A couple of weeks ago we penned an article on The Key to Procurement Software Selection Success: Affordable RFPs!. This resonated with those of you wanting to improve your Procurement operations who were willing to admit that you could use the help, but it also left you with one big question: where to find these affordable RFPs?

And the doctor hears you on this. You can’t just go to any old consulting firm and get an affordable RFP. Most of you have encountered high price tags, whether you went to a Big X, mid-size consulting company, or even a niche specialist. And you’re probably wondering why. Well, first you need to understand the following.

1. The Big X.

There are a number of reasons you’ll RARELY get an affordable RFP from a Big X.

• their modus operandi is to get their people embedded on your projects and keep them there for as long as possible at 3X to 5X+ their hourly rate, they are service firms with a large number of people to keep employed (and they need to invest in employing those people, and, to be honest, trying to streamline RFP processes across every type of software imaginable is just unreasonable for any company to do, so why should we expect it)
• they have agreements with a number of big suite vendors where they are a preferred implementation partner (and not only do they get a big referral check in addition to YOUR implementation fees which makes finance happy, if they don’t bring enough clients, they could lose that partnership and the deep insight it gives them into the partner, which is key to them being able to bring value to the implementation — see when should you use a Big X?
• they’ll put a senior resource / junior partner as lead, but you’ll hardly ever see that person, instead, most of the work will be done by a team of inexperienced recent hires, usually recent graduates, who will, unfortunately, even with a good playbook, rack up the hours just trying to get the basics right as they get the experience needed to be more effective (mainly because this senior resource / junior partner will also be attached to many other projects so that they can close the deals, leaving the team without a lot of senior guidance)

2. The mid-size consultancies.

While it is sometimes possible to get an affordable RFP from a mid-size consultancy, the reality is that it’s a rare occurrence (and your odds are about the same as achieving success with an average technology project which, as per Gartner, is less than 1 in 5, largely because they are never scoped and planned right, starting with the RFP), and most of you never will. As with the Big X, there are a number of reasons you’ll RARELY get an affordable RFP from a mid-size consultancy.

• like the Big X, they want to get projects that keep their people busy (usually at more reasonable 3X to 4X resource hourly rates) as they want to grow, and this leaves little time for trying to streamline RFP creation methodologies which is possible if they are sticking to a niche with only a few, and maybe a few dozen, different solution modules that would be relevant (and, in their quest to grow, they can totally miss the big picture that it is delivered value that wins repeat business)
• while they are willing and able to be more impartial than the Big X (who need to keep their partners happy to get the insight and training they need to deliver unparalleled value), they have a few partners they prefer to direct any RFPs (and awards) to as they know the systems well (and can get the implementation work), those resources get it done fast, and it keeps them front and center with the vendors who need to direct implementation work to a third party
• they can’t afford benchers, so their recent grads are not only the top of their class who have shown aptitude for their domain, but they are balanced by intermediate personnel on the projects who can guide them and there’s usually always at least one senior person, but only the senior people can do the RFPs well enough on their own, so the day rates are almost as high as a Big X as the RFPs tend to be mostly senior and intermediate personnel

3. The niche consultancies.

The niche consultancies are your best bet of getting an affordable RFP, but the reality is that it’s still, unfortunately, hit and miss and it’s likely that less than 1 in 3 of you will see a decent rate when all is said and done (where we measure RFP spend against total system spend over five years and try to maintain the right ratio).

This is despite the facts that:

• unlike the Big X and mid-size consultancies, they have lower overheads and can keep their bill rates in the 2.5X to 3X range (enough to cover their resources’ hourly rate, overhead, and a fair profit margin)
• even if they have partnerships with a vendor or three, they tend not to favoured by the vendors who will never direct work to them (and only allow them to implement deals they bring) due to their small size and inability to rapidly scale up (like a Big X or mid-size), which means their bias towards any vendor, if it exists, is quite limited
• they don’t have junior people, because they can’t afford benchers and resources that don’t deliver with their cost model, and only hire (high-achieving) intermediate and senior personnel, and focus primarily on those who can do small projects entirely on their own or with limited support

When you look at this, you should be able to get a lot of value for a reasonable amount of money. And, make no mistake, you do get value for money.

However, when you look at the total system cost that you can afford as a (smaller) midsize company, and then you look at the cost of getting that good RFP, the problem is that the cost of the RFP is more than you can afford (and should be spending relative to the annual cost of the specialized system you are likely to buy). This means that you end up having to cut corners on the software (and get less from a preferred vendor or go with a more cost effective runner up) or forego more than a modicum of help from the consultancy (where you just get a few advisory days and hope your team to can capture enough of the brain-dump to put together something reasonable).

Even though this shouldn’t be the case.

So why are most niche consultancy RFPs not affordable (unless you are acquiring a mini-suite or significant advanced functionality that comes with a significant price tag and are a larger mid-size with the budget for it) when they could easily pick a focus area and make it so?   And for that matter, why aren’t the razor focused mid-sized consultancies more affordable when they could do the same?  After all, it’s only the Big X where the investment would be unjustified compared to the return, and, to be honest, you are going to them for enterprise systems that cost nine (9), if not ten (10), figures, so you should be expecting to pay high six figures for a good RFP in that situation!   (See when you should use a Big X!)

We’ll get to that in our next installment.