I started my career as a contracting officer for the US Air Force where I wrote and evaluated Request for Tenders (RFTs) for a living. I did this again later in my career as a consultant in the IT industry – helping clients purchase systems and outsource software development.
I’ve also been on the other side of the fence as an IT Sales Executive writing proposals in response to RFTs, as well as the buying customer as a former Not for Profit (NFP) organisation executive.
It’s with this wide lens that I believe the RFT process for IT solutions fails NFPs most of the time. Let me explain why.
The standard RFT process is broken
Let’s start with a scenario I’ve seen too many times.
The Request for Tender (RFT) process is standard way for organisations to receive competitive bids for an expensive service such as an IT system implementation. The standard process is for the NFP to hire an external consultant to gather requirements and write the RFT. They are often paid a daily rate, and it can take months or even years to do this as there’s no incentive to complete it faster.
Then, the RFT is sent to a list of potential vendors and/or service providers who are given a month to respond to pages of detailed requirements (opposed to the 12 months it took the consultant to write it). The requirements are based on the consultant’s understanding of the organisation’s needs, but not necessarily what’s available out of the box from the vendors.
The vendors scramble and pull together a bid team as it’s a huge undertaking in a small amount of time. Then, they realise after reading the RFT in more detail that what the customer is asking for is probably not what the customer needs and/or can afford.
The vendors are only allowed clarification questions during this part of the RFT process, and any questions will be shared with all their competitors. Therefore, they rarely reveal concerns of any substance because it could disadvantage them. Instead, they prepare their tenders while worrying that they will outprice themselves if they respond per the RFT requirements, or that they might lose a fortune if their assumptions are wrong. Still, they submit their tenders (usually after very little sleep) with fingers crossed.
The NFP opens the Tenders at the closing time and flips immediately to the pricing page. Up until this point, the potential cost of this project was a mystery, and now the moment of truth is revealed. The only question they want to answer at this point is,
“Can we afford it?”
Maybe? No? The Executive is now required to show the results to the Board knowing that the costs may not be approved. The project could dead before it really began, but money and time have already been spent with nothing to show for it.
A year or two goes by, and the need is still there. However, the organisation is afraid to start the process again because they’re not sure how they can afford the solution.
This is the common story I hear from both clients and providers, and I have also personally experienced this multiple times while in their shoes.
You’re paying for the design process twice
What NFPs don’t realise is that a RFT process forces you to pay for the solution design process twice.
You’ve just spent a good amount of time and money to gather the requirements into a RFT. Nevertheless, no matter how good your requirements document is, the provider will still require a detailed design process as part of their implementation. Why? Because they do not know enough about your organisation’s business processes and workflows to determine how much of their solution will require configuration and customisation.
Instead, the provider has to “guestimate” about total effort in their proposal. Therefore, they add a risk component to their price, and use their written assumptions as a way give you change requests (i.e. request for more money) later for the actual implementation.
How do I know? Because I used to write proposals for IT system implementations, and it was always a challenge to balance the submission of a competitive price with the risk of under-scoping the work.
This is the reason why the first part of every implementation schedule is a set of design workshops to fully understand the amount of effort required. And yes, you are paying for this whether or not it’s visible as a line item in the proposed price.
You don’t need a RFT process to have a competitive selection process
Rather than a formal RFT process, I have found that a collaborative approach with vendors is more likely to get a better outcome. It’s like a long courtship process with numerous suitors rather than an arranged marriage with the best on-paper offer. I call this my Rapid Evaluation ProcessTM or REP.
This process uses discussions, interviews and demonstrations with all potential vendors before asking them to submit prices based on their understanding of your requirements. It not only gives you an indication of price and their solution very quickly, but also what kind of partner they will be to work with in the future.
For IT system implementations in particular, almost all vendors and service providers can provide you a fixed quote for a Design Phase. They can also provide indicative prices for the Implementation. So, why pay for a consultant to write your detailed requirements when it can be done by the actual provider who intimately knows the system?
You’ll still need a scoping process to narrow down your potential suitors to a manageable size, but requirements do not have to be written down to the level of a RFT process to do this. As an example, for a stand-alone system decision like a Learning Management System (LMS), I often complete the entire competitive selection process with clients in a month. This includes a board-level report to document the decisions and process along the way.
So, before making your next major IT decision, consider whether or not a RFT process is really necessary to get the best outcome.
You also might want to check out my other article, 7 Ways to Blow your IT Budget.
Tammy Ven Dange is a former charity CEO, Association President, Not for Profit Board Member and IT Executive. Today she helps NFPs with strategic IT decisions, especially around investments.