There’s a lot of needless pain and frustration on both sides of the RFP process. Getting the vendors, the procurement department, and the business on the same page is not an easy task.
In this episode, Kris Johnson, Chief Product Officer, and Steve Hastings, VP of Global Business Development, both with Anglepoint, clear up some misconceptions about the RFP process and provide advice for approaching it in a way that enables you to make the most informed decisions.
- Common challenges faced in the RFP process
- Misconceptions about giving too much away
- Trends towards more transparency in services procurement
- Why it’s more effective to understand your requirements ahead of time
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Steve Hastings: You should find somebody that you like, right? You should find somebody you want to work with that you think that culturally there’s a good fit, and personality wise, there’s a good fit and people that you want to see every day, right? Yeah. Because you’re going to have calls, daily calls, weekly calls, monthly calls with these folks for the next three, four, or five years, right?
Kris Johnson: Pick somebody you like. Life’s too short to work with people that you don’t like. Yeah, exactly right. You’re listening to the ITAM executive, a podcast for ITAM, leaders and practitioners. Make sure to hit subscribe in your favorite podcast player and give us a rating in each episode. We invite seasoned leaders to share their tips on how to define your strategy, promote the value of ITAM in your organization, and align your program with the latest IT trends and industry standards.
Let’s dig in. Welcome to another episode of the ITAM executive. I’m Kris Johnson, here with my colleague Steve Hastings. And we wanted to talk about RFPs. This is a topic that we’ve spoken about amongst ourselves many times. A lot of the frustrations that we see by both those on both sides of the RFP in our position, we of course, are responding to a lot of RFPs for organizations that are interested in selecting a managed services provider for IIC management services, right? But we’ve also worked on the other side of things, helping our clients through RFP processes to select SAM tools, for example. There’s a lot of frustration on both sides that we’ve observed and continue to live through, and we thought we could talk about some of those and see if.
Any of these resonate with you and see how we might prevent some of these things needless pain and frustration for everyone.
Steve Hastings: If you think about an RFP process or if you’re procuring some of these high value services, there’s really, there’s the vendors that you’re looking at. There’re also the procurement departments that are facilitating the RFPs. And then there’s also the business who is looking for value, right? Yeah. They’re looking for. Something that can help them to derive some kind of business value for what they’re doing, right? So yeah, trying to get all that put together in a meaningful way so that you get the most out of it is not an easy process.
Kris Johnson: Oftentimes it’s obvious when you’re the recipient of a, of an RFP when there’s disconnect between the business and between the procurement folks that are running the mechanics and logistics of the RFP. This is manifested with the requirements are very superficial.
Haven’t been thought out a whole lot when there’s not a lot of details about the environment, details about the volume of purchases or how large a particular publisher is within their estate. And the q and a process are designed to allow. Would be bidders or respondents to ask questions, get those things answered.
But time and time again, you ask certain questions like that, and you get very, you don’t get an answer. Superficial answers. In part, I think just because of the mechanics of the RFP process, it’s time bound. They’re usually short fuses, which has its place for sure. Yeah. But it often also represents.
Even on the part of the business that maybe they haven’t thought through exactly what they need. And they’re almost wanting the RFP process to show them what they need, show them what they should do, which again is probably okay if they are willing to allow that to happen.
Steve Hastings: I think there’s a misconception in the industry a little bit, that if you give too much away about your environment or about your goals and objectives, that you’ll somehow narrow the responses that you’re going to get or that you won’t get the best broad response that you maybe want from the market or potentially that you’re thinking already, even at the beginning of the RFP about.
Your price negotiation, right? How is this going to affect if I give too much away? Yeah. Am I going to get overcharged? Am I going to get bids that are too high for my budget? There are always those considerations in the back of everyone’s mind Yeah. As you go through this process, right?
Kris Johnson: Yeah, good point. I’m thinking of an example take an Oracle managed service which may be a component of a larger service. We very often on the receiving end, don’t get good information about how much are you spending with Oracle? What kind of agreement type are you in, where are you at in that lifecycle, and what product mix do you use, in kind of some.
Our dominant product is this, 80% or 60, that is hugely necessary for anyone to put together a meaningful proposal. For a meaning proposal requires the bid to know how much effort is going to need to be put into it. Because if you just say, we spend X amount a year on Oracle.
But without kind of at least breaking, it down into product families how much of that is database versus e-business suite versus middleware versus maybe of JD Edwards? Yeah. There are very few firms that can handle JD Edwards and know anything to do about it, right?
