RFP process and steps: The ultimate guide to streamline your process
RFP process and steps: The ultimate guide to streamline your process
While incredibly important, the RFP process is often complex and time-consuming. It’s a challenge for many, but with the right approach and resources, you can speed up the process. In this blog, we’ll offer you tools to enable you to feel more confident managing RFPs. We’ll start with understanding what they are, the roles in the RFP process and the key steps in the process. Let’s explore.
An RFP is a formal request in which the issuer asks vendors to submit proposals demonstrating how a product or service they offer can address one or more of the issuer’s key business needs. RFPs have played a crucial role in business for many years. They allow issuers to vet the offerings of various vendors and allow vendors to demonstrate their solutions’ unique benefits.
“The request sets out specifications describing the solution it seeks and evaluation criteria disclosing how proposals are graded. Requests for proposals may include a statement of work describing tasks to be performed by the winning bidder and a timeline for providing finished work.”
RFP roles and responsibilities
To be successful, requests for proposals require tremendous coordination. Various stakeholders must work together to identify a need, gather information and explore solutions.
Defining and documenting key roles and responsibilities ensures your organization develops an effective RFP process.
Key players in the RFP process
The RFP consultant is responsible for understanding the needs of their client and properly explaining those needs within the RFP. They are also responsible for selecting qualified vendors, managing communication and assessing their qualifications.
The procurement manager coordinates the creation of the RFP. They must work with several internal team members to determine exactly what the organizational challenge or pain is and what solutions would best solve the problem at hand. In addition, they reach out to vendors with the initial request, monitor progress, answer questions and evaluate the responses.
The business unit, department or team requesting the purchase or solution. Often stakeholders will help determine what the solution should accomplish and key factors or features for consideration. In some cases, the business stakeholders may also participate in evaluating and scoring the RFP responses.
The chief financial officer (CFO) will evaluate costs and return on investment (ROI) to determine whether a solution is financially viable.
Issuers may leverage additional tools to support the RFP process. For example, digital vendor profiles centralize vendor information and allow issuers to create a shortlist faster. In addition, they may use client discovery, which enables consultants to capture client needs for the RFPs they issue on their behalf.
6 essential RFP process steps
By definition, RFPs provide a lot of crucial information in order to allow a business to make an informed and strategic decision. To achieve that goal requires a substantial amount of preparation, research and skillful execution.
While it may seem complicated, the RFP process is fairly straightforward when broken down into the essential six steps.
Gathering RFP requirements
Crafting your RFP
Conducting the initial evaluation
Following up with shortlisted vendors
Making your final selection
Creating and completing the contract
1. Gathering business requirements
A successful RFP leads to a partnership. With the goal of finding the best partner in mind, it’s important to provide vendors the background and context to understand the business’s needs. This ensures vendors develop an understanding and are empowered to respond appropriately.
The RFP should inform vendors about the problems the issuer hopes to address. Certainly, it’s in the issuer’s best interest to make this document as clear as possible. The more information provided, the more accurate and useful the proposals will be.
When gathering information and solution requirements from key stakeholders, there are four primary areas of consideration. The RFP should detail each of these elements so vendors may deliver effective responses.
Stakeholder discovery considerations
First, ask stakeholders for information about the need. What are you looking for? Are you interested in a long-term partner or a solution for a one-time project? What challenge are you solving? Use that information to detail the purpose of the RFP. This sets expectations early and ensures you only receive proposals from qualified suppliers.
Next, explain exactly what the business wants to achieve. Ask stakeholders how they expect the vendor to solve the challenge. In addition, ask what role will the vendor play in helping you be successful? What would a successful outcome look like?
Discuss with stakeholders what the most important factors of the solution are. When you receive the proposals, how will you score them? What will be the most important information to help you make a decision? This will be different in almost every RFP. For example, the most important factor may be price, availability, speed of the solution, customer experience or any other number of technical or intangible considerations.
Gather any additional notes about what might be nice to have in a solution. These should not necessarily be requirements, but instead a wish list of things that might improve your view of a vendor’s offering. This allows vendors to highlight these items if they offer them, while not discouraging responses from those that don’t.
2.Crafting the RFP document
Every RFP has questions. While some have a dozen questions, others may have hundreds. To simplify evaluation, it is helpful to keep the number of RFP questions as low as possible. Not only do shorter RFPs make selecting the right vendor much more simple, it will also increase the on-time completion and prevent helpful vendors from declining to respond.
Using the information you gathered from stakeholders, begin crafting questions. For essential requirements, phrasing questions in a yes or no format can help quickly eliminate unqualified or underqualified suppliers. On the other hand, if you’re seeking a partner with a deep understanding of your industry and needs, open text answers can encourage suppliers to share their creativity and vision.
Key questions to ask in an RFP include:
Do you offer a trial?
Free trials can give issuers a clear picture of what the vendor has to offer with no risk to their organization.
Who are your competitors? Asking this question can help issuers determine a vendor’s integrity. It lets issuers know whether the vendors are honest about who their competitors are and why they lose to them. It can also help issuers determine if there are other options they should explore.
