At this point, you’re convinced that your purchasing process bears the hallmarks of the problems that come from manually-managed RFPs. You’re shopping around for RFP management software to streamline your process and gathering information just as you would for any other purchase that your team makes. (Maybe you’ll even get meta and run an RFP to find an RFP Management solution!) No doubt, you have your own questions that need answering, but here are seven questions you absolutely need to ask before you purchase RFP management software.
1. Does the product have features that will address the
problems I’m experiencing?
Obviously, collating and scoring responses are critical components of understanding the RFP process and any solution that merits consideration should makes those processes easier. It’s also going to be helpful to ponder some of the less obvious challenges that you might encounter when running a sourcing event. For example, how about all of the requirements gathering, vendor discovery work, and documentation that occurs before the RFP is even crafted, much less sent out? And have you considered showing that inbox of yours a little respect? Does the solution help reduce monstrous email chains and manage attachments?
2. How easy would it be to implement this solution across the team?
There are at least two different parts to consider when thinking about what’s involved in an implementation. First, there is the deployment of the software solution itself. Is it a turnkey SaaS setup or is implementing the software going to take coordination and time? Second, you have to think about how long it would take to bring your colleagues up to speed. How much time will need to be invested to train your procurement team? What about subject matter experts who are unfamiliar with procurement? A strong solution should work for all of the stakeholders who get involved in sourcing, whether they work in the procurement department or not.
3. How do I think about calculating ROI when considering an RFP management solution?
Are there certain thresholds in terms of spend or the number of RFPs that must be reached before a solution makes financial sense?
There are companies that spend billions of dollars per years on suppliers just as there are companies that spend thousands. Likewise, there are organizations with robust procurement teams and sourcing specialists along with other organizations where divisional leaders are tasked with doing their own sourcing. As such, there are no hard-and-fast criteria for rationalizing the expense of RFP management software in absolute terms. Instead, it’s advisable to consider ROI in relative terms. A good solution will likely promise to help your organization recover time and reduce supplier spend, both of which should — directly or indirectly — fall to the bottom line. Measured as a percentage of your spend, how much money will you have to recoup in the form of person hours and reduced costs to justify the expense of RFP management software? 5%? 2%? 1%? Figure out the number that makes sense and then work through some scenarios to determine if it’s achievable.
4. Did you skip the RFP process even though you probably shouldn’t have?
Chances are, your current RFPs are a pain. If they weren’t a pain, then you wouldn’t be looking for a solution and probably wouldn’t be reading this article. And pain, at least in this case, costs money. The pain results from bad process; the bad process requires much more time that it should; the time spent belongs to people; those people earn wages. While it’s possible that you’ve elected not to run a proper sourcing event out of pure frustration, you might also have avoided them on occasion because of cost. For example, if you had to spend $10,000 (primarily in person hours) to run a process for a $20,000 product, you would have an ROI challenge with the product before the ink was dry on the contract. The math is pretty damning. Simply take 8 people x 40 hours x $30/hour and we get to $9600. As you can see, it’s not hard to spend five figures on an RFP. Bottom line: if you’re evaluating RFP management solutions based on how many RFXs you run, and how much spend you manage, you need to contemplate the costs of the RFXs that you didn’t run because your process has been a problem.
5. What are your stakeholders looking for in a solution?
What is your procurement team looking for?
While sourcing software is typically going to end up being the procurement department’s bailiwick, they will not be the exclusive users. Indeed, part of the rationale for licensing an RFP Management solution is to streamline the process for stakeholders outside procurement. It’s helpful to have some potential stakeholders — preferably from different departments — sit in on a demo for a sourcing solution and weigh in with their opinions. Ultimately, their “buy in” will be helpful when you begin using the chosen solution.
6. What is the development approach of the company from which you are licensing the software?
Do they push out annual releases? Or do they quickly iterate on requested features?
In evaluating a solution that works best for your organization, you should think about how your needs will evolve over time. Rarely is software static, but the frequency of updates as well as the method of applying them can vary considerably. On the one hand, you might be looking at classic enterprise software that is deployed on your servers. A common model is for the software provider to offer quarterly patches amid larger upgrades, which might occur every few years. The evolution of SaaS-based solutions has changed that model. Those providers run the solution on their own services and offer subscription-based access to it. Release cadences vary, but there is a strong bias towards much more frequent, iterative releases. This allows for a high degree of responsiveness to customers that advocate for the addition of specific features. Finally, there is a hybrid-model whereby a solution that is usually offered as SaaS can be deployed on the customer’s server infrastructure. When implemented thoughtfully, this approach can allow for the same frequent iteration as its pure SaaS counterpart while allowing customers to control the infrastructure. Ask your prospective vendors about their deployment models and development methodology.
7. Is it easy to use?
If the demo you receive is 90% Powerpoint presentation and 10% product focused, you might not walk away with much confidence that the solution will be easy to use. Remember, the scope of a sourcing product extends beyond the procurement team. Stakeholders from different departments — some technical and some not technical at all — could be included in sourcing events that you run. So ask yourself, “Does it look as smooth, simple, and helpful as promised?” And more importantly, “Does it address many or most of the problems I’ve identified with our RFX process?” Modern solutions shouldn’t generally require days of training sessions. Ask if you can run a practice sourcing event. The software provider should stand behind its product. If you can’t try the software before you buy it, there’s a good chance that the software is confusing to use or might be complicated to implement.
We have invested lots of time and money in simplifying what has traditionally a complex process.. Indeed, Vendorful was created from the ground up with usability in mind. So give it a whirl…. You can knock out question number 7 by signing up for Vendorful and trying it for free.