How to Develop Effective RFPs

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  • This article was downloaded by: [Cornell University Library]On: 19 November 2014, At: 02:15Publisher: Taylor & FrancisInforma Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House,37-41 Mortimer Street, London W1T 3JH, UK

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    How to Develop Effective RFPsJohn A. Guerrieri Jr.Published online: 31 May 2007.

    To cite this article: John A. Guerrieri Jr. (1984) How to Develop Effective RFPs, Journal of Information Systems Management,1:4, 40-47, DOI: 10.1080/07399018408963060

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  • How to Develop Effective RFPs- John A. Guerrieri, Jr.

    The goals of computer vendors and the users they senlice are often incompatible. And unfortunately, vendors are usually more skilled and experienced in selling computers than users are in purchasing a system that meets their requirements. A request for proposal (RFP), however, shifts control of system selection to the user.

    Hardware and software acquisition generally requirements that can alter the effectiveness of plays an important role in the support of critical the eventual solution. When users convey their organizational functions and future productivi- needs only to a sales representative, important ty. Many organizations, however, approach requirements might be overlooked until it is too comDuter purchases with a level of informality late. that 'would not be tolerated with other capital acquisitions. This casual method of systems se- lection seems to contradict the widespread awareness that computer systems often do not perform as expected or required. The problems associated with system selection (particularly with initial or infrequent purchases) do not oc- cur, however, with most other equipment. The extensive, complex, and unique tasks that a computer system is expected to perform often make it difficult for users to communicate their precise expectations and requirements to ven- dors. The user may forget to mention specific

    John A. Guerrieri, Jr.. COP, is an information systems consultant, Niles II.

    A second' problem occurs because vendors are primarily interested in selling systems and therefore may be somewhat unwilling to ad- dress user requirements that are not advanta- geous to their products or services. If user re- quirements cannot be thoroughly satisfied by a vendor's products, sales representatives often subtly restructure the requirements to match the strengths of the vendor's products. Although the revised requirements can initially appear logical and acceptable; the system often does not perform after installation. .

    Finally, when alternative solutions from sev- eral vendors have been obtained, the formal proposals that serve as the basis of the acquisi- tion contract usually are not directly compara-

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  • How to Develop Effective RFPs

    ble. The user must try to rework the vendors' subtly reinforcing their products and often recommendations into formats suitable for com- downgrading their competitors. This informa- parison and evaluation. tion can confuse decision making on final re-

    quirements and can bias evaluations. When an These problems can be minimized using RFp is used, the detailed requirements and

    a request for ~ r o ~ o s ~ l (RFP) proposals Specifications are developed before vendon are from vendors for systems that satisfy an 'Qani- contacted to eliminate the potential bias of out- zation's specific requirements. An RFP is a for- side sources. ma1 document given to a11 vendors identified as having cornput& systems that can potentially satisfy user needs. The RFP contains a11 the in-

    - formation a vendor needs to configure a system and quote acquisition and operation costs. Vendors use the RFP to decide whether their products and resources satisfy the requirements and, if so, to structure an efficient and econom- ic solution.

    Advantages of an RFP An RFP is preferable to informal methods of

    computer system identification and selection because it provides the benefits discussed in the following sections.

    Detailed Requirements and Specifications

    The most important advantage of an RFP is that users are forced to identify and communi- cate their needs and requirements in enough detail for the vendors to configure a system. Even if RFP development ends with the prepa- ration of the detailed requirements and specifi- cations, this process alone can highlight any omissions, misunderstandings, logical anoma- lies, and unreasonable requests. In addition, documentation for external purposes is pre- pared more carefully, completely, and accu- rately than internal correspondence. Detailed and accurate requirements increase an organi- zation's chances of selecting a successful com- puter system.

    Unbiased Evaluations

    An RFP also enables users to define their needs and requirements without being influ- enced by incompatible biases. Computer selec- tion usually starts with a cursory determination of requirements. Several vendors are contacted to determine whether the requirements are fea- sible and, if so, what additional needs can be satisfied. The vendors then each suggest differ- ent approaches to meeting the requirements,

    Consistent Information

    Because verbal communication between us- ers and vendors is generally unstructured, infor- mation may be distorted or incomplete. Verbal information given to the various vendors is usu- ally inconsistent, making proposal comparisons difficult because existing information must be reworked or additional information acquired. An RFP ensures that all vendors are provided with identical' information. This advantage is significant when numerous proposals must be evaluated.

    Another difficulty with providing require- ments verbally is that vendors can innocently (or intentionally) misunderstand the inforrna- tion or deny receiving the requirements if a sys- tem does not perform as expected. An RFP is the only way the user can document that the vendor has received accurate and complete information.

    Standardized Vendor Proposals

    Another advantage of an RFP concerns the evaluation of competing vendor proposals. Most vendors structure proposals according to their perception of what would be most advan- tageous to their products and services. If the format of the proposal is specified in the RI-P, however, weaknesses cannot be concealed and proposals that do not meet the user's specifica- tions can be rejected. Proposals that conform to the format can be compared more easily and accurately.