What is your implementation process like? When purchasing software, setting it up correctly is crucial to maximizing its effectiveness. RFP issuers should determine how long the implementation process will take and how involved the vendor will be.
What kind of training do you offer?
The more complex the solution, the more important this question is. Certainly, if you don’t understand how to use all the solution’s features and functionality, you may miss out on key benefits. Issuers should inquire about the vendor’s customer success team, scope of training vendors offer, as well as the available formats. For example, will support only be offered by phone or will there also be online self-service and email?
How do you handle customer support?
Almost all software users encounter an issue at some point in time. Issuers should determine how long vendors take to respond to customer support requests, as well as how they can submit those requests.
Can you provide references, reviews and case studies?
In the absence of a trial, there’s no better way to determine the effectiveness of a solution than by learning about the experiences of those who already use it. Ask to talk directly to a current customer. If possible, request to speak to one that has a similar business or use case.
Additional considerations when writing an RFP
Finally, RFP issuers should ask questions related to their industry. It’s important to determine whether a vendor understands the business’s challenges and can use their experience to be successful.
As you build RFPs, you may find it helpful to save them as templates. Remember, always review your templates and remove any unnecessary or irrelevant questions. RFP software makes this easy with dynamic templates broken down into sections.
3. Initial evaluation to select shortlisted vendors
After vendors have submitted their proposals, the RFP issuer can begin a preliminary evaluation. During this stage, the issuer will identify a subset of vendors who are most qualified to address their needs. This subset is known as a shortlist.
3 steps to select your shortlist:
Compare critical factors to vendor strengths
Eliminate vendors who are not qualified or cannot compete
Identify differentiation factors for an in-depth comparison
Questions for evaluating vendor proposals
Did they provide a timely and accurate proposal?
How long has the supplier been in business?
Is the supplier able to scale as your business grows? Will they be able to meet your needs in the future?
Has the supplier been recommended to you by a peer or network connection?
Is the vendor a member of a trusted organization, trade association or certified by a government agency?
Do they have experience working with your competition or other businesses in a similar industry?
4. Follow up with shortlisted vendors
Once the RFP issuer has determined which vendors made the shortlist, they can begin a more in-depth evaluation. This process should identify which vendor will ultimately win the bid.
Engage the shortlisted vendors
Ask follow-up questions that focus on critical factors
At this stage, it’s important for issuers to differentiate between the remaining vendors’ offerings, while maintaining leverage. According to Computerworld:
“Vendors still in consideration can be commended for their efforts thus far, as a goodwill gesture. But they must also be told that there’s still competition and that they must sharpen their pencils. Your essential customer objectives at this point are to maintain flexibility, establish some negotiating power and keep your options open. A misstep here can lose you some leverage.”
Vendors should be able to show how their offerings differ from the rest of the competition. By this point, the issuers’ needs and concerns should be clear, providing an opportunity for targeted messaging.
5. Completing the final evaluation
At this stage, the RFP issuer should have a thorough understanding of what each vendor has to offer. Now, it’s time to decide which solution will best address their needs.
To properly evaluate vendors, the issuer should compare each vendor side by side. This often involves a strategic scoring process, such as weighted scoring — where sections or individual questions which represent the areas of biggest concern are valued most heavily.
Key stakeholders should engage in the evaluating and scoring of finalists. Certainly, you may review and score in a group setting or individually. If individual scores are provided, areas of disagreement can be identified and addressed if necessary. This improves buy in from stakeholders and ensures that each perspective is accounted for.
In some cases, additional stakeholders may be required for scoring. For instance, if purchasing a software solution, it’s wise to have the IT department review technical specifications and security.
After scoring the vendors, issuers should have an internal review of the scoring where they make their final vendor selection. If the scoring process is inconclusive or the group did not come to a consensus, you may wish to schedule additional interviews or follow-up demos to address any lingering questions.
6. Creating, issuing and signing the contract
Once the issuer selects a vendor, it’s time to document the decision, as well as the go-forward process. This should include:
Providing the RFP results to the legal department
Drafting a statement of work (SOW) from responses gathered
Including performance metrics and review process in the contract
Advice for your statement of work
The SOW should be as detailed as possible as it defines how the RFP issuer and selected vendor will work together. This is why it’s important to include performance metrics and the method of review. These key elements ultimately inform the vendor of what’s expected of them and protect the RFP issuer in the event that the agreed upon expectations are not met.
The importance of creating a careful contract
The process of creating and signing any contract requires extreme care. Indeed, they are crucial should any litigation become necessary.
Eliminating misunderstandings and confusion
Reinforcing the commitment of both parties
Providing clear financial expectations
Limiting and defining your liability
Serving as a valuable reference document
Once your contract has is final and complete, your RFP can be closed. At this point, it’s time to inform vendors of the outcome and provide feedback about the reasons behind your decision if possible. Certainly, they will appreciate the information and maintaining a positive relationship with suppliers ensures that next time you have a challenge, they’ll be eager to help you find a solution.
As you move forward with your new partnership, remember to check in and evaluate the results. It’s wise to stay engaged to periodically review ROI and outcomes to ensure that expectations and needs are being met.