risks by thoroughly addressing factors on both sides of the table: a deep understanding of your needs and how critical they are to your organization, as well as the fitness of the supplier to ensure the best possible outcome.
Many organizations will establish a threshold for RFPs so that any purchase over a certain amount should follow the process. These range widely from $5000 to hundreds of thousands of dollars, providing a basic assurance of good procurement decisions.
WHERE DO YOU START THE RFP PROCESS?
You’ve decided you need to create and issue an RFP, so what do you do first? Begin with the end in mind. Avoid hunting for templates and attempting to start writing your RFP as a first step.
A Note about the Temptation of RFP Templates
You should definitely use templates. Templates and boilerplate content save you a lot of work, and we have them. But RFP templates are just the packaging, they aren’t the point. Focusing on them will anchor you to the document-centered approach, where most problems live.
All templates do is provide structure so your RFP is easy to understand with spaces to include boilerplate content that meets process, compliance and legal requirements. That’s the easiest part of the process. Knowing that, don’t get stuck there. First, be sure you can describe why you’re trying to solve the problem, and what will be different when you do.
More on that below. But first…
The ONE Critical Insight You Need to Rock Any RFP
Every step in the RFP process should be to build and use an objective decision-making tool. And what’s more objective than a calculator?
The perfect RFP process is a calculator that produces a clear, numerical answer. You don’t go through all the work we’re about to outline to arrive at a squishy conclusion that can be overridden by opinions or second-guessed. Objectivity is the name of the game.
Like calculators, RFPs are about inputs and outputs. The unmet need your RFP is meant to help satisfy is really a math problem to solve. Supplier responses are inputs to your calculator, and the best buying choice is the output. By assigning numerical weights to every decision factor, you create a calculator that can be manipulated and discussed in fine detail.
You may be tempted to let certain things remain “up for discussion” and unweighted or not clearly defined. That is a mistake. Placing values on specific items is the means for productive discussions. When it comes down to it, if your team’s values are properly captured in numbers, great decisions present themselves.
So let’s get into it.
RFP PROCESS STEPS IN DETAIL
Every aspect of an effective request for proposal is designed to take you from the current problem state to your desired outcome, not to inject extra work. Remember, you’re building a calculator.
Define Problem, Scope and Outcome
Certainly, RFPs aren’t limited to solving problems, per se. They can also be used to advance important new objectives. Either way, understanding the effects of the issue, if it goes unresolved, helps to determine your desired outcome. Therein lies your scope: what you’ll address, how much you’re willing to spend on it, and how long it should take.
Pro Tip: Most important business objectives already have a financial projection and timeline associated with them. When you shine a spotlight on the business objective, exactly what you’re trying to accomplish through an RFP and by when, becomes much more clear.
You may need more input from suppliers to nail down the exact parameters of your scope, which is ok. Your estimated budget for the desired outcome might turn out to be too low, or your timeline too tight. In that case, it might be necessary to reframe your desired outcome or pursue a different one altogether.
For example, suppose you have a bank of servers on-premise that need to be upgraded because they can no longer handle the load your new machine learning and data science team is subjecting them to. You know that ML projects are a company priority, and the data insights must continue to flow. It may be faster and cheaper to upgrade the hardware in the near term, while migrating to the cloud may prove more reliable and flexible, but more costly. How do you choose?
Let the process help you and your team decide. If you understand the desired outcome with total clarity from your stakeholders, you can define what should happen without having to define exactly how. That’s your supplier’s job. Otherwise, all you would need to do is issue a bid.
Develop Evaluation Criteria
Also known as requirements, the list of criteria you’ll use to evaluate suppliers is where the RFP really takes shape. You need requirements to be sure any given supplier can actually satisfy your needs, but also to make thorough, objective comparisons between them.
What questions should you ask? Like templates, we have a lot of questions pre-written to help you cover all the bases, depending on your project. Ultimately, your questions should reflect your priorities, but there are some general categories that help cover all the bases.
Basic Categories of RFP Requirements
- Technical capabilities pertaining to your need
- History of quality and reliability
- Scalability and flexibility
- Security and privacy
- Integration and compatability
- Customer support and service
- Intellectual property and licensing
- Financial stability
- Geographic coverage
- Cultural fit and alignment
- Contract terms and conditions
- Internal resources required to implement
- Total time to implement
- Total cost
Of course, each of these categories can be broken out into more specific criteria. Some may not apply to you, or you may have other categories in mind.
As you delve into each category and list specific evaluation criteria, whenever possible, break each one down into components that can be assigned a value and compared across suppliers. Long prose responses and pretty graphics don’t help you make comparisons the way short, clear answers can.
Pro Tip: If the answer can’t fit in a spreadsheet, don’t rate it. You should be able to rank how well each criterion is met, and how much that matters to you, so your decision-making is clear, objective and defensible. Your spreadsheet should literally be a calculator.
