Earlier this year, the TM Forum published a really insightful report called, “Time to kill the RFP? Reinventing IT procurement for the 2020s.” There are so many layers to the OSS/BSS procurement discussion and Mark Newman and team have done a fantastic job of capturing them. We’ll expand on a few of those layers in a series of posts this week.
For example, section 2 articulates the typical RFI / RFP / RFQ approach. It’s clear to see why the typical approach is flawed. Yesterday’s post pondered whether procurement events are flawed from the initial KPIs that are set by buyers. Today we’ll take a look at the process that follows.
Two quotes from the TM Forum report frame some of the challenges with RFPs from buyer and seller viewpoints respectively:
QUOTE 1 (Buyer-side) – “CSPs normally distribute RFPs to a group of three to eight suppliers. These are most likely existing suppliers, previous vendors or companies the CSP is aware of through its own technology scouting. Suppliers are likely to include systems integrators who rely on other vendors to fulfill elements of the contract, and CSPs tend to invite bidders offering a range of options.
For example, they may invite a supplier that is likely to offer a good price, one that is a ‘safe’, low-risk option, and the incumbent supplier, which in many cases the CSP is looking to replace.
The document itself is likely to be several hundred pages long, a large portion of it comprising details of technology requirements, with suppliers asked to specify whether they comply with each requirement.”
The question I’d ask about this process is how does the CSP choose 3-8 out of the 400+ vendors that supply the OSS/BSS market? Does their “own technology scouting” adequately discount the hundreds of others that could potentially be best-fit for their needs?
QUOTE 2 (Seller-side) – “We were holed up in our hotel for a month working feverishly on different aspects of the bid. We had 15 people there in total, and we were asked to come in for meetings with five different teams. The meetings go on and on, and you really have no idea when they’re going to finish.”
Let’s do the sums on this situation. 15 people x 25 days x $1500 per day (a round figure that includes accommodation, meals, etc) = $562,500. That’s over half a million dollars just for the seller-side of the post-RFP evaluation phase. Now let’s say there were 4 sellers going through this. [Just a small aside here – reading between the lines, do you suspect the buyer was taking the seller on a journey into the minutiae or focusing on what will move the needle for them? Re-read that through the lens of yesterday’s contrasting KPI perspectives]
You can see exactly why Mark has proposed that it’s, “Time to kill the RFP,” at least in its traditional form. These two quotes lobby hard for the death penalty. More on that tomorrow!
Also note that another hint was contained above in the lead-up to a project launch on Monday that we’re really excited about.