Category Archives: Best Practices

How Do You Write A Good RFP? Part II: Indirect

This is easy, right? Just about every RFP platform was built to help you do this with templates, pre-built specs, catalog integration, easy supplier discovery, etc. etc. etc.

Wrong. It makes it super easy to assemble a good RFP IF you have the right platform (and most of the platforms out there are NOT the right platform [for you], as we discussed in our classic series on RFX Creation: Kicking You When You are Down), but that’s it.

And before you ask, Gen-AI does NOT fix the problem. In fact, it makes the situation first. What you really, Really, REALLY need to understand about Gen-AI and these public LLMs, is that, as you’re likely not aware (because every vendor using it tries to convince you otherwise), they DO NOT serve up the best of what’s out there. Moreover, they DO NOT even serve up the average of what’s out there, as some of the vendors who claim to be more “enlightened” would have you believe. They serve up the lowest common denominator response to whatever request you make of them. Let me repeat that. THE LOWEST COMMON DENOMINATOR RESPONSE. It’s critical to remember that no matter what label they slap on the technology, it’s still essentially a re-designed multi-layer neural network (that now disassembles a request, works on parts, and then tries to assemble the parts into a whole vs. taking one input and producing one output from a fixed universe) and these are built on probabilistic models that are trained by weighting the variables in the millions of equations. Guess what weights the variables the most? What there is the most of in the training set. Remembering that these LLMs are trained on the internet (as it’s the largest data source available, even though it still isn’t big enough), guess what there is the most of on the internet? Lowest Common Denominator rubbish!

So anyone who sells you an RFP generator built on the latest Gen-AI to help accelerate and improve your RFPs is lying to you about the quality of the result. You’ll produce the RFP faster, and the English might even be better, but the RFP won’t be. A good RFP requires human intelligence at the core, and unless that’s plugged in, it doesn’t matter what “latest and greatest” AI is applied. (Now, it is possible to use LLMs effectively to speed up RFP construction in the assembly process, but it requires the right design, forethought, and human intelligence backing it up. I’m not seeing a lot of that!)

A good RFP for indirect doesn’t go out asking for a bid on a standard catalog item complete with catalog specifications, because if you need something specific, that’s an RFQ for a new contract, possibly with a new supplier. It goes out asking for products of a certain type to meet a need. For example, if you’re an office supply store looking for a new distributor to restock the best selling brand of Dell laptops, you’re looking for a quote, not a proposal. But if you’re in the business of office setup and furnishing, you’re going out to find a vendor who can provide the basics (chairs, desks, board room tables, panel dividers, etc. in a cohesive, modern style) at the best price point that meets the functionality and style requirement for your clientele. You’re asking them to identify the products you should be considering, and the best prices they can get you based on your expected volumes over the next year.

The key in indirect is to specify virtual item descriptions based on intended use and the problem that needs to be addressed (something to sit on, something to print on, something to do word processing on), not actual products, and let the supplier propose the best products to meet your needs at the best price points they can muster. And, more importantly, to let them propose multiple products where a more expensive product might meet the need better than any peer product or a less expensive product might meet enough of the need that there is no reason for the more expensive product.

This last point is key, but even today only a few RFP platforms support the definition of substitute products in response to an RFP or bid request, forcing the supplier to pick one, and eliminating them from business if the price is too high or the product they choose is not the most appropriate one for the potential customer’s need (which they couldn’t know because the customer never specified how or where the product would be used or who would be using it).

If you remember this key point — virtual items not physical products; the best practice advice of specifying the who, what, where, when, why, and how that we covered in our first entry in this series; and avoid over-relying on lowest common denominator Gen-AI, and instead put your human intelligence first, it’s not hard to write a good RFP for indirect, and if you have a proper platform with templates and a process that walks you through this (and assembles all the standard elements of contact info, organizational Ts and Cs, standard and potential suppliers, etc.), it won’t take long either!

