At last week’s Staffing Industry Executive Forum, I presented a workshop on how staffing firms can be best equipped to manage and respond to customer RFPs. Having been in procurement for more than a decade, I know how difficult the RFP process is for the customers issuing these proposals. Nonetheless, it is important to address a few issues that can yield tremendous benefit to everyone involved in the process — making it easier for suppliers to participate and easier on buyers to evaluate responses.
Preparing a response to an RFP is expensive business. It’s not uncommon for large proposals to cost a provider more than $100,000 simply to respond to the proposal when you factor in travel expense, employee time, creative cost, creation of a demo environment, technical specs, etc. Given the costs involved, you owe it to those who are taking the time and expense to respond to present the most complete and accurate information about your program so they can best evaluate the opportunity. The question is: what are some of the core elements you need to include to do just that?
Scope. The largest complaint from providers in responding to RFPs is the size of opportunity. For example, what’s sold through the RFP as a $100 million opportunity rapidly becomes less than $20 million when it comes time to implement. While numbers often can be uncertain before programs are fully implemented, such discrepancies carry tremendous cost. And I would argue as professionals, we need to be able to articulate those uncertainties; to present anything other than that quite frankly is tantamount to fraud.
Think about it. Based on what you present as the scope, the supplier makes resource-based decisions, hires staff and mobilizes technology all based on the assumption that what you presented is accurate. And all of those costs are likely to come back to you in the end. Simply put, you may think you’re leveraging a larger spend and therefore getting a better deal, but if your providers are sophisticated enough, they will incorporate risk premiums into their pricing. It’s not uncommon for that risk premium be 5% to 15%.
Transparency. But what if you could address that unknown upfront? In my own RFPs, I would cull and scrub provider data to provide anonymized transactional data that showed a full calendar year of job titles, hours worked, region and location detail. Providing this additional detail translated directly to better prices and stronger partnerships.
Of course, it’s not always possible to provide that level of detail. But you can still be clear about the known as well as the unknown of your program. For example, instead of saying an opportunity is possibly $20 million, maybe you can say known spend is $7 million, but there is an opportunity for it to be as much as $20 million. Or if you’re not comfortable with that, express the numbers in terms of a confidence interval: “We estimate the scope of opportunity to be approximately $20 million, this number is heavily dependent upon seasonality economic environment and other factors; it may be as little as $7 million per year.”
This way you’re being honest and transparent, presenting the most accurate information possible to future providers. They will appreciate it and you will find better pricing and stronger partnerships, which in the end is really what the bid process is all about.