But if you have JD Edwards and you don’t tell them, then you’re at risk of selecting a provider that really has no clue how to provide value in the area that you might need it most. But if you’re not willing to give that transparency, you don’t know what you’re asking for one, and you have no idea what you’re getting and your bidders.
Also don’t know either and then it devolves into this what is, what do you default to? It’s usually price, which certainly is important, has its place. But it can also illustrate that disconnect between, the procurement folks and the business folks because, oh, price, we know how to negotiate price.
Says the procurement. People. Yeah. When the bidders are like we don’t know what you need, so we’re just going to float something out there. We might give a range if we can. Yeah. We hope we get there, right? Yeah. And then it gets to how much can you discount? How much can you discount when, what we should be asking is, what do you actually need?
And that hasn’t been transparent. And so, it what you end up with is that outcome of an RFP process that is far away from what you actually needed it to lead you to.
Steve Hastings: And for a provider like Anglepoint, that’s extremely difficult for us. We are consultative sellers to our core, right? We want to understand your business needs. We’re selling a high value solution that requires some customization and a lot of flexibility, right? Oftentimes, our buyers want they want us to be flexible with them. They want us to grow with them right in their journey, and that is tough to do.
If you are being kept out, if you feel like you’re behind a wall, it’s difficult for us to help understand requirements and provide the solution that meets the needs of the customer.
Kris Johnson: I’m very sympathetic to organizations that are doing an RFP process. Having been on the other side, helping them use an RFQ process to select a tool, it’s so hard to get to an apples-to-apples comparison. Especially when you. Maybe don’t know very well or haven’t articulated or documented what your true requirements are and why because you’re going to get, different flavors.
And I think one of the trends we’re seeing right now is RFPs being a bit broader. Yes. Maybe by design, but maybe also because they haven’t done the hard work of the requirements analysis. Yeah. In part, they want to see what does. What does Yeah, this provider recommend and maybe you’re trying to get some free consulting out of that, which, don’t, no shame in that.
But at the end of the day, you need to get to, if price is your biggest driver, you need to get to an apples-to-apples comparison because you’re getting a low cost here, but you’re getting a higher cost here. But what they are providing and approaching and say that they’re going to do is far and away better than what is over here that you may have asked for.
But we run into this all the time, right? The customer’s asking for this, but we know that’s not going to give them what they are trying to achieve, right? So, we try and say here’s. Okay. If you really push us here’s what we think this would equate to. Yeah. But what you really should be asking are these things over here.
And this is what is going to mean success for you. But there’s a risk for the bitter of doing that because then you’re going to be compared with somebody else that hasn’t done that.
Steve Hastings: Yeah. And you may look more unfavorable than them.
Kris Johnson: When you’re actually providing better value in the end.
Steve Hastings: And we see this a lot because you can tell when this is happening because the original RFP documents will come out. All the responses will go in, right? There will maybe be some Q&A sessions or some oral presentations, right? And then weeks and sometimes months later you’ll get another call back from procurement or from the business and they’ll say, we’re just having a hard time reconciling your solution.
Can you give us more detail? Can you break down more of what you’re right? And you can tell that they’re trying to get to that apple-to-apples. They’re having a really difficult time. If they would’ve frontloaded some of those conversations earlier in the RFP process, they could have shrunk their time to solution. And been able been ready to procure a solution much faster which helps the business.
Kris Johnson: I think mature organizations recognize that. The RFP process because you, this isn’t for a commodity good or service, right? If it’s commodity, good, and service, and everybody else is delivering the same thing then, price is your main driver.
But, in a scenario like this, where it’s a managed service provider for a high value service, whether it is differentiation between the service being offered mature organizations look at it to identify who can we have trust in? Who instills confidence in us that they know what they’re doing but can make sure that.
It’s a partner we can work with because if you’re going through, let’s say it’s a three-year minute service, your needs are going to evolve and change over that period. And you want a partner that’s going to be flexible and provide best value for service as those needs evolve.
Steve Hastings: And it used to be that there was not that much information out there about these services, right?
It was very high level; it was very difficult to find the providers that were the most relevant. But now, especially in our industry, especially in the last, I don’t know, three, four years, there’s been just a wealth of information that’s been released about how to do its management what are the best practices, what are the standards and tools that are best, right?
And so, there’s a lot of information out there and Procurement departments who recognize this are looking for providers to help them make sense. Of all this information, can I take everything that’s out there and distill it down into what I need? And is there a provider out there that can really help me to make sense of that in a meaningful way?