How Do You Write A Good RFP? Part I

This is not an easy question because it depends …

It depends on the who, what, where, when, why, and how. And every change to each of these elements changes what is required for a good RFP. While there are general rules you should follow if you want a good RFP, and a good RFP process, as they say, the proof is in the pudding, and you will need to include the right “proof” in the RFP to get served the right “pudding”.

Let’s take these basic questions they teach you in elementary school, which are often forgotten in today’s business world (and, sadly, the media).

Who: needs the product or service you are going out to bid for. This is critical, even if it is an RFP for paper. The paper an office worker needs to stock the printer is not the paper an engineer needs to print out large diagrams is not the paper marketing needs for their glossy brochures. Who needs it can have a big impact on what they need.

What: is the RFP for. More specifically, the focus of the RFP is on what problem needs to be solved or void needs to be filled, not on what is on the market. Specifications should only be as detailed as necessary as it is up to the supplier to identify the best solution they have for you, not up to you to pick something from a catalog you think is appropriate. Even if you need a micro-controller for a new product you’re designing, your focus should be on the integration and processing requirements, not currently existing last-generation catalog items.

When: is the product or service needed. This is critical to define. If you are replacing a software system and it needs to be done before the current contract ends in 12 months, you can’t accept a proposal that will take 24 months, and suppliers need to know this so they can decide up front if they can work within any absolute timeframes or not. If you forecasts are that you will run out of critical parts in 60 days, you can’t accept 90 day delivery times.

Where: is the product or service needed. If you need a physical good in a warehouse outside of Lebanon, Kansas, that is entirely different than needing a good in a warehouse outside Jacksonville, Florida, especially if it’s likely that the good will be imported (on ships). The latter is a short drive from a port, the former is a long drive to more-or-less the geographic center of the USA. Specifying this is critical if you need guaranteed delivery times or people on-site of a specialty not found in the city, or state.

Why: are you going out to market. Unless this is a brand new need, chances are the organization already has a product or service it is using, even if such product or service isn’t that great. Like the who, this puts the context into what is needed, which is not always a pre-existing catalog product or service.

How: will the product or service be used or consumed? This defines the specifications much better for most products (with the exception of components that are needed for a build) much better than any feature/function list you can come up with. In software, BI for executives is NOT the same as BI for finance people which is NOT the same as BI for analysts.

In other words, if the RFP is NOT focussed on the who, what, when, where, why, and how, no matter how extensive it is, what other boxes you tick, or what best practices you follow

(which should include:

  • References Up-Front
  • Core Solution Litmus Test
  • Third-Party Claim Verification
  • Open Book Negotiations
  • End-to-End Total Cost of Ownership Elucidation
  • Open Finals

)

you won’t have a good RFP. Where good will also, as you have figured out, be different for indirect, direct, services, and software (which we have partially addressed in our recent series on Best Practice Vendor Selection for True Multi-Nationals: 2025 Reprise).

We’ll tackle each of these in our future posts at a high level to give you some insight into how to approach the RFP and what to include.

Best Practice Vendor Selection for True Multi-Nationals 2025 Reprise Part V: Stuck with an ERP or outdated S2P suite? You do have options!

This is a repost and reprise of a series that last ran (for the second time) in 2015. It’s as relevant, and important, today as it was then, if not more so, thanks to the I2O Hype and AI BS!

Despite claims to the contrary, you are not stuck being a sap or following prophecies from an ethylene-gas inhaling delphi. You do have options. Acquisitions might have some analysts in a tizzy, but you only need to remember one thing. Don’t Panic.

It’s been over a decade since the acquisitions of Ariba & Emptoris, which kicked the M&A mania in our space into super high gear for the first time.
They were not the only best-of-breed suite game in town then, and they certainly aren’t the only best-of-breed game in town now, especially since the latter was retired by IBM a mere five years after acquisition. In fact, for many companies that have been acquired in our space over the years, SI would argue that they are not even in the best-of-breed category as the lengthy integration cycles required to integrate them into their acquirer’s platforms slowed down development and now there are only a few module or functions left that, in SI’s opinion, are still best-of-breed. However, there are lots of other options, and these options exist on both sides of what the Brits call the pond. (For you Americans, that’s the Atlantic Ocean.)

