by Timothy Nuckles

   This article was originally published in The Productivity Institute (PI) Newsletter

(This is the first part of a two part article)

Most buyers of commercial information technology products and services do not use any formalized RFx process—Request for Information (RFI), Request for Proposal (RFP), or Request for Quote (RFQ)—for their technology acquisitions.  Ironically, they appreciate the value of the information produced by an RFx process and the competitive bidding environment the process facilitates.  They use an RFx process for most of their non-IT acquisitions, but IT is the exception.

Following are the most-often cited reasons for not using an RFx process for information technology acquisitions.  Although there is a nubbin of validity to each, these reasons are mostly excuses for not using some version of the best tool available to acquire information technology products and services.

We do not have enough time to conduct an RFx process.

Situation:  Your stakeholders are clamoring for some new application or functionality, your planning process took longer than anyone imagined, and now you are under the gun to get your project started.  You are ready to buy some software or consulting services, or both, and you simply do not have the time to conduct an RFx process.

Solution:  Avoid the time trap with three techniques.

Plan to include an RFx process.  Instead of treating an RFx process as little more than an afterthought—a valuable process, time permitting—build the process into your project plan and allow reasonable time for its execution.  It seems so obvious, yet so many organizations do not do this.  Then, when time runs short, their RFx process gets eliminated or short-schrifted, which usually means dollars and unallocated risk are left on the table.

Overlap processes.  Realize that information technology project planning and procurement do not have to be separate and distinct processes.  You need not complete one before you begin the other.  By combining or overlapping these two processes, you give yourself more time for a meaningful RFx process.  In fact, there is often appreciable value to starting an RFI process while your planning process is ongoing.  Reaching out to potential vendor candidates (true market segment experts) with an RFI during your planning process can produce information that is invaluable to your planning process itself, creating a planning-procurement feedback loop.  An RFI might well produce information that is critical to your tactical and strategic decision making, and it is much better to have this information in the early stages of your project.       

Layered approach.  Let go of the notion that your RFIs and RFPs have to be comprehensive, one-shot, cover-the-world documents—your one and only opportunity to interface with potential vendors and consultants.  By definition, these documents take a long time to produce, and for many other reasons, they are usually not the optimal choice.  Instead, embrace the notion that your RFIs and RFPs can be “living” documents, with each subject to later adjustment and refinement.  Instead of requesting a comprehensive set of information and detail from a large number of vendor candidates, you can break your RFx process down into smaller chunks that are more easily digestible by vendor candidates.  Your goal is to request the most detailed information from only the most qualified vendor candidates, and only the most qualified vendor candidates have to prepare additional detail.  By using a layered approach to your RFx process you will save time and increase vendor response rates.   

We already know what vendor we want to use, so why waste time with an RFx process?

Situation:  Your IT project team scopes out a new project, does a good deal of planning, and with funding still available, it is time for vendor selection.  The selection process is simple because your project team has already identified its preferred vendor, and you set about negotiating with that single vendor.

Solution:  Whether friend-of-friend referral or presumed market segment leader, avoid the temptation to source from a single IT vendor or consultant.

First, It is not easy to win price concessions and buyer-favorable terms and conditions from a vendor when the vendor knows “they’re it”—the preferred vendor, the only vendor in the running.  Competition in the technology sector has increased dramatically, and technology vendors have developed a keen instinct for assessing their bargaining position in a given setting.  When you sole source, you are clearly disadvantaged.

Second, your project team’s assumptions about its preferred vendor might not be entirely valid.  Is this one vendor truly the best for your needs?  Is it the only vendor who can meet your needs?  An RFx process is a cheap way to test assumptions and uncover other valuable information. 

Instead of contacting the single vendor directly for an informal quote—or however you might initiate contact—it is usually better to issue an RFI or RFP to the single vendor. The RFx will give structure to the acquisition process and subsequent negotiations, and it will create at least the pretense of a competitive bidding scenario in the mind of your preferred vendor.  Then, logically, if you are going to create this project-specific RFP for the one vendor, you might as well send it to other vendors as well, thereby creating a real competitive bidding process.  You have nothing to lose, and everything to gain.

Again, your RFx process does not have to be long and protracted, and indeed, you may ultimately select the vendor who was preferred from the outset.  However, now you will have positioned yourself to receive better pricing and other buyer-favorable terms and conditions from this vendor, in a compressed time frame, and all because of the competitive bidding element of your approach.  Your chosen vendor will have earned its preferred status through your RFx process.

(In part 2 of this article, I will continue this discussion of common excuses why businesses do not use the RFx process for technology acquisition and several of its benefits.)

Timothy Nuckles is a procurement attorney and consultant who offers a process-driven approach for the acquisition of commercial information technology products and services.  You can learn more about him at www.nuckleslaw.com .