A World Of Opportunity

The RFP…

…Is a document containing

a detailed list of technology
and business requirements
for a given project.
…Is a document which is
typically sent to a targeted
group of vendors to solicit
their proposals to work on
your project.
Writing an RFP...

...Requires a great deal

of time and effort
...Isn’t essential for every
technology project
... Isn’t a request for
information (RFI)
document
...Is reaching out to
"best of breed" vendors
There is a Difference Between
an RFI, an RFQ, and an RFP...

... An RFI (Request for Information)

Is used for planning and decision making.

... An RFQ (Request for Quote)

Is most appropriate if you need pricing on commodified
products or for making decisions based on a quantitative
analysis of a proposal.

... An RFP (Request for Proposal)

often involves a multifaceted set of evaluation criteria, based
not only on price, but on the total cost of ownership and the
fit of the solution to the organization's goals and objectives.
•  Internal alignment:
Forces your agency to lay out your
perceived needs before involving a
vendor.
•  More accurate proposals:
Allows vendors to clearly understand
your needs so they can provide you
with more accurate estimates of costs
and time frames.
•  Comparable solutions:
Ensures that each vendor receives
the same set of requirements and
thus yields a similar and comparable
set of proposed solutions.
 When Does My Organization
Need an RFP?
Formal RFP    
Informal Process

Projected budget   Greater than $10,000   Less than $10,000  

Projected timeframe   Several months   Several weeks  

Impact on organization   Moderate/high   Low/moderate  

Variations in solution Broad range of Narrow range of
space   solutions/options   solutions/options  
Approximate document 20-plus pages   10 or fewer pages  
length  
Approximate level of Highly detailed   Overview/summary  
detail  
• Identify organizational goals.
• Identify stakeholders.
• Identify project objectives.
Overall, the process is a good one.

•  Customers document their requirements

and needs
•  Vendors are qualified and solicited
•  Customers compare and contrast vendors
to ultimately select the finalist
 RFP Process
Two Interrelated Events

•  Vendor Selection

•  Vendor Negotiation
The Point Of Selection

•  Other vendors have

been eliminated
•  Some vendors drag out
negotiations
–  Customer time investment
•  Customer concessions
are made
Change Vendor
Selection Sequence

•  Negotiation process begins

parallel to the vendor selection process
•  "Pre-negotiate" the price and contract before
leverage is materially eroded
•  Negotiate when a "short list"
of vendors has been determined
•  vendors are instructed to provide
"best and final offers," or BAFOs
 Request For BAFO’s

•  Short-list vendors may make concessions

in order to seal the deal
•  Finalist vendors may be guided to be
more competitive
•  Vendor response to contractual concerns
or issues
 Time and
Resources

•  Final negotiations are administrative

in nature
•  Conclude final negotiations
immediately
•  Customer will still have the
opportunity to engage an alternative
finalist
Measuring the
ROI of a Vendor

•  Service-level agreements

•  Key performance indicators

–  Commitment

–  Innovation

–  Flexibility
Balanced Scorecard

Weighted metrics
– Relationship
– Cost management
– Quality
– Delivery
 Balanced-Scorecard Elements
Cost
Relationship Management Quality Delivery
Quality/ expertise of On-time
Commitment On-budget delivery
staff delivery
Lead time/
Flexibility Discounted pricing Staff turnover Order cycle
time
Shared price Response/
Innovation Order accuracy
reduction repair time
No. of defects/ Orders
Customer
Invoice accuracy Conformance to delivered
satisfaction
specs completely
Percentage of
Dead on arrivals/
vendor-managed
Shipping damage
inventory
Order costs Warranty returns
Transportation/ Mean time between
shipping failure/ repairs
 Commitment
•  Number of account management visits
•  Special access to new developments within the
vendor's research and development activities
•  Tours of vendor facilities
•  Access to vendor's sensitive information
•  Access to vendor subject-matter experts
•  Quality of vendor-customer executive relationships
•  Trust Ratio =
Promises Made By Vendor
+ Promises Kept By Vendor
 Flexibility
•  Willingness or ability to respond to unanticipated
demand
•  Willingness to modify order entry systems or
other vendor systems facilitating customer
•  Flexibility of contract terms and conditions
•  Ease of negotiation
•  Willingness to change products or services to
meet changing needs of customer
•  Number of contract disputes
 Converting Performance Into
Quantifiable And Quantitative Measurements

•  Value-for-money metrics
•  Ongoing evaluation
•  True partnership-in-practice behavior
•  Categorizing vendors
–  Vendor management,
–  Conducting a vendor rationalization program
–  Determining vendors to invest more time in
–  Developing vendor relationship rules of
engagement.
 Account Reviews
•  Regularity
•  Discussed the balanced scorecard
•  highlight the more strategic aspects
•  Utilize the 6-6-60 format
–  past six (6) months' value-for-money metrics
–  next six (6) months' plans
–  within sixty (60) minutes