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IT Leadership Insights | Best practices in the RFP process - YouTube
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- Hello, my name is Jaros艂aw Granat,
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and I'd like to welcome
you to this episode
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of IT Leadership Insights
by Future Processing.
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Writing a request for a proposal is not a
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quick or easy task, as
there are a number of things
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that must be taken into consideration.
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Thankfully, our guest
today is Lauren Tennant,
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a specialist sourcing
advisor from Horizon Seven,
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who is just the right person
to talk about this topic.
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Hello, Lauren.
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- Hi.
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- Lauren, could you please
tell us a little bit
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about yourself?
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- Of course I can.
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So I spent most of my career buy-side,
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buying technologies for big
clients based out of the UK,
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and since then I've been
working as an advisor
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to the market, helping global
clients to buy services.
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Alongside that, I have
done a significant amount
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of research as a master's and
now a doctor of outsourcing.
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So I have spent overall
a crazy amount of time
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thinking about outsourcing.
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(laughter)
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- That's perfect for today's episode, so.
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- I hope so.
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- As a specialist, Lauren,
could you please tell us
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how a typical vendor
selection process looks like,
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because from my experience
it's sometimes a pain
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for clients, for buyers,
because they do not know
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what to expect, what to
ask, especially if they are
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doing it for the first time.
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- Of course.
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So typically clients will use
a RFP 'request for price'-
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type process to buy
services, and it depends
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on the size and shape of
the services they're buying
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as to how long and the complexity
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of that process, of course,
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but it is typically very
difficult for all concerned,
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the buyer and the
supplier of the services,
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so normally a client will
think about their scope first,
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so they will write a
requirements specification.
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Then they will think about
sending that to the market,
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and many clients, especially
in bigger procurement will
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use an RFI process to qualify the vendors
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that they want to then
invite to the RFP process.
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So this can all take a long period of time
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and is a long written
document, and typically done
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at arm's length, so a
distance relationship.
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So then they will provide
that to the vendor or vendors
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who will look at writing a long response,
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and that can be followed
by a beauty parade,
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followed by a shortlisting exercise,
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followed by evaluation, and then typically
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only at the evaluation
point is when the client
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will understand the business case around
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the proposal from the
vendor, the selected vendor,
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and all of these things
can cause some difficulty
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in the sourcing process,
because it takes a long time,
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is a long written document
and a long written response,
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which can lead to some
difficulties in expectations
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and understanding.
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- All right, so the process
definitely consists of
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plenty of phases, steps.
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- Correct, yeah.
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- So from your experience,
what would be the best
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practices for following that process
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for these companies that
are deciding to outsource?
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- Sure.
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I think what's really
important is that clients
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that are looking to come
to market for services
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understand what it is
they're trying to achieve
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from the product or services
they're looking for,
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so what should the end
result be out of the contract
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that they're procuring, the
services they're procuring,
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so that they understand the value of that,
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that they understand the business case
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around making that decision,
including whether or not
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they should have some things inhouse,
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whether there should be a hybrid,
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and also whether they
should do nothing, right?
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So to understand a robust business case
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really helps a client come to
market with a full knowledge
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of what it is they're buying
and what it means to them
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so that the process later
on doesn't get upset by,
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delayed by, or completely
stopped by someone
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realising the benefit is not as great
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as they thought it was going to be
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or achieving the services
is impossible for
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their internal resourcing.
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- You also mentioned
that part of the process
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is to prepare a document that is sent to
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potential vendors.
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What do you start with when
you prepare such a document?
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- Well, I think typically
clients will spend
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too much time writing too
much input specification
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into an RFP document,
that is trying to tell
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all the service providers
what the solution
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should look like, and I think for me
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there is a benefit from
avoiding that approach.
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- Okay.
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- So focusing more on
the output specification.
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So inevitably, you need
to start with the scope.
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What is it that you are trying to buy?
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And we try and help our
clients to think about that
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in outcome terms rather than input terms.
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So what are you trying to achieve?
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The scope should also
include the parameters
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around volumes, geographies, et cetera.
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The other thing that I think
is important to include
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in the early stages is the
buyer's view on the contract.
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So what kind of contract
are you expecting?
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What are the principles
that should be associated
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with that contract?
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What are you expecting the
supplier to sign up to?
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Because often that's left until the end,
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and then there can be a
difficult conversation
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around the contract terms
and how the supplier
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has priced the solution
against the contract terms,
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and there's often a mismatch there, right?
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So avoiding that can help to include that.
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And then I think the final
thing that you should
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really include is around how you expect
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the relationship to work.
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So what kind of relationship do you want?
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How should the governance function?
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Is it an intimate relationship you need?
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Do you need to have a
close ways of working?
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What kind of service metrics
are you expecting to achieve?
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So that again the supplier
can write a solution
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that delivers those things and that it's
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not a surprise later on.