Best of Breed vendors eat, sleep, and drink sourcing, procurement, and supply management
Unlike do-it-all suites or ERP vendors, best-of-breed supply management vendors are focused entirely on a critical supply management process and, as a result, they tend to be much better at it than do-it-all or ERP vendors, especially supplier enablement, which we all know fuels the e-procurement benefits engine. (And whatever you do, don’t confuse supplier enablement with supplier experience or confuse vendor marketing with actual supplier experience — some vendors who market supplier experience actually excel at the working with the supplier experience which means the platform makes buyers happy, but suppliers [much] less so.)

Best of Breed on an ERP backbone can offer significant advantages

  • Best of Breed providers often know the strengths and weaknesses of ERP systems they are replacing (or augmenting) better than the consulting implementation partners, who care more about if they can weasel their way into long-term strategy consulting than a successful implementation. (For example, there are now a number of vendors with over 100 customer SAP implementations who know the system way better than a Big 5 consultant on his second implementation project ever will.)
  • Best of Breed providers have enabled hundreds of thousand of suppliers, maybe more, over the years … in all regions of the world … your 13,470 suppliers aren’t going to make them flinch (and they will be faster and cost less, because once again, they, or their carefully selected and trained integration partners, have been there, done that … a few hundred or thousand times.)
  • Best of Breed provider’s customers are all former ERP e-procurement / consulting implementation customers … that’s right, most of whom have already failed using the ERP/consultant approach, spent the millions, got 7 punch-outs and 11 catalogs implemented … now they spend hundreds of thousands and get … well, you already know … actual results and benefits. And the Best of Breed learns from those customers!
  • Best of Breed providers have to be better than the ERP or broad portfolio providers, because they can’t fall back on their CRM sales or app server license revenue if they don’t deliver.
  • And because of all of this, Best of Breed providers have way more references than the ERP providers. Those big ERP guys based in Germany have a handful of significant e-procurement references at best … because they’ve already lost most to specialist providers with better systems.
  • Best of Breed providers’ SaaS-type offerings and supplier networks minimize or eliminate the need for your IT department or external consultants to be involved, so they implement faster and less expensively
  • The most successful Best of Breed providers have service organizations or carefully selected service partners around the globe to assist with implementations and provide stability.
  • Best of Breed providers fill in the gaps where ERP falls short. ERP may try, but it is not all-in-one and they are usually years or more (and sometimes a decade) behind the Best-of-Breeds functionality-wise.
  • Best of Breed works and they have the client stories to prove it. Follow SI’s advice, verify their offerings, check their references, and find the right one for you.
  • Best of Breed will help your SUM (Spend Under Management) soar.

Consider your options carefully. A Best of Breed solution on your ERP backbone might be the best decision you can make.

Best Practice Technology Vendor Selection for True Multi-Nationals 2025 Reprise Part IV: Open the Doors for a Truly Successful RFX

This is a repost and reprise of a series that last ran (for the second time) in 2015. It’s as relevant, and important, today as it was then, if not more so, thanks to the I2O Hype and AI BS!

In the first three parts of this series we discussed the proper RFX process to follow when attempting to select a technology(-based) solution provider (for e-Procurement, e-Sourcing, and Supply Management solutions in particular) as a true multi-national. We noted that while most companies more-or-less understand the high level process, most get the implementation wrong, focussing too heavy on feature-function checklists (that are usually put together by vendors, even if they are obtained from third parties), technology buzzwords (like AI, Intake, and Orchestration) and too little on the core processes that need to be effectively supported and a vendor’s global implementation and support capabilities.

