The 6 Days of X-asperation: Day 2 – Questions to ask your e-RFX and e-Auction Vendor!

Just like we did in the X-emplification series, we’re going to start with e-RFX and e-Auction as we tackle the generic questions that you should be asking every vendor, and the types of answers you should be expecting.

1. What do I have to do to get a good handle on how to make effective use of this technology, and for an organization of my size, how long is it going to take?

Before you even consider selecting an e-RFX and e-Auctions platform, you should have reviewed your categories, divided them into projects, and achieved a good grip on what categories are appropriate for sealed bid RFX and what categories are appropriate for reverse auctions. Then, you should review these categories with the vendor and see if their recommendations match yours. If the vendor’s recommendations are different, they should be able to back them up with data and experience and an ability to transfer that knowledge to you if you go with their solution.

Furthermore, neither e-RFX nor e-Auction is new, and both offerings should be very straight forward. Therefore, it shouldn’t take long to install and deploy these solutions on your first project, once it is identified and the requirements determined. (A SaaS vendor should literally be able to set you up on the platform and help you get your first e-RFX and e-Auction up and running in a few days.)

2a. How much functionality is my organization realistically going to be using in 12 months?

e-RFX and e-Auction functionality is pretty basic compared to other e-Sourcing and e-Procurement offerings, and there’s no reason that you shouldn’t be using most of it within a year.

2b. How much functionality do I really need?

All of the basics. And all of the functionality that was outlined in the original X-emplification post, although you probably won’t be ready to use complex formulas, splits, and cross-lot rankings right away.

This means that you don’t need a 1001 template library or automatic project creation from a bundled spend analysis or reporting tool to be productive and, more importantly, get savings. If you have the flexibility to build any RFX you might need, you can always download a free template from a resource center and build it yourself. Sure a built-in one might save you a few hours, but how much is that few hours costing the organization relative to how much the total buy is costing and, more importantly, what if the bundled template isn’t quite right? In other words, be sure you’re not sacrificing core capabilities just to get a few frills.

Note that even though RFX is a mature technology, there are inflexibilities baked into many of the tools that analyst firms blindly label “best in class.” There have even been outright failures of RFX software, despite this maturity level (one might almost say, “because of it” — some companies have stopped innovating entirely in RFX as of several years ago). So when you evaluate RFX, make sure to pick a tough category with complex pricing grids and make sure the RFX solution you choose supports them. You might be unpleasantly surprised if you do not.

2c. And how does this functionality solve my #1 pain today, which is X?

Chances are, if you’re looking at e-RFX, you’re number one pain is sourcing cycle time. Make sure the tool automates as much as possible. If you’re looking at e-Auction, chances are your number one pain is cost. Make sure the tool supports a reasonable number of different auction formats, because empirical evidence seems to indicate that certain auction types get better results in some categories, while others get better results in other categories. (See Alan Buxton’s Where Next blog, for example.)

3. How much training is my team going to require to effectively use the software? How long is it going to take them to absorb this training?

e-RFX and e-Auction is very straight forward, but you still shouldn’t overlook some basic training. This training should include the set-up of a sealed-bid e-RFX project, the set up of a basic reverse auction, a review of what the supplier sees (so that the buyer can competently answer questions), an overview of the communication and collaboration capabilities, and troubleshooting techniques. This should only take a couple of days, but it’s an important couple of days.

4. How much is this software REALLY going to cost me in the first year and each subsequent year?

e-RFX and e-Auction software are a commodity now. Decent solutions are available in the low five-figure range. Furthermore, since the solutions are mature, updates, whether they are minor bug fixes or minor updates, should be few and far between, so maintenance should be low – in the 10% (or less) range per year. Installation should be free if delivered as true multi-tenant on-demand software, and if it’s behind the fire-wall or hosted ASP installation, no more than a couple of days of reasonably priced consulting time. Furthermore, there should be no need for technology services – the basic training should include everything you need to know to get started. (Although you might want to consider using them for category expertise consulting, if they have it.)

5. You say you care about your customers and that you are going to provide great service. Prove it!

Ask for references. Talk to them. If they have an upcoming user meeting or conference, ask to go to it. But most importantly, ask for examples of results their customers have achieved on the platforms recently, and how they can help you achieve the same.

6. Can I take it for a test drive or a short term lease?

Considering that all of this software is web-based, even if the provider isn’t delivering it using true multi-tenant on-demand SaaS, they should still have a test-drive platform up-and-running and they should be willing to let you do a test-drive at a very low, nominal, cost.

7. Can I buy it or implement it in pieces?

This is one of the few technologies, given that it is simplistic when compared to other e-Sourcing solutions and a commodity, that you may want to consider buying the technology up front rather than buying it on a per-event basis. You don’t have to use more than the basic reserve price reverse auction until you’re ready for more advanced features.

Having said that, though, nothing prevents you from using the technology for one or two events just to make sure that it works well, before signing a long term commitment.