Why Your IT Outsourcing RFP Is Holding You Back

16.06.2012

When Young first began offering the RFS option four years ago, only a few customers were willing to try it. Today, just under half of those he works take an RFS approach, at least for part of a deal.

The option provides valuable getting-to-know-you time. "An RFP is very formal. It's doesn't build trust," says Young. With an RFS, "you're jointly working together to solve the problem right from the start. And that time is better spent starting off the relationship on the right foot." It can also shift the buyer's focus from who has the lowest price to who they mesh with best.

One consumer products retailer who recently issued an RFS with Young ultimately chose a service provider based on soft benefits. "They liked them, they trusted them, they fit in culturally," says Young. They shook hands and immediately began writing the statement of work and the contract exhibits. "But [the customer] also made it clear if [the provider] jerked them around, they'd put an RFP cover sheet on the solution and send it out for competitive bid," says Young."

Ideally, that's the way it works. One of the solutions lights the buyer's fancy and they fast forward to contract negotiations, cutting the typical four to six month provider selection process in half. But many still follow up with a traditional RFP, either because they think competitive bidding is the only way to get a good deal or because that's the way they've always done it.

"It's a little disappointing. They just don't seem to get the fact that the perfect can be the enemy of the good. A good deal managed well is great. A perfect deal managed poorly is terrible," says Young. "They think if they can create a 1,000-page contract through a competitive RFP process, they will be protected. But the more buttoned down the RFP and contracting process is, the more that take their foot off the pedal during the management phase."