Why RFPs Are Bad For You

From time to time we receive RFPs (requests for proposals) from clients looking for vendors to outsource consulting, such as a website redesign or a server installation. These documents (also known as RFQs and RFBs for “requests for quotes” and “requests for bids”, respectively) usually outline the client’s needs and asks for a bid to be submitted. The client then reviews all bids and chooses a vendor to hire. The RFP process is common in government, but we’ve also seen them from the non-profit and commercial sectors.

Here The Problems Begin

The main problem is that the winning bid is invariably chosen based on price. RFPs describe when the project needs to be complete and what the project should include. According to the business triangle for projects, that only leaves one variable: quality. This forces bidders to make a choice: either submit a high-quality solution and probably lose the bid, or compromise the quality and submit a low bid.

People Are Not Soylent Green

The other problem is that RFPs are traditionally for procuring goods, not services. If you are purchasing a commodity, then you are comparing apples to apples — an HP ProLiant DL server is going to basically be the same between vendors. But as soon as you outsource that server’s installation, maintenance, and other services, the principal purchase becomes people — and people are not commodities. All kinds of fuzzy qualities like customer service, response time, expertise, and efficiency come into play, and you can’t evaluate these based on what they write on a piece of paper.

Another complication is that clients rarely know what they need. RFPs invariably leave out important information that is essential for providing an accurate cost, and clients aren’t aware of the full range of options available to them. Many of the RFPs I have seen all apparently come from the same boilerplate document — almost the only difference is the client’s name. These generic RFPs don’t tell us anything about the faceless organization behind the request; in fact, it builds a wall between the client and the vendor. Simply talking to the client for half an hour is enough for consultants to get a better idea of the client’s needs and be able to provide a minimal-cost, tailored solution.

How We Got Here

I imagine most RFPs come from overworked, underpaid employees or committee members who need to outsource a project. Maybe their process dictates that they send out bid requests to appear fair. Or maybe this is just the easiest way to find a consultant — simply fill out an RFP document, send it to a few agencies, choose the cheapest bid and pay for it, then wait until it’s done. Unfortunately, spending less work at the outset ends up costing you more time or money in the future.

A Little Effort Goes A Long Way

Here’s how to outsource a successful project:

1. Write a brief of what you need, and your requirements. So far, this is just like an RFP.
2. Locate similar projects in your industry and find out who produced them. Do a web search for projects. Ask friends and colleagues for recommendations.
3. Do a little research to narrow down the field to the most reputable agencies. Call past customers (or ask the consultant for references) and ask them about their experience. Be sure to focus on the people-centric qualities like customer service. Price is irrelevant — the other customer’s situation is different than yours (and most companies won’t give out that information anyway).
4. Set up a meeting with one agency. Go into the meeting with your brief and a rough budget in mind. This is where you can discuss what you want with the consulting team and ask them questions. Both sides will learn more about the other and a relationship will form.
5. If you get a good feeling from the meeting, ask for a proposal. Consultants will work with you to revise the proposal until you’re happy with it.

This Way Going Forward

ArrowQuick has adopted a policy to not respond to RFPs unless we have been contacted prior or have an existing relationship with the client. ArrowQuick isn’t the only agency that rejects RFPs. You can find many similar articles on the web; from website development to the software industry, there’s a consensus from consultants that RFPs are not an effective way toward a successful project.

The Best of All Worlds

Using the alternative process outlined above, everyone is a winner. You get to judge consultants on more than just the bottom line. You get to talk to the consultants face-to-face and tell them what you need. You get to build a relationship with a firm that will result in a much better project. You get advice specific to your company. You get a tailored solution that costs exactly as much as you want. Your life will be much easier.

Image courtesy tohoscope.