Contributors

What’s New in the RFP Process?

Following his last Cuppa Joe interview in 2003, Gil Parker discusses what it takes to win new business.

by Joseph Vales

When leading outsourcing providers need to win a mega-deal, the first call is often to Gil Parker. During his 30-year career with Deloitte, McKinsey, PricewaterhouseCoopers, and Vales Consulting Group, he has led more than 250 successful proposals with a 70- percent win rate. Working side-by-side with his clients’ most sophisticated new business development teams, Parker shapes the winning strategy, value proposition, business/technical solution, and proposal documents. Parker shapes the winning strategy, value proposition, business/technical solution, and proposal documents. His proven approach to developing a powerful 15-point executive summary and six-bucket value proposition have become an industry benchmark for communicating a best-value solution that meets or exceeds the buyer’s requirements and RFP vendor-selection criteria.

JV:
Looking at the ITO and BPO marketplace, how has the relationship between corporate buyers and service providers changed during the past three years?

GP:
The corporate buyer is now king and has gained greater contracting and negotiating power over the past three years. Buyers are more experienced and sophisticated about outsourcing than ever before. Also, buyers are increasingly engaging RFP consulting firms to gain valuable market knowledge and to advise them on vendor selection and contract negotiations. As a result, buyers are much more demanding throughout the entire proposal process, in their statement of work requirements, service level agreements, and contract terms and conditions.

JV:
What are the RFP consulting firms doing to meet the growing demand for their services, and how are they influencing the proposal process?

GP:
To meet the growing demand, major RFP consulting firms have been expanding into more BPO processes, more vertical industry markets, and taking on smaller engagements. Also, the leading strategy consultants have entered the market to advise buyers on outsourcing as part of their strategic business planning. In addition, a number of smaller specialist firms have recently formed to advise buyers about outsourcing in different industries and processes such as real estate, facilities management, healthcare, recruitment, document management, and others. All of these consulting firms know the strengths/weaknesses of the different service providers; this is their core competency, so they can quickly identify the three to five best qualified providers for any given assignment.

This means they can often advise buyers to skip the time-consuming RFI phase and move directly to the RFP phase, which makes for a more efficient bidding process and a shorter procurement cycle. But this does pose real challenges for second-tier and smaller niche providers to build working relationships with the consulting firms and to communicate their value propositions, specialties, and sweet spots to get on their preferred provider lists for certain types of outsourcing programs.

JV: How have outsourcing RFPs changed over the past few years, and what are buyers looking for and asking about today?

GP: What’s really new about today’s breed of RFPs are the many questions buyers ask about the “business value” that providers will bring to their outsourcing engagements, and these kinds of questions are being asked in various ways in different sections of the RFP documents. These business value questions are higher-level and focus more on ways to improve the company’s operational efficiency, organizational effectiveness, financial performance, and, ultimately, shareholder value. These questions are in addition to the basic ones that are regularly asked about the provider’s resources, experience, qualifications, and service plan to deliver on the statement of work. Clearly, buyers are looking for more value in the outsourcing relationship.

This is why we developed a special value proposition section for proposals, where service providers can bring together in one place all of the business value ideas and benefits that often get buried or lost in answering detailed questions in voluminous proposal documents. We want to present a more robust, multi-dimensional value proposition so providers can compete not only on the basis of price but also on all of the other value-added benefits to be delivered as well. We group these ideas and benefits into six basic areas: economic, strategic, operational, technology, human resources, and risk management benefits. And providers have to communicate these ideas and benefits to the multiple buyers in each client organization, including the CFO and CIO as well as the business unit leaders, process owners, procurement executives, and risk management officers.

JV:
How does this value proposition section tie in with the executive summary, which the top decision makers expect to see in every outsourcing proposal?

