Beware the RFP When Evaluating Wholesale Software

Mark Canes


You may have heard the term RFP before used in a business setting, or perfprhaps your company has even considered issuing one.  For those unfamiliar with the term, RFP stands for “Request For Proposal” and according to Wikipedia is “a solicitation, often made through a bidding process, by an agency or company interested in procurement of a commodity, service or valuable asset, to potential suppliers to submit business proposals.” RFP’s are often preceded by either an RFI or RFQ  – or sometimes both.  An RFI is a Request for Information and an RFQ is a Request for Quote.

RFPs are used in a variety of industries and can be submitted when companies wish to receive information about specific wholesale ERP software.  In general issuing an RFP informs the software vendor that your company is actively searching for a new system and provides additional information such as:

  • Background information on the company and how it operates
  • What prompted the search and where the need for software derives from
    • This includes information on current challenges and opportunities
  • What specific functionality is required
  • Who will be competing for the final sale
  • The process for making a decision

Due to the amount of information included in a typical RFP, the documents themselves are quite long.  Taking this approach to finding a new software solution may seem beneficial, but these types of documents are becoming less and less common and are not ideal for smaller businesses.  Below we have highlighted some important factors to keep in mind before deciding to issue an RFP, RFQ or RFI.

Are you able to document your existing processes in significant detail?

Small businesses may not have formal procedures in place to document and submit as part of an RFP.  In this situation it is often while working through the sales process and having discussions with software vendors, that businesses are able to better identity their existing processes and areas for improvement.  Many small businesses take advantage of speaking with software vendors to get advice on how to best improve their existing processes and how software can help them achieve this.

In addition, for businesses coming off of introductory type systems, they may not be fully aware of all the features available to them as part of a proper wholesale solution.  This can make documentation difficult and time consuming and can result in incomplete information.

What sort of relationship do you want to develop with your software vendor?

A lot of information can be gleaned from speaking with someone on the phone.  It can be easy to answer questions in a document when you have the time to spend, but speaking with software vendors on the phone and getting them to answer harder questions on the spot will give you a better idea as to the type of company they are. Ultimately, the ERP vendor you choose should become a respected business advisor as their software is designed to help control how you run and manage your business and processes.  It is important that you feel you can trust them to provide guidance on business improvements.  Developing these types of relationships is done best in person or over the phone.

Are you prepared to follow a structured evaluation and selection process?

In general it is a good idea to have a game plan in place for finding and selecting a new software system, but a too rigid schedule may hinder your decision.  Tight deadlines for completing work and speaking with vendors can cause stress and create a negative view of the software search.  (As a side note, I’ve seen well over 100 RFPs down the years for small and medium business software selection, and not a single one has ever resulted in a decision by anywhere close to the initially scheduled selection date.) In addition, trying to evaluate too many vendors and absorb too much information at one time can lead to information overload, wasted resources, overwhelmed employees, and ultimately the wrong decision or (more usually) no decision at all.   Another aspect of the evaluation process is viewing demos, and it is typical for the RFP process to involve spending several hours with each vendor looking at demo videos. Watching a demonstration for more than an hour or two at a time can quickly begin to blur the differences between candidate systems.  Although each vendor will offer specific functionality and unique components, the differences between each will become less and less clear the more demos and discussions you have. A smarter approach is to narrow down the search before looking at demos, so that the total number of demos viewed is much lower.  Try to keep the demos themselves to under an hour and a half and spread out over a few days, so that there is ample time between each one to discuss and record notes with key employees.

In conclusion, issuing an RFP can seem like an easy way to get the information you need in a timely manner, however in practise they can end up requiring more work and causing confusion.  Find a process that works for you and your business when searching for software and as much as possible try to engage the vendor in face-to-face or phone discussions in order to increase your chances of making the right decision.

6 Factors for Evaluating ERP Vendors