Using our machine learning example again, suppose your stakeholders prefer a supplier with a “Gold” certification from a certain hardware manufacturer, but a smaller supplier offers proof of competency through customer testimonials and case studies. Perhaps that alternative earns the smaller supplier a 4 rather than a 5 for hardware-specific experience.
Was the Gold certification really a requirement, or was it simply hardware-specific experience? Perhaps there are other ways the smaller supplier offers better value than the nominal “market leader,” which makes their proposal a better fit overall. As always, the numbers will help you decide.
It can be tempting to create an exhaustive list of hard-and fast requirements. However, when you place a value on each question, you may find far fewer are actually “requirements” as opposed to preferences.
Invite and Assess Proposals
Armed with a solid list of evaluation criteria, you’re ready to start reaching out to potential suppliers. Notice we do not advise soliciting supplier input prior to gathering your own criteria. Focus on your needs first and frame the issue the way you see it, otherwise, you are likely to be influenced by what someone else wants to sell you more than what you actually need to buy.
Describe Your Project or Goal
Begin your RFP by providing a clear and concise description of your project or goal. This should include background information on your organization, the problem you're trying to solve, and any specific objectives that must be met– any information will help potential suppliers understand the context of your request and tailor their proposals accordingly. Remember, you’re hoping to trigger interest, so keep it focused. Supporting info can always move down the page or kept neatly in other documentation.
Share Required Documentation
Relevant documentation that will help potential vendors better understand your requirements and expectations may include technical specifications, regulatory requirements, or industry standards that must be adhered to. Providing this information upfront saves time during the evaluation process and ensures accurate, relevant proposals.
Request Proposals
Here’s where your spreadsheet of requirements gets to shine like the RFP superstar that it is. Whether you’re sharing spreadsheets that you’ll compile into a single view later, or links to an online form, or using a platform like ours, insist that responses fit your format. Suppliers may need to provide documentation or plans that can’t fit into a form field or cell, but those longer answers should not obscure a key yes/no item or timeline or other criterion you can assign a value to. By having suppliers respond to the input fields of your calculator, suddenly, you’re able to process far more data at once. Ah, the beauty of spreadsheets.
Pro Tip: Solicit as many proposals as possible. The more options you have, the better. Because you’ve built an efficient rating system, you can easily rank many suppliers, without combing through tedious pitches. You only send to a shortlist if you’re afraid of information overload. Control the submission format and there is no overload.
Evaluate Proposals
Everyone involved in the process should already know the criteria and when a decision will be made. Once the responses are assembled in a single view and rated, there is little to do but discuss whether the ratings are accurate or the weights for each are appropriate.
If you find yourself sitting around a table, thumbing through glossy brochures and Powerpoint slides, you’re doing it wrong. Trust in your calculator.
Certainly, there is value in meeting with the top candidate or two before offering a contract. Face-to-face meetings can provide everyone added comfort and an effective way to address lingering concerns. But a parade of supplier presentations is not a useful decision tool compared to your finely tuned bid table.
Finalize the Contract
Depending on the complexity of the RFP, there may be details to negotiate. Be careful not to allow negotiated items to turn a best-fit proposal into an albatross of a contract. One should follow from the other.
That said, it’s not uncommon for circumstances to change in the time it takes to award a contract. Perhaps the supplier won two other proposals just before you could pull the trigger, changing their availability. Take the time to assess whether negotiated terms would drop this supplier out of front-runner status before accepting any substantive changes to the contract which may impact your desired outcome.
Monitor Progress and Evaluate the Outcome
You’ve done a lot of work to make the right choices for solving an important unmet need. Make your time invested both in the process and in your new supplier count by helping it inform future decisions.
Regardless if the contract contains many performance stipulations, it’s essential to establish key performance indicators (KPIs) and measurable outcomes that align with the original goals and requirements you developed for the RFP.
These KPIs should be tracked throughout the project or contract duration to monitor the supplier's progress, adherence to timelines, and overall performance. Regularly reviewing metrics in conjunction with qualitative feedback from stakeholders, such as end users or project managers, provides timely insights about both the supplier and the project.
Not only does the process help determine if the supplier has successfully met or exceeded your desired outcomes, it also enables you to make informed decisions about future collaborations or potential improvements you can make to your procurement process.
Putting Your RFP Process into Action
Detailed projects that include lots of people have a way of taking on a life of their own. The RFP process is no different, especially because you’re working on something that’s important to your organization.
Rather than allowing the importance of the RFP to become a reason it bogs down, make that the very reason why you won’t let it. Focus on the outcome and why it matters. Build your criteria from your desired outcome, so you can decide what truly is a requirement and what is a preference.
To the best of your ability, translate all of your criteria into simple questions with simple answers that can be assigned values and rated side by side for all suppliers, to calculate the best fit with objective clarity. Communicate through collaboration tools and assemble responses in a single view so you can evaluate apples-to-apples fairly and efficiently.
When you run an efficient and transparent RFP process, from initial discovery through procurement, all the way to evaluating the outcome, you can be confident you’re facilitating the best possible solutions to meet your organization’s most pressing needs.
