5 Reasons Why an RFP is Crucial to Your System Selection

Last week we sent a Request for Information (RFI) for budgetary pricing to three ERP system vendors we felt best fit the client’s business. We laid out the schedule for the how the client expected the system selection process to proceed.

This list of tasks included sending a Request for Proposal (RFP), analyzing the responses and on-site demonstrations of the software. As an aside, the client has sales of $13 million and a budget of $500,000 to implement.

One vendor fired back an arrogant email that said they felt their systems capabilities were superior, and sales were exceptional this year. They no longer feel the need to answer RFPs. And they would not be doing on-site demos, so they would not see the contact centers or fulfillment operations; only in “special cases” would they do so.

What client’s requirements aren’t “special”? Sarcasm aside, our omnichannel client has several small footprint specialty stores selling color/size apparel, a catalog and an ecommerce website. Since it’s a small company and has color/size assortments, there aren’t necessarily large quantities of products in the stores or warehouse.

The client expects the store and DC inventory systems to be fully integrated so online inventory accurately reflects what’s actually in both places, through the contact center, store POS and website. Occasionally direct orders are fulfilled from stores so access and update capabilities from them is critical.

Without an RFP and demonstrations it would be extremely difficult to understand the differences between new system options and whether a potential new system is materially better than the existing one.

Scratch that vendor off the client’s list.

The importance of RFPs to the selection process is equally critical for any large-scale system, be it order management, warehouse management, web platform, content management system or  warehouse automation.

Let’s look at the potential ramifications for not having on-site demonstrations. Web-based demos generally aren’t long enough or effective enough to see all of the functionality. Rather than a couple hours, we advise you spend a day to a day and a half going over every aspect. Also schedule your various department managers to review system functions affecting their responsibilities.

While our client has $500,000 set aside to invest in a system, that is a huge figure for a small company – but their system is 15 years old. They rightly want to be sure that in every respect the final selection is the right one. They also want to know the total cost of ownership for the licenses, software, hardware, modifications and annual support. If you don’t spend that time you will never understand how the system is designed and how good the fit will be for your company.

It could be equally detrimental if the vendor doesn’t see your contact center and fulfillment operations. Experienced vendors can share what changes their system will create in your business environment, and what changes are required to make optimal use of it.

Here are 5 reasons why RFPs are a critical component of the system selection process:

Requirements: An RFP is an internal exercise and discipline that lets your company identify information system requirements in detail. It is also the best way for you to get on the same page and get buy-in from all relevant departments in your company.

System comparisons: In analyzing vendor responses, RFP responses become the basis for detailed comparison in terms of functions, investment and vendor implementation methodology. In the case of systems sold by value-added resellers (VARs), the RFP should ask about their experience with businesses your size, channels you sell through and integrations to other business systems and websites to make sure they’re the right fit. VARs can often work in different industry segments than direct to customer. Selecting the right VAR is as important as the right system fit.

Scripted demonstrations: Ideally we like the client to control the demos much more than what typically happens. Left to their own devices vendors talk about how great they are and they show you whiz-bang functions. We know they’re good, that’s why we recommended them for the short list. But what functions are most crucial to your business? Going back to the inventory integration noted above, how well do the shortlist vendors meet these needs? Focus the demo questions and analysis on the key functions.

Return on Investment: Analyzing and comparing functional differences and advantages of different systems should also get you thinking about the ROI. It’s often difficult for many vendors and merchant companies to show demonstrable savings. There is always a long list of intangible benefits, but where are the cost reductions, productivity gains or customer service improvements you can take to the bank?

The devil is in the details: Most systems selection projects have to be scheduled over months rather than days because of team and vendor availability. An organized methodology and RFP process helps you track and compare your observations, questions and conclusions.

Using an RFP and this selection process will help you make the right application decision for your company. We all know in complex businesses, no system can address all the needed functionality, but this level of analysis is critical to understanding the fit.

Curt Barry is Founder and President of F. Curtis Barry & Company

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