How to Build A Quality RFP

Don't jump into the Request for Proposal process unprepared.

By Mary Hegarty

Let's face it, most people cringe (or worse) when faced with the prospect of initiating or responding to a major Request for Proposal (RFP).

The RFP process doesn't have to be a cause for undue stress, though. Done right, RFPs can be a valuable learning experience for both the buyer and the supplier.

An in-plant manager has challenges that the average buyer does not. You are faced with buying equipment that will meet all the needs of very diverse customers, each with their own budget, time and requirement constraints. You need to get input and buy-in from a number of internal groups to justify new equipment. Getting that information can be a tough job. A well-constructed RFP process can help by giving you guidelines from which to work.

In some instances you may need to do some preliminary work before the RFP. A Request for Information (RFI) is a tool used to gather information about specific vendors' products and/or services or a category of product or service. It is not a request to bid, but a way of gathering information necessary for the RFP, or to narrow the field of vendors.

If you don't have time for an RFI, or you have identified your field of potential suppliers already, consider an LOI (Letter of Intent) mailing. An LOI should be short and to the point. Clearly state the "non-negotiables," the time frames and any other important requirements, such as volume, scalability or service-level agreements for the product or service sought. The LOI should require a response with an intent to bid by a stated date. If the supplier does not respond, do not send the RFP.

An RFP is used as a basis for contract negotiations and is a more involved process than either the LOI or RFI. Companies often use both an RFI and RFP process—the RFI to get general information and help establish a healthy list of candidates for the RFP, and the RFP to choose the right supplier. This article will focus on the making of a quality RFP.

Setting Goals

Once you have decided to go through an RFP process, a cross-functional project team is necessary to establish goals, define requirements and facilitate buy-in for the final decision. Make sure each functional area that will be impacted by the outcome of the RFP is represented on the project team. Include the legal department, as RFP responses will be the framework for your contract with the selected supplier(s).

Both the suppliers and the project team may be evaluated on the success of the RFP, so make sure clear goals and measurement criteria are established up front. This includes criteria for the suppliers, measurable results for the implemented solution, and goals for the RFP process itself.

The RFP process should have a defined budget and time line, and should be treated like any other mission-critical project. You will need a project manager who can handle internal and external resources equally, as well.

Choosing The Suppliers

If you have a preferred-vendor list, go with that. Just remember to keep up with technology and industry changes to keep your list of vendors up to date and allow you to choose from the best. If, on the other hand, there is not a clearly defined category for the solution you are seeking, you may need to pursue several avenues to establish your list of vendors.

Ask colleagues and industry representatives for vendor recommendations and appropriate terminology. Make use of association Web sites for your industry and Internet search engines.

Don't send out the RFP to everyone. Ideally you want to identify the full range of available suppliers early in the process, and then narrow it down through direct research or an RFI process before sending out the RFP. You want enough suppliers bidding to give you bargaining power but not so many that the RFP process costs a fortune.

Analysis And Documentation

The effort you spend defining and documenting your requirements is the most critical part of the RFP process. This may be your biggest challenge, but you need to work hard to make internal groups feel they are a part of the process. Review the workflow and requirements for each functional area and document them, as well as how they may change with a new product or system. Gather the most current supporting documentation and samples. Think about future requirements that may have relevance to the RFP and your requirements.

If you are making major changes to a legacy process or purchasing a product for which there is no existing knowledge on your team, either get training, or engage a consultant to assist your team. If you don't know what is possible, you won't ask the right questions, and you won't get the right answers.

Circulate the documentation within the internal groups and have them review it for accuracy. Once the requirements are approved, you will use this information to shape the narratives, questions and evaluation criteria for the RFP.

The RFP Document

When structuring the RFP, think about the person trying to answer it and try to make it easier for him or her. Begin by structuring the document in a logical manner. Some things to consider are:

• Put all "administrative stuff" in one section and avoid repetition. Include the rules for response, time line, contact information, etc.

