Why your IT outsourcing RFP is holding you back

The typical RFP process virtually locks out attempts by vendors to get creative

By Stephanie Overby , CIO |  IT Management, IT outsourcing

The methods the RFP process employs to "normalize" the proposals of various vendors and create apples-to-apples comparisons virtually locks out any attempts by a provider to bring something creative to the table. The more detailed the buyer gets in the RFP, the less room there is for innovation or flexibility—which outsourcing customers claim to want. And outsourcing customers often take an everything-but-the-kitchen sink approach to their RFP requirements, including not only need-to-have requirement, but nice-to-have services.

[ Related: 9 IT Outsourcing RFP Response Red Flags ]

In response to a recent ISG survey, service providers said their pricing was at least 10% higher when responding to complex RFPs An alternative is what Young calls a request for solution (RFS). In contrast to a detailed, buyer-led RFP, the RFS is an open-ended, collaborative process. The customer describes its IT environment, objectives, concerns, and risk tolerance and the potential suppliers come back with unique solutions that meet those general requirements.

"In buyer-led commerce -- like an RFP or RFQ -- the buyer dictates the terms and scope of the commerce. In seller-led commerce, the seller makes—often unsolicited—offers to the buyer on the seller terms," says Young. "The RFS is meant to bridge these approaches—getting the best aspects of both."

Young likes to use a vacation-planning analogy. With a traditional RFP process, you'd ask a travel agent find the cheapest package for a family of four to fly from New York to a hotel room within five miles of Disneyworld for five days in June. Taking the RFS approach, you'd say you want to take a family of four on a five night vacation and spend $4000 or less and then select from the variety of options the agent provides that meets those criteria—a cruise, a camping trip, a European tour, or Disney.

When a buyer really wants to transform an IT environment, they may not know what they want even though a detailed RFP implies that they do. An RFS can reveal options an outsourcing customer may not have thought of, says Young.

When Young first began offering the RFS option four years ago, only a few customers were willing to try it. Today, just under half of those he works take an RFS approach, at least for part of a deal.

The option provides valuable getting-to-know-you time. "An RFP is very formal. It's doesn't build trust," says Young. With an RFS, "you're jointly working together to solve the problem right from the start. And that time is better spent starting off the relationship on the right foot." It can also shift the buyer's focus from who has the lowest price to who they mesh with best.


Originally published on CIO |  Click here to read the original story.
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