Why RFP? Trust Versus Transaction

Receiving the automated procurement email alert issuing a request for proposal (RFP) at 5pm on a Friday bears resemblance to a call to war for many suppliers. Assembling an army to muster the response begins. Who is the subject matter expert? Where have they done this before? What weapons do they have in their armoury to demonstrate they’ve previously solved these problems and met the requirements of other clients? For many client procurement teams, pressing send on the RFP email comes with a sigh of relief that the scoping meetings are over and the document is out of the door.

Taking a step back, ‘going to war’ on an RFP is a costly process of time, resources and focus for both clients and suppliers.

Constraints on corporate spend, coupled with a climate of commercial transparency and public mistrust, demand a process of visibility and fairness when banks procure products and services above a certain threshold value. The emergence of the RFP is becoming an all too familiar sight as an automated, faceless process.

But what is the end goal of producing an RFP: is it best price, best fit or guaranteed delivery?

Loathed by suppliers, who assume they are held in high esteem by their clients and prospects, how can we ensure that RFPs are tools to facilitate better supplier and client trust, and therefore better business?

Numerous articles have been written on the need to standardise and sanitise the RFP process, provide uniformity of communication and ensure set templates are adhered to, in order to make a cross-comparison of respondents. There is some merit to this approach, and on paper a transactional, transparent process conducted publicly could be the fairest way to achieve best price. However it ignores the single most important factor required for all successful business partnerships – a relationship of trust. So how do you conduct a standardised, transparent process that engenders trust, helps communication and therefore facilitates the building of client supplier relationships?

1. Setting RFP Objectives: Why RFP at All?

Why does a bank issue an RFP rather than using an existing partner or using internal solutions or resources? Setting a handful of bullet-pointed objectives between the business and procurement at the outset will help manage the process, and provide a measure of success of the final outcome. There may be objectives that can be shared with the supplier to help them understand the business drivers for the process, and ensure their response addresses these as well as the scope of the RFP.

2. Supplier List: It Doesn’t Have to be the Usual Suspects

RFP supplier lists should be short from the outset. The process will lose momentum and effectiveness if it requires more than five supplier responses to be reviewed and scored. A request for information (RFI) in the form of a brief requirements questionnaire to a wider supplier list can be a fast and effective way of compiling a short supplier list for a RFP.

It is best to use cross-organisation preferred supplier lists, as this can enable the bank to tap into a mix of large and small scale suppliers, but it doesn’t have to be the usual suspects. Where there is an incumbent supplier, this doesn’t naturally mean they remain the best fit for the bank’s current and future requirements – current IT software licenses could have been procured 10 years ago and long-term service providers could be too close to the internal culture to provide the fresh pair of eyes required.

Encourage business and procurement teams to take time outside of RFP processes to diversify supplier relationships in the market. This will enable a better understanding of their solution and services capabilities, and their cultural fit, to better inform future RFP lists.

3. Understand Scope: It’s No Guessing Game

As a client, what expertise do you want to see in your chosen supplier as part of the RFP process? Is it a best fit from an understanding of your needs or that they can guess what you need from the smallest set of clues? Unfortunately short notice, under-scoped, high level RFPs are on the increase and do not ensure that those suppliers who guess right are the most capable provider of a solution to the client requirements. Setting out the scope of an RFP can be simple if you focus on the three key areas of change: people, process and technology. This can be done using focused workshops for IT, product and end-user teams.

The art of scoping an RFP is providing as much detail as possible – business objectives, timelines, bank personnel level of engagement in the project, delivery date expectations, etc – without falling into the trap of creating a 300-page document. For example, a leading European bank issued a core banking system RFP with 5,000 technical specification questions and a two-week response timeframe.

Long RFPs require the service provider to focus on answering the sheer volume of questions, rather than on the quality of the response and fit to requirement. Avoiding ambiguity in the language of scope (including but not limited to, etc) means avoiding ambiguity in the responses and the associated assumptions the supplier has had to make. Logically structured and detailed, but concisely scoped, RFPs set expectations clearly with suppliers, helping them estimate the timelines, effort and pricing much more effectively and transparently.

Prioritisation of scope is also a key factor in assessing RFPs. What are the absolutely essential factors – without which the supplier would be knocked out of the bid – and which are merely nice to have? Making these known to the supplier from the outset enables them to weight their response accordingly and saves the evaluator’s time when reviewing.

4. Selection Criteria: How Will the RFP Responses be Marked?

Making the selection criteria transparent to the supplier is critical. The elements on which a supplier will be judged, such as their existing relationship with the bank, proven credentials in the market, scope fit and commercial flexibility, need to be agreed once scope is confirmed. However some elements may carry 90% of the decision. Agreed up front by the bank and then communicated to suppliers, this knowledge enables suppliers to weight their proposal accordingly, spending the proportionate amount of time addressing each element.

