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5 minute read
For a lot of businesses, making any major purchase means conducting a formal evaluation, most commonly in the form of a Request for Proposal (RFP). Done well, an RFP can be a valuable tool in evaluating different vendors or solutions; done poorly, RFPs can devour precious time and actually impede teams in finding the right solution(s) for their needs.
Understanding RFIs, RFPs, and RFQs
Before diving into the nuts and bolts of crafting an effective RFP, let’s cover off on the terminology. A Request for Proposal (RFP) is a formal means of evaluating multiple vendors. Alternatively, there can also be a Request for Information (RFI) and a Request for Quote (RFQ). RFIs are typically used for gathering preliminary information, while RFQs come into play when you have enough data to make a decision and simply require pricing comparisons.
Do We Need an RFP?
The short answer is “Maybe”. Many enterprise organizations require an RFP for any new purchase, and sometimes even for contract renewals. However, an RFP isn’t always the best way to evaluate and purchase compensation technology.
Generally, your purchase process will be much quicker and have fewer obstacles without an RFP. The compensation technology industry is home to just a few market pricing solutions; there are rarely entirely new offerings (BetterComp notwithstanding), so evaluating is relatively simple compared with other technologies. In addition, most large organizations already have a solution in place, so budget allocation typically isn’t an issue. As a result, comp teams often have success circumventing an RFP process by building a solid business case and showcasing that they’ve already done their due diligence.
In the event an RFP is required, it’s critical to make sure your RFP document and process is designed specifically for your needs related to compensation technology. Here’s how to do that.
Choose Your Participants
Finding the right companies to participate in your RFP is as important as the document itself. Putting in a bit of time up-front can save you a lot of headaches and wasted time later on.
DO: Do Your Research
Having a clear understanding of the marketplace is essential before going to RFP. Make sure you know what all your options are. Ask peers, check places like the World at Work or SHRM directories, and leverage sites like G2 to identify potential solutions.
DO: Get Clear About Your Needs
Before you embark on an RFP, it’s critical you have a clear idea of what you’re looking for. Think about your processes, resources, and roadblocks. Work with your team to understand what’s working well and where there are areas for improvement. Build out what you want your future state to look like, and divide things into must-haves and nice-to-haves.
DO: Develop a Short List
Start off developing a short list by doing discovery and taking demos with the potential vendors you identified. This will help weed out companies that can’t meet your minimum requirements, and help you identify those that are viable candidates versus those that aren’t. Inviting EVERY company to your RFP will just be a waste of time - yours and theirs.
DON’T: Wait Until the Last Minute
Having enough time in your RFP process is vital. This means starting your RFP prep work early enough to ensure there’s sufficient time for respondents to craft their proposals, your team to conduct their evaluation, schedule any follow-up calls, complete contracting and information security reviews (if required), and most importantly get fully implemented with your new solution prior to any upcoming project or contract deadlines. If you only have a couple months before your contract is up, you might not have enough time to evaluate alternatives, much less embark on a formal RFP process.
Building Your RFP
Getting your RFP document right can be the difference between success and failure for your procurement process. The tighter your document, the easier it will be for participants to give you the information you need and for you to evaluate potential solutions. If you want a starting point, check out our RFP template.
DO: Set Reasonable Timelines
With RFPs, as with comedy, timing is everything. When you’re working with procurement on your process, be sure to build in time for participants to ask questions - and for your team to answer them. Also provide plenty of time for them to craft their proposals, and give your team enough time to review, evaluate, and seek clarification on any of their responses. For example, you may feel two weeks is a reasonable amount of time to complete your RFP (if your RFP is relatively simple, it may be), but if Thanksgiving or Independence Day fall within those two weeks, you’re actually only giving people 6 or 7 business days. Additionally, take any other projects that could impact your resources into consideration. If you need an HRIS Specialist to assist with your evaluation, but they’re also implementing a new HRIS module, you will want to factor in that they will be splitting time between projects.
DO: Be Clear About Your Needs and Expectations
Since you’ve certainly been following my advice on prep work, you have a clear picture of what you want your future state to look like. Share as much about that vision as you can. It will help your participants show how they can help you achieve your goals. It will also help vendors self-select out if they know they won’t be able to give you what you need.
DO: Give Room for Freedom Within Your Framework
Your RFP should be designed to get information in a way that allows you to compare your options side-by-side. That said, if you’re too rigid in your structure, you may miss the opportunity to get information you didn’t know you needed. Use open-ended questions that allow your participants to showcase their differentiators and specialities.
DON’T: Ask the Same Question Multiple Times
An RFP process is time-consuming for both you and your participants. Asking for the exact same information in different sections is a waste of their time and yours, even if you’re asking in a slightly different way or in a different section. For compensation technology, you generally don’t need a hugely complex RFP document. Keep it simple and straightforward to optimize the process for you and your participants.
Evaluating Responses
If you’ve followed the process up to this point, it will make evaluating your responses easier. Not easy, mind you, but easier. Having a solid evaluation process mapped out will help you make the best decision for your team and company.
DO: Include Multiple Reviewers
Your colleagues in procurement are almost certainly wonderful people who don’t know much about compensation. That means, you’ll need to have your team involved in the evaluation process. Prioritize primary users and people who will be responsible for the partner relationship.
DO: Give All Participants the Same Opportunities
Keeping an even playing field can be tough, but it’s the best way to ensure you’re making an informed decision. All participants should have access to the same information, the same timelines, and the same restrictions.
DO: Look at Responses Holistically
Many companies will divide their RFP into sections and split that among reviewers. This makes sense for some things: for example, it doesn’t make sense for IT to be reviewing information about account management. However, it’s important to have at least a couple people reading the entire response to fully understand the capabilities and approach of your potential partners.
DON’T: Leave Your Participants Hanging
Optimally, you’ll have given your team enough time to review and discuss the RFP responses, but life is unpredictable and things can happen to throw off timelines. Keep communicating with your participants if timelines get derailed. Likewise, no one enjoys giving bad news, but ghosting companies who’ve put time and effort into their RFP responses isn’t a great look and could limit your options going forward. Ultimately your feedback could provide valuable insights on how they can uplevel specific capabilities across all vendors, in order to better meet your needs in the future.
Partner Selection
Once you’re done with evaluation, the last step is making your final selection. If you’re torn, consider asking follow-up questions or inviting your top two participants to a best and final presentation where they have an opportunity to make their pitch and you have an opportunity to ask questions live.
Once you’ve chosen, congratulations! Whether you’re sticking with your incumbent or transitioning to a new partner, you’ve reached the end of the RFP process and hopefully have found the best partner to meet your needs going forward.
