The issuing of requests for tender and requests for proposal by enterprises and government departments intending to procure systems and services has been around almost as long as business has been acquiring systems and services and, much to the chagrin of those in sales, they show no signs of disappearing. Vendors, when presented with an RFP or RFT, will naturally go through a bid/no bid decision process. Such a process will consider the perceived likelihood of success, potential profit if successful and the cost of responding. Or so we’re led to believe. While these do come into play, bid decisions are often made on the basis of how busy the firm is, how they are tracking against sales targets and a raft of general perceptions. The last element is crucial as it often casts the deciding vote and can just as often be completely wrong.
The vendor might perceive that the enterprise is biased towards a particular product or vendor. They may thus not bid, not realising that the enterprise has become dissatisfied with a previously-used or long term supplier. Conversely, they might perceive their selection to be in the bag and inflate the price only to be unpleasantly surprised.
One of the first lessons in sales school is that unless a salesperson has been in regular contact with the firm prior to the issuing of an RFT, they have almost no chance of winning. While contact is usually key to a sale, this notion presumes that no enterprise, with or without the assistant of a consultant is capable of preparing and issuing an RFT without having had some contact with a vendor and if isn’t “us”, it just must have been someone else. Vendors also sometimes decline to bid because, as some have put it, they “have not had several meetings with the enterprise to understand business requirements”. Do they not understand that’s what an RFT specifies? Why not just tell the persons involved that they are not capable of understanding and document the requirements or the business employing them? If you’re going to insult people, at least do so directly!
Not bidding has risks beyond having no chance at winning the business on offer. A tender for “just” one or a small system may result in subsequent orders for more or a bigger system by that company that are not tendered. A vendor that doesn’t bid to an RFT may not be invited to another by the same company or, more significantly, by the consultants for a different client. But from my own perspective as a consultant, the biggest risk of not bidding is that when involved in a project for which the client wants me to select a product, or nominate just a few to negotiate with, one that hasn’t been bid to previous RFT has little change of getting a look-in.
While not arguing that every vendor should respond to every RFT, they need to consider more than the likelihood of winning the RFT in front of them. The risk of responding to an RFT is that the effort may not be recouped from a resulting sale. The risk of not responding may be much greater.
Tags: "request for proposal" sales, "request for tender", IT, procurement, RFP, RFT, tender, tendering
28/02/2010 at 23:22 |
Stephen,
Good article. It hits close to home as I’ve spent much of the past 30 years in satcom system integration. Below is a satirical article I published on the subject.
Regards,
Tony
Chronicles of Satcom
System Integrator
When the commercialization of satcom began in the mid 60s, telecom service providers and users alike were quick to realize the benefits satellite-based communications had to offer. Long before the introduction and proliferation of optical fiber, intercontinental communications was relegated to the use of low-capacity sub-oceanic copper cables or hand-delivery of the written word.
But following the launch (pun intended) of commercial satcom, telecoms operators learned they could establish reliable links quickly and begin capitalizing on the provision of services previously unimaginable by anyone other than Mr. Arthur C. himself. Spirited sports enthusiasts around the globe enjoyed the opportunity to view multi-national events as they happened.
Though it was the answer to many a telecoms operator’s dreams, no one short of a wand-wielding techno-wizard had any idea of how it worked or how to build a system capable of exploiting this new black-magic technology. The knowledge-base required to architect earth stations was held by a scant few. Some, seeing the potential bonanza looming on the horizon as the demand for satellite communications exploded, banded together and formed a new market segment of this promising new industry.
So today we pay tribute to one of the most under-appreciated pillars of our industry, that often faceless team of quintessential techno-geeks to whom we owe the formation and perpetuation of the industry we know and love. Yes – the satcom system integrator.
Uncomfortably situated in the middle of the food chain with “end-users” to the north and product vendors to the south, integrators are typically placed in the unenviable position of having to create much from little at a bargain price and over night. Do you want fries with that? They are fueled with proposal requests consisting of reams of documentation often wrought with impossible logistical hurdles, references to errored or non-existent technical specifications and commercial terms that appear to based directly upon the provisions of Chapter 11.
Armed with extensive technical knowledge and years of experience as evidenced by the physical and psychological scars imposed upon them by an uncompromising customer base, they assemble a team of specialists – Project and System Engineers, Program Managers, Pursuit Strategists, logisticians, wiremen, installers and exporters – all anxious to tackle the latest challenge with little reward beyond obtaining a valid job-charge number for this week’s time sheet.
With a finite selection of components and technologies from which to choose, like a Mexican restaurant that must create an entire menu from three basic ingredients – ground beef, refried beans and cheese, they must interpret an often cryptic request and architect a solution that hopefully contains an element of uniqueness that will separate their offer from those of an army of competitors – that provides a value proposition no savvy customer could refuse.
Their commercial strategists go to work constructing a complex pricing workbook designed to capture and mask the intangible costs of their value-added services, which seems a bit ironic since customers, anxious to avoid design and deployment risks, seek the council of system integrators whose unique experience and knowledge is key to safely navigating the potential pitfalls of a poorly architected solution and resulting techno-disaster.
Countless hours are spent generating volumes of commercial and technical documents. With submission cut-off dates timed to the minute, proposal teams must run a protocol-laden obstacle course standing between a potentially winning offer and a straight shot to the “round file” due to some mundane detail such as a missing signature, an improperly dated bid-bond certificate or any one of a hundred catastrophe-causing details that will give Murphy the opportunity to end the race before the starting pistol is even fired.
Weeks, months – even years go by as the customer’s evaluation committee scours the reams of information contained in the plethora of offers received, while others invest less effort in their purchasing decision than Caligula placed on his decision to execute one of his soldiers for flatulent behavior during a glut-fest of fatty goat meat and stale wine served from a gourd. How do YOU spell “Dutch auction”?
If the requirement, project budget or for that matter – customer survive this seemingly infinite gestation period, a contract award eventually ensues – ripe with the chance to declare victory over all other comers, but accompanied with the fear of having failed to account for a critical cost element, the looming risk of schedule delay penalties or sobering realization of inescapable deployment challenges – everything except guaranteed profit.
So I say to all customers foreign and domestic; the next time your conference room is graced with the presence of a system integrator vying to provide you with a clever orchestration of buzzing fans, flashing L.E.D.s and bent metal intended to enhance your bottom line, raise your glass, tip your hat and toss him the thanks he deserves.
Hail the system integrator!