How the pricing will be assessed can be vital in distinguishing and comparing RFP responses. For example, is the initial software license fee the key concern, or is it the on-going maintenance costs? Is it the service personnel blended day rate that is key or a fixed price engagement? This will ensure a supplier spends time providing innovative cost models for consideration. It’s not uncommon for basic cost models to be requested in an Excel table, only then for procurement teams to undertake complex calculations on them post-submission to derive a separate metric from which to assess the supplier. Get the supplier to do the work in their RFP submission and you may find they are more competitive when they understand your pricing assessment metrics.

5. Set Realistic Timeframes: Start the Trust Equation Here

It takes time for a bank to gather stakeholder requirements and to write and issue an RFP. In turn, a quality response requires a generous lead time to compile it. So if, for example, an RFP deadline is only 48 hours, what do both parties hope to achieve? Are the receiving suppliers simply being used to benchmark the preferred supplier’s price?

This short timeline favours incumbent suppliers already working with the client, who will have base level knowledge of requirements, and therefore a head start. So what is an alternative supplier to do? If key resources happen to be on leave, they may assess that their chances of winning are too low and decide not to bid. The bank could then lose a supplier that would have been an excellent fit for requirements simply because of unrealistic timeframes.

Providing advance notice to suppliers that they are to be issued an RFP on a certain date with an expected timeframe will enable them to plan, compile the best team to respond and therefore provide the bank with a true reflection of their capabilities. Advance notice of presentation/demo dates, with these times having already been secured with the relevant business attendees, will also ensure the process runs smoothly and the supplier fronts its top experts.

6. Closed Q&A Sessions: An Opportunity to Build a Relationship

Savvy procurement professionals take the business on the journey with them. Using the question and answer (Q&A) process is a way of obtaining the next level of scope detail from the business, and being clear about the objective of the RFP and what is required from the supplier. Closed Q&A sessions, rather than emailing all suppliers with a list of all questions asked and the relevant answers, enables more direct questions to be asked and more direct answers to be provided.

A Tier 1 UK retail bank is already seizing the opportunity to assess approach and fit of suppliers by hosting closed Q&A sessions as a conference call, rather than faceless email exchange. This provides the opportunity to build a relationship and rapport through dialogue, understand the chemistry of the two teams that could be working on the project together, all within a controlled RFP procurement process.

7. Feedback: Without it There is No Experience

For shortlisted suppliers and those who are unsuccessful, feedback is a vital part of the RFP process. This is often where clarity comes, and where the procurement relationship can be better built, particularly where participants are now ‘out of process’. Understanding the strengths and weaknesses of submitted bids ensures better quality either at the next stage, or next RFP process.

There are examples where the demonstration of subject matter expertise in an RFP response was of such quality, that while the supplier had not been awarded the bid, the business requested formal presentations from them. The aim was for the client to understand their capability further, enabling them to be considered in greater detail in future bid processes.

8. Negotiation: Cost, Quality or Time?

Again clarity here on the negotiation objectives with a winning supplier are critical. Online auctions are becoming more commonplace and can be baffling for suppliers if they don’t understand the objectives of the banks undertaking them. Is there a budget limit to be adhered to, a discount threshold to be obtained, or do the service levels and quality assurance need to be guaranteed more than the lowest price?

There are three levers for any commercial negotiation: cost, quality and time. They are interconnected and as such a drop in cost can coincide with a reduction in quality and an increase in time. These are elements that go uncommunicated using online portals as part of the new age RFP process, but are not lost in a face-to-face negotiation. Provide a step in the process to be transparent with your suppliers, so they understand your negotiation objectives. This will undoubtedly ensure you obtain best value for their products and services.


What do these eight pointers tell us? RFPs have become increasingly widespread as a way of ensuring commercial transparency and preventing the same old suppliers being awarded contracts. Unfortunately banks are building sterile processes, celebrating uniformity, ensuring no off-the-record or side-line conversations can be held, setting out the expectations for the most economical solution and, as a result, invariably receive five RFP responses, three of which are nearly identical. So how do they choose? How could anyone choose? Faced with little difference, you go with who you know.

The original question is most important: what is the end goal of an RFP? Too often this is to gain the cheapest price from the already preferred supplier through a formal transacting process. So let’s rephrase the question. What could a well-constructed RFP process achieve?

We have already ascertained that faced with the same solution and cost, the only differentiator is a trusting relationship. This naturally favours the incumbent supplier. To truly level the playing field and create a diverse competitive supplier base, you must include in the RFP process the ability to build relationships through interaction – a process that values trust over transaction. Provide the opportunity for clients and suppliers to transparently build a trusting commercial relationship and in the battle of trust over transaction, such relationships will deliver lasting value, not just the best price.



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