GP: The value proposition is the heart of the executive summary, which should bring together all compelling reasons to select the service provider as the best-value solution. The executive summary has to be a powerful, high-impact sales document that really distinguishes the firm from its competitors. The summary has to be an engaging dialogue with the top decision makers that:

  • Communicates a deep understanding of their business objectives, goals, and plans;
  • Describes why the firm’s proposed business/technical solution meets and even exceeds their outsourcing requirements;
  • Introduces the firm’s great client service team with outstanding credentials;
  • Highlights the firm’s relevant industry, process, and technical expertise;
  • Demonstrates the firm’s thought leadership and client satisfaction;
  • Commits the full resources of the firm to the success of the outsourcing program.

To communicate all of this, providers need to prepare summaries that span 10 to 15 pages and even longer ones for mega-deals in the hundreds of millions of dollars.

JV: Risk management is high on everyone’s agenda; what new steps are service providers taking to identify and manage outsourcing risks?

GP: That’s right. Risk management is now the second most important vendor selection criteria, right up there after cost savings. No buyer can afford the risk of an outsourcing failure, whether it’s corporate risk or personal career risk. Buyers want service providers with world-class best practices, smooth and orderly transitions, and Six Sigma specialists monitoring quality control. They also want data-center security, computer program/application security, network access security, disaster recovery/data back-up, and redundant power and telecom systems. And they avoid providers that can’t deliver because they’re overextended serving other clients.

Since the Sarbanes-Oxley Act of 2002, buyers have been issuing RFPs with entire sections on risk management. Buyers are not just asking questions; they’re actually telling service providers what they must do to provide effective governance structures for managing their outsourcing programs. To respond, service providers are building special risk management programs to identify, assess, control, mitigate, or eliminate any outsourcing risks. They’re strengthening the integrity of financial management systems, internal controls, and management reporting. And they’re implementing programs to ensure full client compliance with government regulators and professional standards.

JV: What should service providers be doing to showcase their client service teams during the proposal process?

GP: To win the big contracts, service providers have to field their “A-Team” of credentialed professionals, not just the available team. They have to introduce team leaders to the buyer early in the proposal process so they can build relationships with the key decision makers. They also have to identify the entire client service team in the organization chart, with all of the individuals named with roles and responsibilities spelled out. Far too many proposals are being submitted without the full team in place, with no clear executive leadership, and many team members “to be determined” later. Not to identify the entire team is a fatal flaw that will result in the proposal being scored low and rejected.

JV: How important has it become for service providers to have an offshore delivery capability to win new business?

GP: Three years ago, service providers could win proposals without an offshore component in their solution, but today, they’re at a competitive disadvantage without one. Larger providers are using their own captive service centers in low-cost countries while also acquiring local firms. Smaller providers are forming alliances with established offshore providers; for example, RPO and PEO firms send recruitment work to pure-play providers such as Summit HR in India. And the larger Indian ITO and BPO firms such as Genpact, Infosys, Tata, and Wipro have recently begun marketing their services more aggressively as a total global delivery outsourcing solution.

JV: Are client references becoming more important in the proposal process?

GP: Yes, references are more critical than ever, especially as a risk management measure. Client references are often the deciding factor in selecting service providers for outsourcing programs. Yet many providers’ reference programs are out of control and have been for years. Senior executives may not be available for telephone interviews, they may be over-used, or may not be briefed properly; in some cases, junior managers may fill in and give lukewarm references. We recently saw a leading provider lose a $300-million F&A contract bid. Their proposal was top-rated, but their three executive references didn’t speak well enough of them. We see this problem recurring in most proposal situations, and providers need more effective reference management programs. In fact, the Reference Standards Board was formed last year to help providers develop more informative and meaningful reference reports for buyers.

JV: What future trends could impact the RFP process?

GP:
Looking ahead, the buyer’s sourcing or procurement departments may take on more responsibility for managing the RFP process, first for commodity processes and then higher-value areas as well. The coming wave of consortia buying will give powerful buying groups more leverage to negotiate favorable contracts with providers. New ways of delivering technology solutions such as software as a service, service-oriented architecture, and virtualization will impact pricing and vendor selection.

Gilbert Parker, director, Vales Consulting Group, leads the firm’s sales proposal process services. He can be reached at 212-410-9876 or gparker@valesconsulting.com.

Tags: Contributors

Related Articles

Menu