• State your evaluation criteria clearly, and frame questions in a manner that will elicit measurable answers.

• If something is non-negotiable, highlight it clearly up front.

• If your RFP encompasses more than one function, break out the workflow and questions for each area separately.

• Use appendices for flowcharts, diagrams, hardcopy samples, etc., and refer to them in the narratives. Don't incorporate every detail in the body of the RFP.

• Ask clear, measurable questions, but also craft an "essay" section. Give suppliers leeway to be creative.

• Insist that marketing material is included in an appendix, not the responses.

• Consider creating a pricing matrix so that each supplier provides its final pricing in the same manner, enabling you to make an apples-to-apples comparison. To make it even easier to review, create a pricing spreadsheet and insist the respondents use it.

Response, Evaluation And Selection

Schedule time for supplier questions. If the RFP is complex, you may want to schedule two dates since more questions can arise once the response is under way. Remember, you want the suppliers to deliver an informed response. Compile all the questions and answers (except those deemed proprietary in nature) and send them out to all suppliers. Set up a conference call with each supplier to talk through the questions. Strive to maintain a level playing field even if you feel a particular vendor may be the front-runner. Decide ahead of time if you will take phone calls outside of the documented process.

While your evaluation criteria should be established as part of the RFP, now is the time to organize them for deployment on incoming proposals. Create a spreadsheet listing criteria to be used as the project team reads and rates the responses. Each criterion should be weighted, with the "must haves" weighted the highest. Break the criteria into the same sections as the RFP, to make it easier to rate for the reviewer. Set a schedule of meeting times with the project team to review each response a first time.

Depending on the number of suppliers, you may want to set up a first round of reviews, with the goal of eliminating the weakest. If there is a clear disparity between the highest and lowest rated response, it is an indicator that you can safely eliminate. Have the project team come up with a list of questions for the suppliers. Let team members concentrate on their areas of expertise and dig deep into those areas for questions. After the call, sit down and go through the evaluation sheet again.

You may be able to narrow the field further through checking references. Organize the reference process so you can be fast and efficient. Focus on areas of concern relative to a particular vendor, and ask measurable overall questions for the remaining issues such as implementation, service, support and delivery of promised capabilities. Make sure the reference has an implementation similar to the one you envision. If the references are not appropriate, ask for different ones. Check all references.

Unless responses are very close, limit presentations to three or fewer finalists. Give clear instructions on what you want to see in the presentation. If there are particular areas of concern, state them clearly and fairly and offer a chance to respond. Specify a time limit and stick to it. Encourage—or require—the supplier to invite those who would actually work on your project to attend and present. Don't confuse a great sales person with a great solution. Get the evaluation sheet and rate the presentations immediately after each session.

If a site visit or tour of an installed customer facility is part of your RFP, make the most of it. Allow plenty of time for a tour, a presentation of the workflow and meetings with the people who will support your requirements. Review the agenda in advance of the visit to ensure your needs will be met. Insist on a working session, not a sales pitch. Go through the actual implementation project plan. Get out that evaluation sheet and rate the suppliers again.

By now, you should be very close to a decision. You have worked with suppliers through a long process, not unlike an actual project. If you have rated all of the proposals, presentations, references and site visits against your weighted evaluation criteria, you should have a measurable basis for a decision.

If so, you should feel comfortable with turning the rest of the process over to the legal department to frame the contract. But sometimes the promises in the proposal don't stand the scrutiny of the contract negotiation, so keep a second vendor in mind. Remember to notify suppliers when a decision has been made and thank them for the time they took to respond.

The RFP process isn't over until you successfully complete the implementation. If you have established a good working relationship with the chosen supplier, the job will be much easier. An RFP generated from teamwork will help ensure success and make you and your important customers happy.

.

Mary Hegarty is a senior consultant with Art Plus Technology. She has helped many companies streamline their RFP processes for technology and outsourcing initiatives. Contact her at:

Mhegarty@ArtPlusTechnology.com.