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Techscape: RFP is not the one for me

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Any salesperson who hasn’t felt the adversarial friction with a corporate procurement officer hasn’t lived. Or hasn’t really sold.

CEOs look to their procurement guys for big savings: and these tough-as-nails negotiators want to make their bosses happy. They are obsessed with getting the most for the company in return for the least outlay.

The procurement weapon du jour is the Request for Proposal, or RFP, the closest thing in business to enforced hoop-jumping. But their use can be counterproductive for the buyer and extremely unfair for wannabe suppliers.

The RFP “process” has been the sole mechanism through which first governments, charities and then NGOs put out the availability of money for some service or project to be performed. Partially resembling a bid or auction method, the RFP quickly took hold and became a kind of procurement sector necessity eventually migrating into many other areas of business, government or charitable transactions.

Here’s the problem: the RFP became such a knee-jerk ingredient that it ceased being a good, efficient or even fair way to determine the best qualified or most economical service provider.

The outsourcing industry is a case in point: being a fairly new game in town, outsourcers rushed to adopt this tired old mechanism making it their mainstay for business, contract and monetary availability.

Big mistake.

Doesn’t it seem that reflexively applying such a hackneyed, shop-worn apparatus to a brand new, high-tech industry bespeaks a certain laziness and inability to conceive new systems?

According to Gregory Salvato, chairman and CEO of New Jersey-based PWI Inc, "certain aspects of the RFP process are extremely inefficient". PWI is an outsourcing firm that specialises mainly in software development and works in conjunction with a Russian CTO and Moscow office.

“Vendors like us spend a lot of time preparing a response to an RFP; we sketch it out in a convincing way,” Salvato says. In spite of this care and attention to detail, he said: “One out of ten responses we prepare might offer a chance for new business. An RFP forces a supplier to articulate in a very formal way how they would serve the client.”

But is the RFP really a form of “articulation” or just a documentary bureaucratic process? Well, several small consulting firms are appearing on the scene to fill the gap and provide some good, old-fashioned common sense to the outsourcing sector. These new businesses provide a “trusted intermediary layer” between the client and suppliers. Eschewing the long, laborious RFP cycle, the OSP (Outsourcing Service Provider) goes aggressively scouting for the client’s specifications amongst a known supplier network. Once potential matches are found, conference calls, one-page pitches and site visits by the client to suppliers are quickly arranged. This can take 75 per cent of the time, paperwork and expense out off the top of the process.

The time variable is usually front and centre for both customer and especially the supplier.The paperwork and lost time and money resulting from unnecessary documentation is usually not.

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