If your organization follows the advice presented, starts with the customer references, and only spends time and energy conducting a detailed review of those vendors with a track record that suggests that the vendor has a solution that will support your core processes and could meet your global implementation and support needs, then your organization is off to a great start. But this isn’t the only best practice that your organization should be following in the selection of a vendor for your global technology needs. In this post we’ll cover five more.

The Core Solution Litmus Test
Once the vendor has passed the core process and customer litmus test, the next litmus test is the core solution requirement litmus test. After dividing all of the stakeholder problems into must solves, should solves, and nice-to-solves, re-validate that the vendor has solutions (technology, services, or a combination thereof) that address each of the must-solve problems and most of the should-be-solved problems. The vendor is not right for you unless it is a global, cultural fit that brings the right solutions. (Remember, there’s no checking feature/function boxes at this step!)

Third-Party Claim Verification
Most vendors will make big claims in terms of their platform capabilities. Just like a vendor’s ability to serve your organization globally should be challenged and verified with customer references, so should its ability to fill your technology gaps. Not only should you talk to their partners, but talk to analysts, bloggers, and other third-parties they have interacted with and whom have seen (part of) their solution.

Open Book Negotiations
In addition to third-party claim verification, don’t be afraid to force a vendor to prove every claim, statement, and assumption. This should not stop at current, successful, customer references. The vendor should let you speak to analysts it has relationships with, consultants who have implemented their solutions, auditors to verify their financial stability, and even ex-customers if asked.

End-To-End Total Cost of Ownership Elucidation
What is the true cost of the solution to your organization AND your supply chain? This goes beyond the end-to-end platform cost, as discussed in this classic post on Cost Model Calculations in SI’s “Enterprise Software Buying Guide” series, but also includes any costs that will be borne by your supply base. It’s often the case with e-Sourcing/e-Procurement/Supply Management solutions with Supplier Information Management, Supplier Portal, or Supplier Network functionality that a vendor will charge your suppliers an access fee, which can sometimes be hefty. An access fee that is just going to hit your organization with interest in a year when your suppliers raise their prices to cover the fees you caused them to incur. In Procurement, a penny saved today at your supplier’s expense often translates into a dime spent tomorrow. (And if you don’t believe me, then you need to work on understanding the cost of capital throughout your supply chain. Remember that sound, conventional financial management is NOT good for supply chains.)

Open Finals*
Typically, the final negotiations in this space are more secret than what goes on beyond closed doors at Area 51, scientology headquarters, and the back room of the club where Wall Street mega deals really happen. This is dumb. Really, really dumb! Blind auctions may be okay when buying commodities, but it’s the last thing an organization should do when buying a critical piece of functionality where a failed implementation will cost (tens of) millions of dollars or more in overspend and opportunity costs. Not only should each vendor be aware of whom it is up against, but vendors should be asked to promote their strengths and counter their opponents weaknesses. They should be instructed to tell the truth, even when asked tough questions (about customer retention and defection to a competitor), and (severely) penalized for false answers (and if they try to bypass you by going straight to the CFO or CEO, they should immediately be disqualified from the competition).

Remember, good vendors are honest, especially about the occasional (big) mistake that they made in the past, learned from, and put measures in place to prevent ever repeating it. And the best vendors will get up and walk away as soon as they realize they are not the solution for you (because they thought you needed primarily e-Sourcing functionality and they are mainly e-Procurement for example) and that it would take too long or cost to much to tailor it to your needs. (And these are the first vendors you should go back to as soon as you have needs that they can fulfill. As we said in a prior post, there is no perfect solution, or even anything close, but a vendor who is completely honest about what they do and willing to work with you to solve your problems is the best vendor for you, not the vendor with the most extensive system today [who may have stopped new development entirely and is just selling what they have].)

If your organization implements the best practices covered in this series, then chances are that it will have no choice but to prepare for success!

* Nothing to do with tennis, folks!