no rfps! why requests for proposal are bad for business (and how we can stop them)

Crystal Williams, Brian Skowron, Todd Nienkerk, and Zach ChandlerDrupalCon Denver | March 20, 2012

No RFPs!Why requests for proposal are bad for business (and how we can stop them)

#NoRFPs

Who we are

#NoRFPs

• Crystal Williams

• Brian Skowron, Lullabot

• Todd Nienkerk, Four Kitchens

• Zach Chandler, Stanford University

Who we are

#NoRFPs

Favorite RFP memories

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Who we are

Why RFPs?

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The Good Reason

There’s work to be done, and a customer is looking for vendors to help

Why RFPs? ➜ Good reason

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The Bad Reasons

“That’s just how we’ve always done it”

#NoRFPs

Why RFPs? ➜ Bad reasons

“I think I’m supposed to write an RFP”

#NoRFPs

Why RFPs? ➜ Bad reasons

“It’s a standard requirement”

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Why RFPs? ➜ Bad reasons

Required to gather competitive bid for projects over some amount of money

#NoRFPs

Why RFPs? ➜ Bad reasons

The Really Bad Reasons

Pricing a project to gain leverage over an existing vendor

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Why RFPs? ➜ Really bad reasons

Free consulting: Get a blueprint, take it in house

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Why RFPs? ➜ Really bad reasons

Risk aversion: Displace responsibility to the vendor

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Why RFPs? ➜ Really bad reasons

Qualifying new vendors

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Why RFPs? ➜ Really bad reasons

Why respond?Best-case scenario

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Small shops, big projects

It’s not common (or easy), but it is possible for an exceptionally well qualified team to break through to the “Big Leagues” with RFPs

Why respond? ➜ Best-case scenario (Crystal Williams)

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Practice “safe RFP”

Appropriate Complexity to the Size of Project?

Prior Relationship or Internal Advocate

If you can’t afford to lose this project, you might not be able to afford to win in

Why respond? ➜ Best-case scenario (Crystal Williams)

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Why respond?Adjacent benefits

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Sending a bigger message

We knew there was a chance we’d lose a recent RFP, but we also knew the potential of other projects from the client

RFP response was a way to demonstrate capabilities in a more comprehensive way to a wider audience

Why respond? ➜ Adjacent benefits (Lullabot)

#NoRFPs

If you assume you’re going to lose, is there still an upside?

Why respond? ➜ Adjacent benefits (Lullabot)

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Why respond?Product analysis

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Using RFPs to test a new service

With Lullabot’s new Videola service, RFPs helped us encounter questions we hadn't thought of, in a low-pressure setting

We were able to perform product and business analysis driven by actual client needs

Why respond? ➜ Product analysis (Lullabot)

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RFPs can teach you about your strengths and weaknesses relative to a new market

Why respond? ➜ Product analysis (Lullabot)

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Why respond?Maybe you shouldn’t

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30-40 hours per RFP response

$5,000-7,000 opportunity cost

Won only 22% of the RFP-driven proposals we submitted

Only 16% of work resulted from RFPs

Why respond? ➜ Maybe you shouldn’t (Four Kitchens)

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On the flip side...

84% of work involved no RFPs — just personal connections and word-of-mouth

Why respond? ➜ Maybe you shouldn’t (Four Kitchens)

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Conclusions

RFPs have driven a small, but not insignificant, amount of business

It costs less for us to send a team to meet a potential client than responding to an RFP

Why respond? ➜ Maybe you shouldn’t (Four Kitchens)

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Collateral damage:

Word’s gotten out that Four Kitchens “doesn’t respond to RFPs”

At least one client did not send us an RFP as a result

Why respond? ➜ Maybe you shouldn’t (Four Kitchens)

#NoRFPs

Try this at home

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Calculate your “hit rate”

List all RFPs you’ve ever replied to, and mark those you won

Try this at home

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Calculate how reliant you are on RFPs

List all projects you’ve ever “won,” and mark those that actually followed an RFP-proposal process

Try this at home

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Calculate the cost of responding to an RFP

Try this at home

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time spent writing proposal, communicating with client, etc.

your blended rate×

travel expenses+

opportunity cost

cost of responding

Now weigh that cost against

• Project’s revenue

• Will you actually make money?

• Likelihood of RFP win

• Are there other projects you are more likely to win?

Try this at home

#NoRFPs

Meanwhile, on the client’s side...

#NoRFPs

Clients like RFPs because they creates a sense of rigor around the selection process

...and it’s familiar...

The client speaks

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We can build a better process

The client speaks

#NoRFPs

• personalized invitation to bid

• expository sketch (not a specification)

• presentations

• Q&A period

• documented vendor review process

• executive summary

• SoW should be collaborative and iterative

The client speaks ➜ Build a better process

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This results in more work, but a better result, for the client and the project

The client speaks ➜ Build a better process

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Advice to clients

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Require speaking to the people who are going to work on the project

Salespeople should be facilitators, not the mouthpieces of the vendor

Advice to clients

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Beware of low bids

They are often too good to be true

Advice to clients

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Pre-select, research, and vet vendors

No open bids

Advice to clients

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Do not create an exact specification in advance

Advice to clients

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Check references

Word of mouth is not always right

Advice to clients

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Be open about your budget, and ask vendors if they feel it is feasible

You may be wasting many vendors’ time only to discover your budget is way off the mark

Advice to clients

#NoRFPs

Advice to vendors

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Ask clients how many other vendors they’re inviting to bid

Advice to vendors

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Be open: Ask if it’s really worth your time to respond

Advice to vendors

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“Why were we invited to bid?”

“Are vendors with existing relationships under consideration?”

“How did you find out about you us?”

Advice to vendors ➜ Ask if it’s worth your time

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Ask if another vendor had been hired to write an RFP or evaluation

In these cases, it’s likely that vendor will get the job — not you

Advice to vendors

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Ask about the selection process

Advice to vendors

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Require a phone, video, or in-person meeting

Evaluate client consensus around requirements, goals

Advice to vendors

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Ask if the client has ever embarked on a project like this before

If not, their expectations in terms of cost and difficulty may not be realistic

Advice to vendors

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Does the client respect your work and industry?

Or are you just a bunch of “techies”?

Advice to vendors

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Offer alternatives to the RFP-proposal process

As part of any sales or negotiation process, the evaluation system itself is often negotiable

Advice to vendors

#NoRFPs

Offer to write an evaluation rather than a proposal

See “Stop Writing Project Proposals” by Jonathan Wold, Smashing Magazine: cog.gd/3l2

Advice to vendors ➜ Offer alternatives

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Suggest RFI instead of RFP

“Do you want to proceed?”

“Not sure if we’re a fit. Let’s tell you more about ourselves.”

Advice to vendors ➜ Offer alternatives

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Where do we go from here?

#NoRFPs

• Crystal Williams

• Brian Skowron, Lullabot

• Todd Nienkerk, Four Kitchens

• Zach Chandler, Stanford University

Where do we go from here?

#NoRFPs

Responsible bid process

Where do we go from here? ➜ Final words

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Resources

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• Stop Writing Project ProposalsJonathan Wold, Smashing Magazinehttp://cog.gd/3l2

• RFPs: The Least Creative Way to Hire PeopleGreg Hoy, A List Aparthttp://cog.gd/28b

Resources

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• 6 Steps to Writing a Better Request for ProposalsConfluent Formshttp://cog.gd/3l3

• Buying WinsJoe Rinaldi, Cognitionhttp://cog.gd/30p

Resources

#NoRFPs