Swamping the Row Boats – How Big Companies Do RFPs

In the last few months there has been a surge in Request for Proposals (RFP) from companies looking to implement either Idea Management systems or more fully fleshed out Innovation Management programs.

First of all, I have strong opinions on the likely success of the firms who follow the RFP approach. This is not a random opinion. It is based on research I conducted, as part of Imaginatik Research, on the outcomes of RFI/RFP programs. The summary of the research: companies who do RFPs for the area of innovation management have a 90% failure rate in implementing successful programs. The detail:

  • 52% (26 firms) projects did not proceed beyond planning phase
  • 24% (12) pilots did not get far enough to be implemented (one took a year!)
  • 12% (6) pilots did not convince management and the project was cancelled
  • 12% (6) change of business priority or loss of project team left project abandoned
  • 8% (4) programs successful implemented to some extent

Second, RFPs are unbelievably time consuming when you have to do them properly. An average RFP takes 20 – 60 man hours to complete, depending on how much detail is required, how individual a response is needed, and whether our team needs to travel to the client to present.

For small firms (we employ 35 people – a lot more than others who might be considered competitive), this represents a lot of work. This would be worthwhile, but most RFPs go no where. Few have any buying commitment.

I personally believe it is unfair for large companies to put so many companies through the rigmarole of RFPs. Let’s be honest – the IT department and procurement group will NOT own this once the system is bought. And the data does not lie – you will fail to achieve your end goals (unless you are in the lucky 10%).

Third, vendors (and buyers) know that many RFPs are a check box game. Tick all the boxes, even if there are some suspicions that you do actually do what is requested, and you go to the next round. So what do vendors do – check the boxes (we try not too – ends up with problems around the tricky areas, so better to confront these issues honestly and directly with the purchasing group).

And yet, is that what companies want? Of course, an Idea Management vendor has a tool for idea submission. D’oh!

What is really needed is for companies to take the time to work out what makes their needs UNIQUE. What is it about their firm, their process, their culture, their management expectations, that requires a unique response?

To illustrate, large, complex organizations need systems AND vendors that can handle large, complex organizations. So, if this is your biggest need, focus the RFP on that. Look for a vendor that will be around in five years, that does not rely on 2 people in a basement in Jersey City (or wherever). Look for someone who has explicitly and obviously done it before.

And (now don’t get me started), call up the references! The amount of – I’m going to have to call them lazy – firms that run RFPs and do not take 30 mins to call the reference companies is frankly a disappointment. Tiny companies ALWAYS cheat on their references – they have to, as they are not big enough yet. That does not excuse your procurement team – and business buyers – from not making a couple of hours of calls. Call the references – NO EXCUSES.

So, on that happy note, what can we learn from this:

  • companies should try to avoid RFPs if they can
  • if you have to do an RFP, focus on what makes your needs distinct from the generic
  • if you have to do an RFP, call the references FIRST THING to make your review job quicker

There you go. Over to folks to go implement.

2 Responses to “Swamping the Row Boats – How Big Companies Do RFPs”

  1. Mark,

    Regarding RFPs, I wanted to bring a resource to your attention: the RFP Database.

    -David

  2. Many thanks David – an interesting resource. Cheers, Mark

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