Many of our enterprise research customers are reporting an interesting trend: fewer responses to their RFPs (a.k.a., "tenders"). Even vendors they had at the top of their lists may decline to bid. This puzzles them. Aren't we in an economic recession? Isn't it a buyer's market for technology? Well, yes and no.
There are at least five reasons for this phenomenon, and specific steps you can take to mitigate potential problems.
1) RFPs are getting better
In the technologies we cover at least, we're seeing fewer check-list RFPs and more narrative-based requirements. We also see larger enterprises profiting from preliminary RFIs. (Hopefully our advice over the years has played a modest role here -- but many others are offering good counsel as well.)
Good RFPs tend to create more work for the vendor, and if a potential bidder thinks your project is a stretch, they will more readily beg off.
But those who think they offer a good fit -- and it's all about "fit" -- will usually put in the extra effort.
Indeed, the most important by-product of better RFPs is better vendor responses, even if fewer in number. Responses become more targeted and relevant. This makes it easier to discriminate among them. So there's another trend we've noticed: less contentious down-select meetings. When you're clearer about what you want and bidders have to be more specific about their real capabilities and tendencies, decisions come more easily. (Ditto for subsequent down-select decisions, including after the all-important test phases.)
Of course, not all vendor responses will be as targeted as you'd like. And to be sure, vendors still don't have to look far to find horrible RFPs. But this leads me to point #2...
2) Vendors have become more discriminating
The very economic downturn that has you thinking you're in the driver's seat has vendors watching their cost-of-sales more carefully than ever. In short, they're less likely to chase. That's A Good Thing for all concerned, but also should give you some pause. If you're looking for the right fit, you want to appear at your best when soliciting proposals.
So, avoid nebulous, unprioritized requirements, and never use canned RFPs. Above all, figure out a plausible set of candidate suppliers. When vendors see wacky short lists, they typecast you as an amateurish or potentially indecisive prospect, and are more likely to beg off. Do your homework first.
Then inform the targeted bidders that you chose them through a substantive review process. If they haven't met you, they may balk at responding to an RFP over the transom, even though you've spent a lot of effort figuring out that they could offer a good fit. Try to talk to them on the phone before you send an RFP, and invite a preliminary webinar where useful. Which leads me to point #3...
3) Vendors remain a little paranoid
Whether you like it or not, you may need to assure prospective bidders that the deal isn't "wired" for a competitor. Vendors have always been suspicious that they're getting led around by the nose when a decision has already been made -- where the customer just goes through the motions, perhaps using a fake selection process to secure a better price from the chosen supplier.
In my experience, vendors are overly paranoid, and should give more benefit of the doubt. But they've been burned enough that you can understand their fears, especially if they don't have some sort of relationship with you that establishes initial trust.
[As an aside, at The Real Story Group we work only for you the technology buyer, but on principal we won't advise on nominally competitive procurements where the outcome is pre-ordained and bidders are being exploited. We try to explain to any customer issuing a wired solicitation that it's a smaller industry than they think, and in the long run, reputations matter. Vendors need to adhere the same ethical standards as well.]
4) Systems Integrators are always discriminating
In maturing marketplaces, RFPs increasingly target systems integrators (SIs) or other services firms, rather than software vendors. (We've recommended this on several occasions recently.) Also, when deeply vetting open source platforms, you will often need to turn to a consultancy to bid. In any case, the SI must bring a particular solution to the party, but has to justify both the tool and their organizational fit for your needs. This type of combo procurement can become tricky for you, but also potentially very effective.
Although SIs receive the lion's share of global technology spend, they have narrower profit margins and are therefore careful about what they go after. Also, the best ones are busy. Often very busy. That has them looking for engagements that represent a good fit. A carefully-crafted RFP will let them know if they fall in your sweet spot. A loopy RFP will tempt them to perceive you as a "squirrelly" client -- the kind they lose money on -- so they decline to bid.
5) The vendor screwed up
Sometimes vendors fail to bid simply because of bad timing or other mistakes. There may have been a hiccup in their sales process. Maybe the reps and proposal writers in that region were over-committed that month. Maybe they were in the midst of replacing personnel. Maybe they didn't fully grasp the import of your solicitation.
That's all their fault, not yours. So it's tempting to dismiss them as a poor partner as a result. But you shouldn't over-weight a vendor's sales acumen -- or lack of it -- in your decision, especially if you think they might make a good fit against more enduring criteria like functionality, architecture, and TCO.
Here's how to address this. Confirm whether each vendor is going to participate early in the proposal process so you can give them a chance to overcome issues of poor timing, insufficient understanding, or human mistakes. Don't worry that a candid conversation will make you seem weak-kneed or supplicating; it will likely raise the vendor's interest in participating and you can still remain discriminating in your reviews and negotiations going forward.
By the same token, you shouldn't coddle a potential bidder, either. Sometimes non-responsiveness really does indicate deeper incompetence or disinterest. Just take the extra step to find out what's really going on.
At the end of the day...
Fewer bidders isn't necessarily a problem. Among other benefits it means less reading! And better reading, since, done right, the responses should feel more relevant to your concrete needs.
The problem comes when you don't get a sufficiently discriminating set of responses, and/or a particular supplier that you really wanted to participate begged off instead. To avoid this, follow the advice from #2 and #5 above about communicating early with potential bidders.
Also remember that an RFP and attendant proposals -- while critical -- represent only part of the selection process. Our evaluation research identifies empirical, test-based steps (specific to each type of technology) that you should take before making a final decision.
In the end, like so many things, quality is more important than quantity. Vendors who try to be all things for all customers will respond to vague RFPs. The best fit for you will more likely emerge from a stronger, more focused solicitation. If we can help, please let us know.