And a smart and mature procurement department will look for that in providers, right? Who can help me to take all the information that’s on the buffet table. And just pick and choose the things that are most important to me.
Kris Johnson: I think a helpful analogy when you look at kind of other industries if you look at legal services. Nobody’s doing a reverse duck auction to find the cheapest lawyer that they can.
Your office general council is going with who they know is recognized as experts in the field, right? Based off, their networks who’s providing best services and then interviewing those people, getting confident with okay, you’re going to be taken well care of.
Because we recognize that the cheapest lawyer out there is probably the cheapest lawyer for a reason, that’s exactly right. There’s nobody else is willing to pay for the service. That they’re entering, which has a value that the market dictates. I guess to procurement organizations, it might be good to recognize that this is not a commodity service in, in most regards, and that the more information and transparency you can provide the more meaningful information you’re going to get, to be able to make the most informed decision.
Steve Hastings: We’ve been in a few RFPs involved in the last couple of months where it’s been a very different process. There’s a trend now in services procurement to be a lot more open, right? To be a lot more transparent and instead of dictating to the market what they’re looking for, they request from the market.
What are the best practices? What solutions do you bring? And they’re looking for A way to pick and choose the best solutions for them. There’s a little bit of a double-edged sword there, but they’ve opened and been a lot more transparent in terms of what they know and what they don’t know.
What their business environment looks like, what their technical environment looks like, and it’s a much more collaborative process. Although, it does usually lengthen the time to solutions and as long as they recognize that they’re probably going to end up with some apples to oranges comparison.
Kris Johnson: Correct. And as long as price is only one component that they’re looking to evaluate on, and capabilities and fit and, comfort level are going to be equally weighted.
Steve Hastings: And most providers out there are willing to talk about price. But not until the very end of the process when we’ve all.
Come to a solution that we feel comfortable with. We feel comfortable with each other. We feel comfortable that you’re the provider that we like. And then most providers, once they’ve, once they Anglepoint is like this, once we feel that we’re, we have a solution that will meet your needs and that we’ve been able to develop that for you. We’re happy to talk to you about value for sure. We’re happy to talk to you about price. We’re happy to talk to you about ways to structure a deal so that it makes the most sense for you from a budget perspective. Or from a discount perspective, those are conversations that we’re always happy to have, but we want to have them in a transparent way.
Kris Johnson: I feel like we’re talking about price a lot for some reason, but it does figure prominently. One thing to recognize too, if you’re looking to selective and services provider or interprofessional service for that matter, you’re largely going to get what you pay for.
If you squeeze that provider. So much on price. It, it forces you to have to go to a low-cost delivery center offshore perhaps, which isn’t necessarily a bad thing all the time, but oftentimes you’re diluting the expertise. Yeah, because it’s rare that the world’s experts on that issue or topic are going to be in the lowest cost area.
Of the world. It just doesn’t work like that. And squeeze on cost, they’re going to be forced to make cut some corners inevitably somewhere I remember we got brought in by a large healthcare company on the East coast several years ago to do an assessment. We did a workshop strategy development workshop.
Of their SAM program and they had an existing managed services provider. And they wanted some help on understanding how they got more value out of that service. Sure. So, we looked at what was being provided, some of the strategic direction, we did a tooling review, all those things.
And one of the things that we recommended to them is, you’re not paying your money services provider enough. As an independent third party. We’re telling you’re not paying our competition enough because they have the expertise in some of these areas. Yeah. But you’re not getting that expertise because, you’re not paying for it.
They can’t afford to give it to you. So, it’s something to recognize that you’re going to get what you pay for to a large degree.
Steve Hastings: They were for, not just in terms of ours, but in terms of expertise. They were forced to probably leverage down to let’s experience resources. Maybe you don’t get all the value that you’re, it’s like a balloon, right?
Kris Johnson: You squeeze on one side; it’s going to push out the other. You can’t compress that arrow at one side.
Steve Hastings: It must give somewhere. One other thing that I think is relevant when you talk about RFPs is the amount of time that it takes to complete the process right from start to finish and, as a as a managed services provider.
We only see the back half of that process right. From the time the RFP is released. But even before that, there’s a significant amount of time and effort that’s on the requester’s side for gathering requirements and getting stakeholders aligned and getting budget approved. And there’s a huge process that even comes before that.
And so, by the time the RFPs is released, and you start to interview providers and you start to do pricing negotiations and contract negotiations, by the time the end, that process can be significant. Like we were in an RFP large company out of Europe was looking for Sam managed services. And from start to finish that process was over a year.
