RFx
What is RFx?
This explanation will be long, but an RFx is complex, and we hope this clarifies things.
RFx is how we refer to requests for proposal (RFP), quote (RFQ), and information (RFI). An RFI is a relatively simple process of asking for general subject matter knowledge, often to identify a solution's requirements. An RFQ is gathering pricing information, which takes a bit more time but not by much. In contrast, an RFP is a competitive bidding process, assessing how multiple vendor solutions stack up against your company's specific needs to find the right one for you. It takes a lot of time and know-how, inclining many (often overwhelmed) sourcing professionals to avoid doing a proper RFP. We'll be talking about RFP the rest of the time because that's the most complex.
While an RFP takes quite a bit of effort to do correctly, it's easy to see what you're missing out on. When multiple vendors compete against each other for your company's account, the price becomes much more flexible.
While it may be costly to bring in outside expertise like Seprio for an RFP, there's a whole boatload of Seprio case studies with Clients getting 60-75% off a vendor's initial bid. You can only achieve those results with healthy vendor competition and an expert understanding of RFP that comes with decades of experience.
An RFP can take hundreds of hours across months, but the average success story says it's worth it. The only time it's not worth it is when the needed solution is small - but even with small solutions, a lean RFx process (administered by experts) will maximize savings. Many companies don't have the capacity or know-how to do it in-house, so they skip the process altogether and miss out on so much.
Not working with experts on an RFP is like not changing your oil. You think you're saving money, but all you're doing is pushing it off til later - and since you didn't do things the right way, you spend a ton more money fixing a blown engine instead. You may save 50k on the front end by not paying consultants to help on an RFx, but make no mistake - you'll lose much, much more than that 50k you tried to save…
Having an RFx done always ends in a win. It just seems scary in the beginning. Work with an expert (cough cough) whose got a complete process, soup to nuts, with case studies in your industry that prove results.
3. Contract Negotiation
Here, we're outside of the RFP process. It’s about knowing how to use the RFP for negotiating.
The first date was good. Heck, so were the second and third… You like the way they dress… They look you in the eyes and tell you you're not like anyone else they've met… Your heart flutters when they join those zoom calls. You start to look forward to seeing their smile… But it's not over yet. Don't get carried away by those dimples and freckles and bald spots. It's instrumental to use leverage by softly pitting other love triangle competitors offers against each other.
Once you've chosen your favorite vendor, you need to know if they'll crap the bed if you ever want to break up. This is where your lawyers talk to their lawyers, talk to our lawyers, talk to your lawyers, talk to our lawyers to make sure that what they're promising to deliver is in writing, and they're legally obliged to provide it... If things slow down or go a bit sideways, letting them know those other vendors are willing to move faster and do better usually works.
In summary, contract negotiation is comprised of three phases. I'll outline them here, but you'll want to check out 'link to other page' for a detailed breakdown.
Discovery and History Review: This part won't be necessary, we've already gathered the needed info earlier on when building the RFx.
Strategy Development: In this phase, Seprio is identifying pieces of leverage and planning on how to use them.
Negotiating the Contract: Seprio is deploying the strategy mentioned above in this phase.
It's important to note that Seprio is not here to beat up the vendor and will ensure that your relationship with the vendor is not damaged. Seprio also does not take the reins and run off into the sunset without you; this is a collaborative process built to bring you the best results possible. We're on the same side the entire way. The success of Seprio is dependent on your success.
What’s the process?
1. RFP Development
We won't go through the step-by-step process as we do with the other service descriptions on our website, as an RFP is a reasonably standardized process.
The most important (and most difficult) part of an RFP is defining your company's requirements from a vendor, what we call Requirements Definition (RD). RD is where most untrained in-house RFx teams fall apart, losing a ton of time & savings. As Aristotle said, asking the right question is half the answer.
Vendors can smell an amateur like sharks after blood. Often, they price the solution based on what they think your level of sourcing expertise is. If you know what you're doing and you've introduced a level playing field for competition, you can cut the fat off the deal and turn an initial 10% discount into a 60-75% discount (especially for SAAS). Vendors will take anything you're willing to give… More on contract negotiations later.
An RFP creates the best competition, which gives you leverage for cost savings and most of what you want out of a deal.
Along with the RD, Seprio sends out the RFx after crafting other vital documents that will be left unsaid here…
2. Review & Scoring of RFP Responses
Once Seprio has helped develop a list of eligible vendors and reached out to them with the RFx, the work doesn't end. Once the vendor responds to the RFx, choosing the right vendor is like being in the dating world. You have to be careful… They may look smoking hot at first glance, but the minute you jump in the water together, all the makeup comes off… Yikes.
To avoid that, you need to create a surefire way to speed date all the bachelors and bachelorettes that respond to your RFx. You need a way to compare them and know which one is right for you. It's a difficult process weeding out the gold-diggers, one-size-fits-all amateurs, "I'm too good for you anyways" jerks, and worst of all - the ones who promise you the whole world and deliver on half of it. The good part is that they know they're all lined up next to each other and are doing their best to be the one you choose. You (metaphorically) go on a date or two with each vendor and score them, weighing their responses against your needs and wants in a solution.
You have to skip the small talk on that first date with a vendor. You need to talk about exposure/risk/liability, contingencies, support, future renewal pricing terms, consequences of an unsatisfactory help desk, uptime, and most importantly - why their website looks like it's from 2002 when they say they're an innovative tech company pioneering state-of-the-art solutions. Not to be too dramatic, but the future of your company's success is on the line here. You can discuss planning a golf trip and your favorite Cabernet with them later.
Signs this is for you:
Your team is looking for guidance on a more complex RFx.
Don’t have time or expertise to have an in-house team do an RFx.
You’re wishing you had an objective third party to validate that you’re getting the best price and fit for your situation
You need to provide a due diligence report to the executive team to justify your choice of vendors and/or solutions.
Don’t want to hurt relationship with vendor, but need a better price.
Wishing you had a sourcing professional to tell you whether a deal is good or not.
Your team has a good RFx process, but you want to optimize it and make sure they are utilizing best practices for RFx’s in the future.
Looking to build an internal RFx process while getting hands-on experience with a sourcing guide.
Your team doesn’t have an existing RFx process, or the current process isn’t cutting it.
Uncertain of risk exposure without needing a lawyer to simplify it.
Legal takes a while to process things because the contract is difficult.
RFx Case Studies
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Insurance | Fortune 50 Insurance Company
A Fortune 50 Insurance company sought a video-conferencing provider to implement improvements to prepare the Client for industry advancements in video-conferencing technology and to reduce its carbon footprint and costs associated with travel. This vendor would provide a fully outsourced solution that would encompass the network, bridging services, and overall managed services.
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Coming Soon!
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Coming Soon!!
The Seprio Promise
If you commit to the process, you will save more money than you pay Seprio, guaranteed.
You make all the decisions and sign off on the strategy before negotiations even begin.
We will not only support your relationships with your vendors, but we will also work hard to improve those relationships.
What can you expect from Seprio?
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Visibility
You’ll get full visibility into everything we do together, as well as the nuances of your unique circumstances.
As a decision-maker, it’s impossible to guide your team in the right direction without knowing where you stand today.
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Process Consistency
Great companies do the right things, the same way, every time. Our job is to make your job easier.
We live and breathe sourcing and vendor management, so rest assured you’ll cross the finish line with a smile.
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Money & Risk Reduction
This is one of those situations where it’s easier to show than tell. Don’t make it harder than it has to be!
You’re better off checking out the testimonials than hearing me try to say money & risk reduction a different way.