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- Let's pause for a while with the RFP,
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because I know that
you're a huge supporter
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of an alternative approach, as well.
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- Yes.
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- Could you please share some
insight about that as well?
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- Yeah.
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So we have come up with
a process that we call
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visionary sourcing, and
that's different because it
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takes away the need for the arm's length
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written RFP process.
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It's not easy.
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It's not a shortcut to a solution,
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but it's based on all of
the research that I've done
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over my career around
the things that become
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difficult later on in the relationship
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as a result of some problems
with the sourcing process,
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using the arm's length RFP and
the time it takes to do that.
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So we take out using the RFP and instead
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we do face-to-face co-design piece of work
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to come up with a solution.
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Other things that are different about our
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visionary sourcing from
a typical RFP process,
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based on what I just
mentioned, is moving the
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business case to the front of the process.
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So we work very closely with our clients
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to articulate what that
business case looks like,
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to do some testing in the market to say
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what we will achieve from going
to market for this solution,
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so that we're very clear
about that as we go into
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these workshops with the suppliers,
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and to do a workshop-based approach,
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you need to work with a
fewer number of suppliers,
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so we shortlist at the
beginning of the process,
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and we can do that because
we really understand
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what we're trying to buy
and what's important to us,
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so actually we can very
much narrow the market
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at the beginning instead of
going to 12, 15 or more vendors,
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then having to do all the work to review
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long documents that can
be 300 or more pages.
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We focus instead on three, maybe four
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carefully selected providers,
working face-to-face
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in design workshops, and those are the
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fundamental differences.
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And the last thing that's different is we
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parallel-run our contract negotiation
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with those three or four vendors whilst
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we're in these workshops, so the idea is
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that we come to the end
of that, instead of having
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what we would say comparing
apples with apples,
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very many similar solutions
that the RFP will drive,
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we in fact have three or
four very different solutions
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with a contract that goes with it
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that's right for that solution,
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and that typically takes
four months end to end
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instead of 12+ months, which you can take
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doing an RFP process, but
I emphasize it's not easy.
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It takes a lot of effort, and if you're
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not able to do that kind of process
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or you're not able to employ
an external advisor to do it,
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sticking with a very good
RFP process is still good.
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So it's not either or, it's a
choice that's right for you.
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- Okay, so here is the
question, because I can imagine
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that there are different
groups of businesses and people
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with different needs.
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So probably some of people and companies
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would prefer the RFP process, and some the
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visionary sourcing.
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So who do you think are the target groups
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and what advice would you
give to each group of people?
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- So I think companies
that are looking to follow
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a more traditional
approach of comparing price
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with price for the same
solutions should absolutely
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stick to an RFP approach,
because that's what it drives.
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I think I would still look
at the advice I gave earlier
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around the business case,
moving that forwards, et cetera,
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because the RFP process itself can be
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improved by those things.
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So taking that advice
and being really strong
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about the process.
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I think it's also really
important to think about
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your own internal capabilities
of running an RFP.
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So we work with a lot of clients who
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accidentally extend the timelines because
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they have set aggressive
timelines, they miss
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their own deadlines, or they in fact try
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and squeeze the vendor,
responding vendors,
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into too short a time
to respond effectively,
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so I think it's important
to plan the process out
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respecting your own
capabilities to deliver on time,
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and as a buyer, it's important to maintain
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a good perception with the vendors
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that you can achieve your own timelines.
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So those are the things
I'd say about doing an RFP.
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I think it can be anybody,
any type of client
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in any type of sector,
that's not important.
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What's important is what type of outcome
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you're trying to achieve from the process,
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so price and solutions that are the same
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come well from an RFP.
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If you're looking for
something that's more complex,
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that needs some work on
the design of the solution
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and that coming up with three
or four different options
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is a good thing to have,
then visionary sourcing
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is a good alternative and
will create those things
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much better than RFP possibly can.
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The other thing that it
does is give the opportunity
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to work together with
your potential vendors
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before you start work,
which is a great thing to do
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because if you can work
with them and you build
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a relationship form the beginning, okay.
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So if that's important, if it's a critical
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piece of delivery, if
it's a complex thing,
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then visionary sourcing,
I think, is far better
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than an RFP for that purpose, but again
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I sort of give you a health warning.
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It's not a shortcut and it's not easy.
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It requires a lot of
focused work in a short
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amount of time, so again,
you have to be ready
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with the internal resources to do that
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and I think you really
need external support
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to make that happen.
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- All right, thank you for that summary,
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and for the whole conversation, Lauren.
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- That's my pleasure.
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Hope it was useful.
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- And thank you, the viewers, for watching
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this episode of IT Leadership Insights.
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Again, if you liked that
and found that useful,
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which I'm sure you have,
please do not hesitate
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to share it and recommend it
to your friends and colleagues.
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And at the same time, if there is anything
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you would like us to talk
about in the future episodes,
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just let us know.
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Once again, thank you, and
see you in the next episode.
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