Summary
Episode 10: In this episode of the FourthSquare Solutions Podcast, Kerry Boudreaux discusses the intricacies of the buying process in the public sector, particularly focusing on the RFP process for enterprise software solutions. He emphasizes the importance of understanding when RFPs are necessary, the value of hiring consultants, best practices for evaluating vendor responses, and the significance of demonstrations in the selection process. Kerry also shares insights on improving the RFP process and encourages agencies to engage with vendors early on to ensure a smoother procurement experience.
Chapters
00:26 Welcome and Guest Introduction
01:31 Understanding the RFP Process
04:49 The Role of Consultants in RFPs
08:25 Best Practices for Evaluating RFP Responses
10:30 The Importance of Demonstrations
15:33 Improving the RFP Process
20:27 Final Thoughts on Procurement Strategies
26:04 Conclusion
Welcome and Guest Introduction
Kerry Boudreaux
Welcome to this episode of the FourthSquare Solutions Podcast. We’re going to change things up on this episode. I’m actually going to be talking with our producer, Jim Ray. Jim, welcome.
Jim Ray
Kerry, good to be working with you, buddy. I like this format. We’re going to change it up a little bit, like you said. We’re going to shift the roles. I’m going to actually ask you questions today. So it’ll be a little bit different for our listeners.
Kerry Boudreaux
Absolutely. So for today’s topic, I want to focus on the buying process, specifically in public sector. And what I’m hoping for the listeners to gain is to better understand the buying process in your procurement process when you are trying to procure enterprise software solutions such as ERP, HCM, supply chain, etc. I want to give you some perspective from a vendor and what that looks like. So hopefully that makes sense. And Jim, welcome again.
Understanding the RFP Process
Jim Ray
Kerry, let’s do this. More often than not, when you get into a software acquisition phase, there’s going to be an RFP and you’re going to issue that out. Your qualified vendors are going to answer that RFP. Are they really necessary? Are they required? Do they actually add value to the process?
Kerry Boudreaux
Yeah. So, you know, with an RFP it’s sometimes yes, sometimes no. They’re required, we think as a vendor and, a lot of times, even as an agency, they’re looking asking how can we avoid this RFP process? It’s not to be sneaky. It’s not to try and buy something that wasn’t approved. It’s because the buying via the RFP process is extremely expensive.
When you talk to government agencies, a typical RFP, just to prepare it and release it and to go through that process, it’s $10-$15,000. That’s just on the agency side. And then as we, as a vendor, look at responding to an RFP on our side, it’s anywhere from $5-$10,000 just to respond. And I’m sure some people are thinking why so much?
Well, you just look at the time that it takes to respond to an RFP. You look at the time to prepare an RFP. There’s a lot of time and a lot of labor involved in that. So when is an RFP required? When is it not?
From my perspective, it’s not really required if there’s a contract vehicle that you can leverage,
such as NASPO. There’s a lot of contract vehicles out there that procurement rules allow you to buy off of these contracts without having to go through an RFP because these contracts, the pricing, the terms they’re already pre-negotiated. So that is one area where you can avoid an RFP.
The other way area is if you can sole source, you know, if you can prove that there’s really just one vendor that can do this and that can meet our requirements. Most procurement rules allow you to avoid an RFP process and just negotiate in good faith with a specific vendor. So anytime that you can avoid an RFP process, I think it’s mutually beneficial.
What an RFP provides is a lot of transparency. A lot of procurement directors feel really uneasy about buying without an RFP process because so many audits have been done over the years. These agencies find themselves in the newspaper where there’s potential collusion with a vendor or a contractor. So, an RFP does ensure that full transparency and I totally get that.
The Role of Consultants in RFPs
Jim Ray
It’s a complicated process. You and I have both been in sales for many, many years in various capacities. I also did government sales for a while. Let me ask you this. Given the depth and the complexity of an RFP process, should an agency actually handle or hire a consultant to help with this process from start to finish? Would that be beneficial?
Kerry Boudreaux
I, 100 %, say yes. An agency needs this, especially if they’re buying an enterprise solution or a large complex solution. I don’t care if it’s a fire truck or especially in software in technology. I 100 % recommend that they hire a consultant to help them on their side to prepare that RFP, to go through their analysis and do gap analysis to see where they’re short, see where they need help, see where they can transform their business with the technology, and to see where their technology gaps are. Then you can build your RFP around that.
