Looking
for alteration in your outsourcing engagements? – You might want to dump the
conventional, decades-old request-for-proposal (RFP) process which was used to
go through bidding process.”RFPs by their very nature are prescriptive in their
requirements and prescription is almost antithetical to innovation,” Tom Young,
partner with outsourcing consultancy ISG says.
The long established RFP approach facilitates comparison of like offerings . This makes selection and review process easier at the same time it obstructs or restricts innovation by prescribing a solution. The more the buyer indulges in RFP, the lesser is the innovation or flexibility. The RFS, on the other hand, opens the field to a broader pool of players – and potentially to innovative solutions. In contrast to a detailed, buyer-led RFP, the RFS is an open-ended, collaborative process. A buyer knows that he wants his IT environment transformed, however he might not know what needs to be done even though a detailed RFP implies he does. An RFS can reveal options an outsourcing customer may not have thought of. The customer describes its IT environment, objectives, concerns, and risk tolerance and the potential suppliers come back with unique solutions that meet those general requirements.
To better explain the difference between RFP and RFS process, Young takes an example of vacation-planning. With traditional RFP approach, you’d ask a travel agent find the cheapest package for a family of four to fly from New York to a hotel room within five miles of Disneyworld for five days in June. Whereas using RFS approach, you’d say you want to take a family of four on a five night vacation and spend $4000 or less and then select from the variety of options the agent provides that meets those criteria—a cruise, a camping trip, a European tour, or Disney. (Source: ISG Information Services Group – The RFP will never be the same)
Many big players who have been working with the traditional RFP approach and are doing fine may never go for RFS approach as it requires significant alteration in their sales practices as well. However, RFS is attractive for tier-two providers who may not have required resources to pursue major deals through the traditional RFP process.
Though RFS has quite significant benefits, it need not necessarily be applicable in all circumstances. Since the RFS involves selection criteria that are more qualitative, soft benefits such as “cultural fit” can trump traditional quantitative measures. Generally, the approach is better suited to solutions requiring innovation and transformation, or to situations that raise questions that have more than one right answer.
When it comes to straightforward optimization – no transformation, innovation or it includes components such as market standards or implementation of process improvement or best practices, the better suited approach would be RFP.
The traditional RFP has been an effective tool in enabling competitive pricing and efficient oversight of service delivery. But as client organizations mature and their approaches to sourcing become increasingly sophisticated and ambitious, new models are needed to allow for innovation and creativity. The Request for Solution offers a promising approach to enable service providers to leverage their expertise and capabilities to address the business challenges of their clients.
The long established RFP approach facilitates comparison of like offerings . This makes selection and review process easier at the same time it obstructs or restricts innovation by prescribing a solution. The more the buyer indulges in RFP, the lesser is the innovation or flexibility. The RFS, on the other hand, opens the field to a broader pool of players – and potentially to innovative solutions. In contrast to a detailed, buyer-led RFP, the RFS is an open-ended, collaborative process. A buyer knows that he wants his IT environment transformed, however he might not know what needs to be done even though a detailed RFP implies he does. An RFS can reveal options an outsourcing customer may not have thought of. The customer describes its IT environment, objectives, concerns, and risk tolerance and the potential suppliers come back with unique solutions that meet those general requirements.
To better explain the difference between RFP and RFS process, Young takes an example of vacation-planning. With traditional RFP approach, you’d ask a travel agent find the cheapest package for a family of four to fly from New York to a hotel room within five miles of Disneyworld for five days in June. Whereas using RFS approach, you’d say you want to take a family of four on a five night vacation and spend $4000 or less and then select from the variety of options the agent provides that meets those criteria—a cruise, a camping trip, a European tour, or Disney. (Source: ISG Information Services Group – The RFP will never be the same)
Many big players who have been working with the traditional RFP approach and are doing fine may never go for RFS approach as it requires significant alteration in their sales practices as well. However, RFS is attractive for tier-two providers who may not have required resources to pursue major deals through the traditional RFP process.
Though RFS has quite significant benefits, it need not necessarily be applicable in all circumstances. Since the RFS involves selection criteria that are more qualitative, soft benefits such as “cultural fit” can trump traditional quantitative measures. Generally, the approach is better suited to solutions requiring innovation and transformation, or to situations that raise questions that have more than one right answer.
When it comes to straightforward optimization – no transformation, innovation or it includes components such as market standards or implementation of process improvement or best practices, the better suited approach would be RFP.
The traditional RFP has been an effective tool in enabling competitive pricing and efficient oversight of service delivery. But as client organizations mature and their approaches to sourcing become increasingly sophisticated and ambitious, new models are needed to allow for innovation and creativity. The Request for Solution offers a promising approach to enable service providers to leverage their expertise and capabilities to address the business challenges of their clients.
About Author:
Nisha Tolani is consultant and part of Systems Plus Pvt. Ltd. She is a part of consulting team that delivers Sourcing and Vendor Management Office projects. She can be contacted at: nisha.t@spluspl.com
Excellent article. Crisp and a good educational read. I'll follow this blog - Bryan Carter, PMP
ReplyDeleteWhat exactly is RFP, is it any similar to ERP? Talking about enterprise resource planning, there is nothing better than microsoft dynamics 365. And now it's so affordable and easy to get, thanks to Anegis Consulting!
ReplyDelete