man standing in the middle of a very large chess board, studying the pieces
PHOTO: Zoe Holling

Companies of every size need fast and reliable solutions. Building sites, developing apps, new projects and everything in between, businesses need to find vendors and partners with the right skills — for the right price. 

Unfortunately, requests for proposals (RFP) offer outdated results and dealing with even just a handful of RFPs can throw a wrench in the whole operation. Yet simply dumping the RFP method doesn’t exactly solve the problem. Instead, business leaders must change the way they think about vendors themselves.

RFPs Favor the Established

Organizations rely on RFPs — 95 percent of organizations in fact. Sure, at face value the RFP reaches vendors for outsourcing IT or creating new applications, but it doesn’t necessarily get businesses the results they are looking for. Among project management professionals who focus on IT say that of their strategic initiatives, 42 percent failed to recoup the budget, 28 percent are deemed failures, and only 60 percent met the project goals. 

Business leaders know they need to find more nimble vendors, but often still find themselves stuck relying on RFPs. Even for the vendor candidates themselves, some of which deal with hundreds of RFPs a year, the colossal time, energy and money waste show in their bottom line.

For companies needing modern solutions to modern problems, RFPs rarely elicit the most innovative solutions. Incumbent privilege often takes the lead among RFP bidders, rewarding longevity of businesses over innovative startups. The 2017 global VC investments in startups is valued at over $140 billion, and between 2015 and 2017 the total global startup economy value was $2.3 trillion. That’s a 25.6 percent increase in the investments in the talents of flexible and talented startups that are routinely ignored by standard RFP demands. Age specifications of businesses can easily disqualify a startup bidder for an RFP, putting up a barrier to reaching new solutions.

Related Article: Navigating the RFP Process: 7 Tips on Evaluating Digital Agency Experience 

Enter Proof of Value 

Some business leaders see the value of diversifying away from single source vendors and take a lesson from the many Forbes Global 2000 companies. In 2008, 42 percent of these businesses outsources all their IT projects to single vendors, and in 2018 that dropped to just 15 percent in a decrease of almost 65 percent.

A concept known as PoV, or Proof of Value, is an analysis of available data relating to a given project that supports its success and potential ROI. It ensures that the best value projects are done for the right price without the need for an in-depth and costly RFP. RFPs are much more broad and detailed, outlining steps of the process, deliverables, and more, while a POV only outlines the points that are expected to provide value to the customer.

POV can take many forms, from real-world demonstrations of a product to case studies about previous success, most often presented as an analysis of ROI. This helps agile and creative vendors have a real chance against older, established vendors in addition to justifying real ROI predictions. Utilizing Information Measurement Theory, or IMT, the predictability of success and error using measurable and factual information is presented, giving every party a good idea of the scope of any project.

Related Article: Ace the RFP Process Now or Risk Repeating in a Year

Life Beyond RFPs

By giving all vendors a real chance to showcase the scope of their skills, PoV replaces Requests for Proposals with an information and performance-based solution as the new standard. Ready to dump the RFP? Take a look at this infographic for more detail on RFPs, why they haven’t aged well, and how to make the switch to better and more lasting methods to reaching new vendors, building new relationships, and finally getting projects done.

RFPs: Dinosaurs of the business world?
Source: Semarchy.com