BPO Best Practices: Turning the RFP Process into a Win-Win for Procurement and All Business Stakeholders
by Ken Neal
June 25, 2021
Senior executives, particularly organizational leaders with responsibilities spanning operations, finance, human resources, information technology and especially procurement, understand that issuing a request for proposal (RFP) often kicks off what can be a long, complex, and demanding process. These challenges apply to both companies issuing an RFP and the vendors competing for the business, whether to implement a project or long-term transformation solution.
Challenges also include cost, again incurred by both sides, based on the time invested over months of internal meetings and follow ups. This can run into tens, even hundreds of thousands of dollars. The total ultimately depends on the number of executives, their level within the company, and time they spend managing a procedure that sometimes can take from six months to a year to complete.
As the saying goes, “there must be a better way.” Based on our experience having worked with procurement teams and internal stakeholders over many years on new business contracts outlined in RFP documents, I believe there is a better way. Before I share some insights on how this process might be made more productive, I would like to make two important points. One is that procurement departments are typically short staffed and have the difficult task of consistently demonstrating cost savings. Consequently, as a strategic spend control arm of the business, these professionals often must demonstrate a hardline approach to be perceived as doing a job well done. Furthermore, alignment with business stakeholders continues to be a challenge for procurement teams. Procurement must deliver; I am suggesting that there is another way to accomplish that goal with the added benefit of better managing risk to the business.
For my second point, let us allow the elephant in the room to gracefully exit. As a BPO services provider, of course Canon has a vested interest in streamlining the RFP process! However, our idea is to streamline the process so that it resembles a win-win approach to negotiation, which strives for an outcome that satisfies all parties.
We believe procurement teams and business stakeholders can benefit by issuing an RFP with a special focus on one key strategy, considered under the umbrella of trust. If, early in the game, all executives involved can begin to feel confident that each side has the best interests of the other in mind, the chances of teaming with the right services partner can go up dramatically. How can stakeholders on both sides build this trust and collaborate more efficiently? One answer is for the client company to start working together effectively with potential vendors much earlier in the RFP process.
A particularly efficient approach would be to invite the top prospective vendors to participate in an onsite analysis of the current state of your operation. Let us assume you are a senior executive with an organization issuing an RFP. You might consider setting up working sessions that include the top vendors and leaders from the operational and technical departments in your company that will be involved in the solution. The goal is to enable your executives to appraise the potential value of each vendor based on how they ask questions and gather data. It is particularly important to involve your IT department. They should be able to evaluate proposed solutions and ask a vendor how they plan to implement technology, for short-term solutions as well as longer-term digital transformation initiatives.
By this process of onsite data collection, your company will more easily be able to determine the best vendor. This approach also could significantly reduce the time it takes for your organization to realize cost savings and other business benefits.
Taking the leap, placing initial trust in a vendor, and engaging in an onsite analysis is based on the longstanding rule that “data does not lie.” During the data collection and in-depth review process, a potential vendor can examine workflows and business processes in action. This will drive the accuracy of that vendor’s proposed solution and the speed at which it can be deployed. You are more likely to avoid unpleasant surprises if your internal teams are better informed about what to expect. Another way to put it: because data is so critical to success, your potential partner should be gathering what they feel is appropriate, accurate data early in the process, not toward the end of the RFP process. This helps to ensure that the vendor’s business plan will be as close to 100% accurate as possible in terms of the services that the vendor can effectively deliver to your organization.
The increased advantage to your company of realizing business benefits much sooner compared to a more drawn-out RFP process cannot be overstated. I will briefly spotlight one example, in which we completed a long RFP process that included providing the expertise, insight and analysis that resulted in the company choosing Canon.
The company had about 20 executives involved in the process for 12 months. Based on the total hours they devoted to the RFP, multiplied by a conservative hourly wage estimate, the RFP process cost the company approximately $500,000. Looking back, we likely could have completed the RFP process in 30 to 60 days rather than 12 months. This would have been possible if the company had engaged us to come onsite at the beginning of the process, implement a thorough workflow analysis, and create an accurate business plan based on solid, relevant data. This approach could have, in our estimation, cut their costs in half and significantly reduced the amount of time their stakeholders had to devote to the project. Additionally, we could have been begun delivering business benefits to our client that much earlier.
In our experience, the example spotlighted above is typical of the RFP process. It is also understandable. Engaging the right managed services partner is a serious business with a lot on the line. The lifetime value of a contract potentially spans multiple years, millions of dollars, and supports business initiatives and transformation projects that could be very important to a company’s success.
There is, however, a more efficient path to mitigating risk, saving time and money, and achieving business benefits more quickly. That path begins with trust among all participants. Collaborating earlier in the process; considering onsite work sessions with stakeholders from both sides; and sharing timely, detailed, and pertinent data critical to the solution all can help streamline the RFP process. It can help prevent turning a competitive procedure into a contentious one. Even better, it can signal the start of a productive, cooperative relationship that endures as a win-win for years to come.