RFPs Are Not Dead: The Purpose of an RFP
Are Request for Proposals necessary? Evil? Or a necessary evil?
While our blog title does bear some similarity to a certain movie moniker, it’s actually a response to “Why Advisers Should Just Say No to RFPs” by Nelson Griswold (published via Employee Benefit Adviser).
Griswold asks: “Why reply at all to benefits RFPs?” Arguing that:
Have you ever seen a good RFP for benefits? One that would ensure that the employer selects the right benefit adviser for this increasingly complicated Affordable Care Act era? One that would allow a progressive, consultative benefit advisory firm to differentiate itself from all the transactional brokers? From every single adviser I’ve asked, the answer is, “No.”
Are RFPs Dead?
In the article, Griswold brings up several valid points, including:
- The traditional RFP process is obsolete.
- It’s incredibly painful for everyone involved.
- Most selections systems are built for choosing commodities, not partners.
- Too often, selection authority isn't balanced (the check writer isn't always the expert).
- Most Request for Proposals are too generic and irrelevant to be effective.
It should be noted, he was speaking specifically to HR departments who are issuing RFPs to choose a Benefits Consultant, rather than technology platforms, software, carriers, etc.
Nonetheless, we agree his argument is mostly spot on.
There's just one tiny problem...there are organizations that require a very detailed and formal selection process.
What about people who have to do RFPs?
A necessary Evil?
We're not the only ones who see a flaw in the plan. Many of the article's comments include the passionate responses of people who would love to do away with RFPs, but it’s simply not an option.
It's true, standard Request for Proposals are often too much work, with minimal opportunity for real ROI.
But that doesn’t mean we can just do away with them. Because like it or not, sourcing decisions that involve compliance or high dollar amounts, usually require a detailed and transparent selection process. Which is, after all, why these formal requests are so common to benefit solutions.
However, as the moans and groans clearly indicate, status quo selection process just isn't up to snuff. So now what?
We rethink our preconceptions and figure out how to do it better.
Since Griswold isn't wrong in his critiques, let's use his highlighted shortcomings as a guide to recalibrate our approach.
Problem: RFPs are irrelevant and generic
Solution: Identify and communicate exactly what you’re looking for
A telltale sign that requirements aren't being fleshed out early enough is when your team realizes what they really want during evaluation. This is a problem because it means you had insufficient (or inaccurate) criteria when determining RFP questions to ask and what vendors to engage. Meaning, you won't end up with the information you need to make the best selection.
Instead, get the facts you need (and make the process easier for everyone) by tailoring requests to your unique needs. Once you have specific requirements, decide if an RFP is the best first step. Sometimes an RFI is more effective, sometimes it’s just an informal discussion with the right people.
Problem: There aren't enough checks & balances in the selection process
Solution: Distribute decision weight across key stakeholders and experts
Unfortunately often times the person paying gets to the make the final decision (even if they're ill-equipped to do so). You can't change that. But you can encourage clients to make centralizing communication a top priority. Consider investing in a tool that makes it easy for both evaluators and stakeholders (consultants, advisors, industry experts) to ask questions, give notes, and stay on the same page.
Problem: Outdated data is costly data
Solution: Keep vendor capabilities updated in real-time
Typically, we send requests to our vendors and suppliers, asking them to update their detail about once a year. But those same organizations will actually launch new features and offerings quarterly, or even monthly. Meaning your data is most likely out of date.
It's time that Procurement learns what the world of email and social media has known for years: effective updates, are easy updates. We need to rethink our concept of a vendor profile, choosing something more dynamic and digital, built to be convenient for our partners. The result, is they're bombarded with less paperwork, and you always have accurate data. Supplier relationship management win-win.
For many of us, Request for Proposals continues to be a necessary evil. For significant investments, most of the world will (likely) continue to demand the detailed and specific selection process of the RFP. As this great article on how moving the RFP process to the cloud streamlines B2B procurement states:
"While a legacy, slow and analog method of accumulating and disseminating B2B information, RFPs remain at the center of most enterprise procurement for a very simple reason: they work."
However, all the pain and critiques bring up a crucial point: traditional selection process isn’t as effective as it needs to be. The request format isn’t dynamic enough, the method isn’t inclusive enough, and vendor information gets outdated too quickly.
That’s why we decided to reinvent it.
**Image credit: Anna Spady