Author: Gloria Qiao, Founder & CEO of Trusli
What is an RFP
An RFP, “Request for pricing,” or “request for proposal,” can sometimes be interchangeable with the terms RFQ, “request for quote,” or RFI, “request for information.” This concept kicks in when a company is deciding to select among several vendors for something the company needs, be it hardware, software, or services.
So why does an RFP matter? This is the process where the company evaluates the available solutions, compares them both technically and financially, and ultimately selects the best supplier to supply the thing they are procuring for. For the technical staff, this gives them the opportunity to study and survey what’s available as a technical solution and select the one they consider to be superior. For procurement teams, this is the prime opportunity to create leverage and negotiate optimal financial and legal terms, which, naturally, the legal teams care a great deal about.
Therefore, the RFP process is, by definition, cross-functional. The team needs to put together technical requirements, which later on become the statement of work for the project. The technical or engineering team needs to evaluate the suppliers’ solution by its technical fit and strength. And of course, the procurement and legal teams need to collaborate to negotiate the optimal financial and legal terms.
In some larger companies I worked for, we were fortunate enough to have a dedicated program or project manager who would collaborate with procurement and legal to orchestrate the RFP process. In other instances where the projects or teams are smaller, procurement professionals end up becoming the de facto RFP program manager. Either way, the process is complex, lengthy, involves lots of documents from various parties, and needs tons of cross-functional coordination. Therefore, here at Trusli, we believe we can help procurement and legal teams to automate many parts of this process and streamline documentation and collaboration.
Step 1: Gathering Requirements
Engineering teams often come to procurement teams with a rough idea of what they would want. Sometimes it’s quite self-explanatory. For example, we need Slack, or if not slack, an internal communication tool. Other times it’s less obvious, and the devil is always in the details. For example, we need annotation services. Ok, so do you want to use internal tooling or rely on a supplier’s tools? Do you want them to be onshore or offshore? How much data or how many images? How fast do you want them to turn things around? Do you need fluent English-speaking annotators, or it doesn’t matter? And of course, how much do you plan to spend?
Someone needs to have the experience and discipline to document this and eventually turn this into the technical requirements for the RFP. This will eventually become part of the final contract, called a statement of work.
Since procurement is often tasked with coming up with the entire RFP document, then they need to figure out a way to effectively collaborate with engineering or technical staff to get these requirements properly drafted and reviewed by the appropriate people. Here at Trusli, we envision having an RFP dashboard to help manage this process by creating an RFP event and assigning different persons with different tasks, such as creating the technical requirements. We can help automate this process by pulling the appropriate precedents or sample RFPs from something similar that we procured before.
Step 2: Conduct market research to figure out which suppliers to reach out to
Sometimes, the engineering team comes to the procuring team with a laundry list of suppliers they want the procurement team to reach out to. Other times, they only have a general idea about the solution without knowing whom to reach out to.
If so, the procurement team needs to collaborate with the engineering team to conduct market research and narrow down the potential suppliers based on the technical requirements drafted above.
At this point, if there are other considerations for any supplier to be disqualified, it should surface here to avoid wasting more time. For example, some companies have very strict restrictions on to where their IP can be distributed to. Others may have considerations such as supplier financial stability or diversity. All these criteria should be documented and captured by the system, so we start narrowing down the potential suppliers for the RFP process. Having a robust system with sophisticated RFP process guides will be instrumental to the success of the RFP.
Step 3: Putting together the entire RFP document
In addition to the technical requirements, a comprehensive RFP document should also include things such as an intro of the company, background information of the project, project timeline, must-haves vs. nice-to-haves, request for pricing information, and sometimes, requirements for legal documents such as including a sample master agreement.
At this point, procurement professionals are typically the ones that eventually pull all this information together from the various cross-functional teams such as engineering and legal and eventually write and issue the RFP with the appropriate RFP questions to the selected vendors. The RFP will also include a deadline to submit the RFP.
Without a proper system, there is a lot of repetition in creating the RFP process for various vendors and collecting their responses. With a proper RFP portal, the team can gather the information once, populate the potential supplier names, have the system auto-generate the RFPs to the various vendors, and collect their responses accordingly in the system.
Step 4: Establishing selection criteria and scorecard
To avoid arbitrary and capricious selection processes, the team must establish selection criteria and assign different weights to them. For example, for a forward-thinking startup, cutting-edge technology may weigh a lot more than the cost. The cross-functional team needs to establish the criteria and their associated weight in the system and invite a broad range of cross-functional team members to evaluate the various RFPs to have a coordinated and fair selection process without much bias or personal opinion.
Step 5: Review responses, start some preliminary negotiation, and maybe conduct a second round of RFP
The next step of the RFP process is to start reviewing the RFP responses and start narrowing down the choices. With some vendors, if there are major discrepancies such as pricing, maybe it’s prudent to give them some guidelines about the budget and ask them to reconsider. Similarly, some companies may have major legal hurdles to overcome and may drop out of the process at this point or need some major coordination to come back on board.
Once narrowed down, the team should also dive deep and attend demos of the remaining front runners, to have a thorough understanding of their technical capabilities, as well as other aspects of their team (e.g., financial stability, professionalism, post-go-live support, etc.).
Step 6: Reviewing final scorecard, finalize selection, award contract, and negotiate final business and legal terms
Hopefully, at this point, some major financial and legal terms have been negotiated and finalized, and the team may leverage the award of the contract as the final push to get what they what.
Ultimately, the project team needs to establish a clear audit trail of the process that has been followed and the exact reasoning for selecting one vendor vs. the other. This is also often times when the team conducting the RFP process needs to brief finance, legal and upper management about the final selection and get buy-in before awarding the final contract. Therefore, having a solid system automatically tracking this complex process with various documents from multiple suppliers is key to making the final decision streamlined, structured, and coordinated.
Do RFP management and RFP process sound daunting to you? Don’t worry. Our goal here at Trusli is to help procurement and legal teams work with more automation. This process can be easily tied into our legal playbook so that the process of reviewing the first round of MSA markups is like a breeze. We have lived through this pain, and we are here to assist you with a robust system powered by AI.