    In addition, the time vendors take to com- plete and submit proposals varies. When a deadline is set for the receipt of proposals, the evaluation can begin at a definite time and ven- dors cannot claim time limitations were unspecified.

    Quality o f Vendor Proposals

    An RFP forces vendors to respond to the re- quirements as defined by the user. Because a

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  • single product or service rarely satisfies all user requirements, vendors usually attempt to adjust the user needs to match the strengths of their product or service. If user requirements and vendor proposals are handled informally, the user can be easily influenced by the vendor. If , however, user requirements are detailed in a formal written document, the vendor must at- tempt to configure the products or services to meet user expectations as closely as possible. Consequently, an RFP can elicit higher-quality proposals from the user's standpoint.

    Increased User Preparation A psychological advantage is offered by an

    RFP in that, after defining requirements and specifications and incorporating them in a writ- ten document, the user appears well prepared and less likely to succumb to sales pressure. Vendors recognize that the user can make in- formed decisions on the validity and acceptabil- ity of their proposals and therefore concentrate on structuring a proposal that addresses the us- er needs at the most advantageous price.

    Disadvantages of an RFP Although an RFPxan be effective in system

    selection, its disadvantages must also be considered in the decision to use it.

    Extensive User Involvement An RFP mandates extensive user involve-

    ment, a major disadvantage. Theoretically, in- dividual user involvement is always an integral part' of system selection. In practice, however, these users seldom participate in determining their own needs and the subsequent develop- ment of system requirements and specifica- tions. The users are either unaware of the detail needed to define system requirements, or the MIS staff assumes that the users can readily provide this information. Although increased user involvement is clearly an advantage in es-

    the user organization. At a minimum, expenses include copying costs, paper, binders, enve- lopes, and postage to produce and mail copies of the RFP. If clerical resources are scarce, tem- porary or part-time employees may be needed to type and duplicate the RFP. Telephone charges may also increase as a result of identify- ing and contacting potential vendors.

    Outside Consultation Another disadvantage of an RFP is that out-

    side consultants may be needed if the user lacks the expertise to identify, coliect, and structure the information of an RFP for a sophisticated system.

    Increased Vendor Communication The use of an RFP can also necessitate in-

    creased communication with vendors. Vendors often try to modify the system requirements and specifications, to ascertain the acceptable system price range, and to uncover information on competing proposals. This communication is not critical and actually tends to be a nuisance, especially as the deadline for submitting pro- posals approaches.

    Vendor Pressure The final disadvantage of an RFP occurs in-

    frequently but is difficult to resolve tactfully. Oc- casionally, vendors can pressure the senior management of the user organization. A ven- dor may request that the RFP be modified to the,advantage of the vendor or may downplay the value of using an RFP. In most of these cases, vendors believe that their proposals are seriously deficient and are trying to win the ac- count at any cost. Unfortunately, little can be done to counteract vendor pressure; user se- nior management can be reminded that such action is unethical and indicates that the ven- dor's product may be inferior.

    tablishing system requirements and specifica- tions, it is also costly and time-consuming. Contents of an RFP

    Increased Costs The major section of an RFP is the user's re- quirements and specifications for computer The use of an RFP increases expenses. The ~ " ~ ~ o r t . Several other components, however,

    cost of preparing and distributing an RFP var- are necessary or desirable for the RFP to have a ies, depending on the resources available within maximum impact on vendors.

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  • How to Develop Effective RFPs

    Cover Letter

    Generally, a cover letter should be included that identifies the purpose of the RFP, specifies the deadline for submitting proposals or no-bid notices, summarizes the major features of the system being sought, specifies the rules of pro- posal submission, and identifies the liaison be- tween vendors and the user.

    General Informa tion

    The first section of the RFP should contain all general information and explain the proce- dure that will be used for system selection, as described in the following.

    RFP Structure. The structure of the RFP should be described by an annotated table of contents to alert the vendor to the sequence and importance of the RFP sections.

    RFP Objective. The objective of an RFP is straightforward: it solicits proposals for sys- tems that will accurately address user needs at the most advantageous price.

    System Description. This conceptual description outlines objectives and operations, including specific limitations on acceptable op- tions.' Vendors can use this brief overview of the requirements and specifications section to

    identify user expectations and to determine whether their products or services are suitable.

    Proposal Evaluation Criteria and Pro- cedures. Proposal evaluation criteria and Pro- cedures are the factors and steps involved in se- lecting a final system. Vendors must understand how their proposals will be evalu- ated so that they can tailor their configurations accordingly. Although any one system rarely meets each requirement and specification, a vendor that is familiar with the user's RFP eval- uation criteria can include incentives that mini- mize system weaknesses and improve the over- all proposal. The objective of the RFP is not to penalize vendors arbitrarily, but to encourage them to propose their best alternative.

    Timetable. A timetable of events specifies deadlines for all the steps in system selection and installation (see Exhibit 1). The critical milestone is the deadline for receiving vendor proposals. To ensure that the vendors have ad- equate time to understand the RFP and forrnu- late an appropriate proposal, a minimum of 60 days should be allowed between the releast! of the RFP and the d...