RFPs are often done under the notion that it’s the best and fairest way to survey the capabilities of potential vendors available in the marketplace and compare them against each other. And level the playing field and limit “favors” that often occur amongst vendors and customers. Many of my clients often think it’s a good way to put vendors in direct competition and drive the best final price.
However, for those of you who have participated in an RFP, you know how it can be a huge consumer of time/resources both on the respondents AND the company sending it out. RFP’s require a fairly high level of management and overhead. It becomes a labyrinth of odd requests, tight timelines, and dog and pony shows with endless questions. Then back and forth follow up items which someone has to manage. Maybe one full time person in charge per three vendors to prepare the RFP itself, coordinate meetings, coach respondents, log receipt of the vendors, etc. This doesn’t include the laborious task of reviewing 30-50 pages of documentation and in the end, scoring and making a recommendation.
With budgets squeezed across most organizations, any way to drive price lower and take some “skin” from vendors is ideal. An RFP is a suitable tool for many situations and often times can be the right choice for companies who have a lot of data analysis to perform about vendors. But my advice to clients… be careful what you wish for with an RFP. It can definitely be the right tool for the wrong situation.