This is a very, very complicated process. When you’re buying an enterprise solution, it’s a very mission critical decision that you’re making and you cannot get it wrong. Failure is not an option. For you to try and go this alone is, in my opinion, it’s a fool’s errand.
There are plenty of consultants out there. I would recommend finding a consultant that is 100 % focused, if you’re a public sector agency, on just working with public sector agencies and leaning on them and their expertise to make sure that you get this process right.
I’ve seen too many RFPs go out the door and they get their responses and I literally have the agency send me a note and they say, Kerry, why did your organization not respond? And I share and I give them honest feedback. What happens is that they have to cancel that RFP because they maybe only got one or two responses. And out of those responses, they didn’t like what they saw. So they have to reissue the RFP. It throws them way behind and it costs them extra money
all because the RFP was not well written. So that’s why I recommend hiring a consultant, what I call a client-side consultant to help you write and prepare that RFP.
Jim Ray
That makes a lot of sense. It allows them to consider other things that maybe they weren’t thinking about when they were drafting and making sure we have the right clause in here? Do we have this right requirement? There’s always other things and having more eyes on the process sometimes can actually speed it up rather than slow it down once it gets issued. Speaking of once it gets issued, okay, so let’s fast forward a little bit. So the agency has now tendered the RFP, they’ve sent everything out and they’re starting to get responses in. Now what? What’s kind of a best practice at that point?
Best Practices for Evaluating RFP Responses
Kerry Boudreaux
Yeah. So what I recommend doing, when in the RFP is when you ask for responses, make sure that the pricing is included in a separate file. If it’s a manual submission (i.e. a paper submission), make sure that the pricing is submitted in a different envelope. so whoever’s scoring their proposals doesn’t see the pricing.
And the reason why is you want to make sure, first and foremost, that you’re scoring the proposals based on features, functionality and resources that best meet your organization separate of price. Okay? There’s always the low-cost provider. They’re low cost for a reason. And there’s going to be a high-cost provider. But somewhere in between, you’re going to find a good, happy place that makes sense for your organization.
Let your buying committee make a decision. Okay. Make their first decision, their first scoring based on what best meets our needs. And even through the demo, I recommend not revealing the pricing until after you see demos, after you see the product, then open up the pricing and let them re-score based on the pricing. Now, you have a good weighted score that indicates here’s the value that we’re getting for the price. That’s what I recommend as to how you go about that.
The Importance of Demonstrations
Jim Ray
That makes a lot of sense. In fact, you brought up the next question about demonstrations. So you’ve got your short list, you’ve got your final group you want to invite to the next round. And in this case, it’s demonstrations. So what is really the point of the demonstration? What should the agency be doing? And then also, what should they be looking for in terms of that vendor? What do they need the vendor to be able to do during that demonstration that not only adds value to the process, but also furthers along the decision making process?
Kerry Boudreaux
Yeah, so when it comes to demonstrations, I recommend that you give the vendors, whoever you choose, give them at least 30-day’s notice to do demonstrations. The reason is because when it comes to enterprise software solutions, you may have up to 10 people just from the vendor side you need to coordinate to be at that demonstration to demonstrate the product.
You’ve got to align all of those resources and you need at least at least 30 days, sometimes more. Okay. And have some alternate dates for the vendors to be able to say, Hey, I can’t get all of my resources there on these particular dates. Do you have some alternate dates? So, that’s the first thing. Give the vendor plenty of time to prepare for the demo.
The second thing is give them some very detailed demo scripts and let them know exactly what you want to see. I’ve seen agencies throw it back on the vendor and say, hey, just show what you feel like you need to show to sell us your product. Well, I come back and say, listen, you’re the ones that have the need. You’re the ones inviting your audience. You need to tell us what you want to see so we can tailor the demonstration to your audience.
Too many times we’ve gone in without a demo script and somebody in finance, if we’re demoing finance, they’ll say, why are they showing us that? That’s not how we do it. That’s not a good experience for your agency to go through.