And that’s a year for companies like ours that provide value add services, that’s a year of not having those services in place. And the value that you lose during that time by taking such a long process to pick a provider. Is a significant cost. And it’s probably in most cases is a much larger cost than you might save by spending a long time negotiating between providers or trying to negotiate on price and safe.
Kris Johnson: Yeah, it’s a great point. It’s obvious when the company, the organization hasn’t done their homework, correct? Yeah, and you see this all the time in orals presentations where there can also. All be some contention or tension between different folks in the business that have a different agenda.
They’re not, yeah, they’re not aligned on what they’re needing. And so, you get to questions like are you going to do this? There’s, there, that was never mentioned in the RFP what you wanted. We can absolutely do that. We didn’t know you wanted that. You didn’t specify that.
Yeah. And there’s kind of this cross tension in the room. Yeah. Because they haven’t done the consensus building and alignment internally.
Steve Hastings: That goes back to consultative transparency, right? Yeah. And we say in a lot of cases, you will have a much better and more productive RFP process if you would’ve just spent some time ahead of time, maybe some time and some money.
In understanding your requirements, right? Understanding your use cases, maybe even doing a strategic roadmap or direction workshop with a provider like endpoint, to help front load some of those strategic questions so that when you do get to an RFP, you know exactly what you need.
You know exactly what you’re looking for. And then when you see it in the marketplace, you know it, right? Yeah. This is what I want. This sounds good. Let’s find a good way forward with these with these guys. Yeah. It’s always frustrating.
Kris Johnson: I know we’ve experienced this in the last year. You go through lengthy RFP processes, the, as the bidder. You go through the orals process, right? All the effort that takes. You get to down selection and then even getting awarded as the provider. And we’re like, great, let’s start, bring in, all the people and we’re off to the races and they’re like, oh, we need to go make the business case, get the budget. Now it’s Wait minute, who are we dealing with here?
Steve Hastings: But nothing is more frustrating than that.
Kris Johnson: I think it’s just part of professionalism, right? In the world that we live in, that there’d be an element of transparency. Hey, we’re going to need your help if selected to create the business case for this.
Steve Hastings: We want to help as a provider. I’m sure that all providers are like this. We want to help, right? We want to. Get you the best solution for you. We want you to provide value because we’re interested in a long-term relationship.
This is not a one and done for us. This is not a two-month project where we’re going to come in and then we’re going to leave. We want to be in it for the long term. And the right amount of transparency and preparation up upfront can yield tremendous benefits down the road. Yeah.
Kris Johnson: Yeah, transparency being real with each other recognizing that you’re selecting a good fit, right?
These are people that we’re going to be working together for the next three plus years, and so you want to make sure that you like them and that they’re people that you can work with, that you’re going to be flexible because it is a partnership, it is a relationship. It’s not a commodity service, and it shouldn’t be treated like one.
Steve Hastings: That’s a good point. I think you and I were in a presentation meeting with a large organization here in the us. And at the end of the presentation the client asked us, if you were us, what would you be asking? What questions have we not asked? What should we be looking for that we haven’t thought about?
And I think you said listen, you should find somebody that you like, right? You should find somebody you want to work with that you think that culturally there’s a good fit and personality-wise, there’s a good fit and people that you want to see every day, right? Because you’re going to have calls, daily calls, weekly calls, monthly calls with these folks for the next three, four, or five years, right?
Kris Johnson: Pick somebody you like, life’s too short to work with people that you don’t like. Yeah, exactly, right?
Steve Hastings: So, find somebody that you fit with, that you that you feel comfortable with, and that you there’s going to be. There’s certainly in any service like that, there’s going to be challenges.
And so, find somebody you can work together with to, to overcome those things. I think that’s important that a lot of RFPs don’t think about that. Yeah. Yeah.
Kris Johnson: I think this has been a good discussion. Hopefully some of these points have resonated with you and we have some things that we recommend that organizations looking to select a managed services provider, ask your managed services providers.
To get good information out of them that is going to be differentiated so that you can make a good comparison. So hopefully that’ll be of some help.
Steve Hastings: Definitely. All right. Thanks Steve. Thank you. I appreciate it. Kris.
Kris Johnson: You’ve been listening to the ITAM executive, brought to you by Anglepoint. Make sure to hit subscribe in your favorite podcast player and give us a rating. Thanks for being part of the ITAM community. Until next time.