Jim Ray
Well, at the same time, I would think it would be very difficult when you’re not seeing apples to apples comparisons to really be able to, from the agency standpoint, evaluate vendor A, vendor B, and then the rest of them. So yeah, the vendor script seems to put everybody on the same sheet of music.
Kerry Boudreaux
You’re exactly right. And to score those demonstrations fairly, they all need to be reading from the same playbook and demonstrating the same features and functionality. You’re exactly right.
Then the last thing is make sure that you allot the proper amount of time for the vendor to demo. So in work with the vendor. Tell them we have a full day. Do you need more time? Okay. And typically, all the vendors are going to come back and say, Hey, we need more time. I have seen where agencies want to see a full ERP demo in two hours.
Well, guess what? It’s going to take us two hours just to demo finance and we haven’t even gotten to planning and budgeting. We haven’t even gotten to procurement. We haven’t even gotten to asset management. So, that comes back, Jim, to the hiring a consultant who is going to help to lead you in that entire process.
Jim Ray
I think anytime there’s a good demo, there are going to be questions, right? And if you haven’t given ample time, your questions as an agent or as an agency aren’t going to get addressed. And the vendor is going to feel like, wow, we had all this other stuff. We just didn’t get a chance to show you.
Kerry Boudreaux
Exactly. So to kind of recap, please give the vendor plenty of notice for the demo. Please give them detailed scripts and a detailed agenda and give them plenty of time to demo what they need to demo.
Improving the RFP Process
Jim Ray
So, Kerry, you’ve done this for many years. You’ve got a lot of experience having been through this process, having been through various processes that are similar, but different industries do it differently. From your perspective, from your experience, what would you like to see different? Or how could this process be managed differently? Really, from your vendor standpoint, how do you think the process could be improved just overall? I guess maybe from the macro.
Kerry Boudreaux
There’s some room for improvement in this area. When we receive an RFP, we receive what we call a functionality matrix. They want to know everything that the software can do. And I get that, but sometimes these matrices can be 4,000-5,000 lines long in a spreadsheet.
Think about how long it takes for our team to go through and answer: Yes, it will do that. Yes, it’s standard. No, it won’t do that, but it’s in a future release. And then they want commentary, a paragraph or two on how it meets that particular requirement. Some of these functional matrices have requirements in there that are very, very basic. Do you have a sign on button? Do you have a login button? Yes, we have a login button. Okay, that’s very basic.
So let’s leave some of the basics that we can all safely assume. Okay, and I know we’re not supposed to assume, but in a lot of cases, we can safely assume, hey, the software is going to do that. All right, let’s take that line out. I think a lot of these functional requirements, are from years and years ago, when enterprise software was just hitting the street and becoming a new thing out there. I think they can certainly improve that.
Jim Ray
I think so much of this has a tendency to be boilerplate. And when that happens, you start copying and pasting clauses or requirements that may not be germane to this specific situation. Now you’re both going, well, why did you want to know that? We don’t even know why we asked the question. It was just part of the form. And then everybody’s running around chasing their tails for something that’s not really going to add value to the overall end objective for the agency, I guess.
Kerry Boudreaux
Yeah. The other big thing I would highly recommend is that please subscribe, purchase, get involved with a, type of contract vendor portal, like Opengov.com. There are a number of them out there. There’s PublicPurchase.com where you can manage all of the documents and all of the submissions electronically.
When I see an RFP come through and it says manual and paper submission, I need one original and I need six hard copies of these proposal submissions, you know, they’re at least a hundred pages long.
So imagine our team that has to put that together and then we have to ship it. I’ve shipped some proposals and the shipping cost alone has been close to $500, because inevitably we as vendors, we work and we tailor and we want to get it right. We take it up to the 11th hour and then we have to overnight it. We have to guarantee that that the agency receives it, so we pay extra for that. I highly encourage, let’s move to electronic submissions and let’s get away from the manual and paper submissions.
Jim Ray
Yeah, that makes a lot of sense. There are just antiquated ways of doing it. Sometimes there are specific reasons why this is done a certain way, but a lot of times the answer is, well, that’s just how we’ve always done it. And that’s not really always the best answer, at least not now with technology being what it is.
Kerry Boudreaux
That’s right. That’s right.
Final Thoughts on Procurement Strategies
Jim Ray
Well, Kerry, I tell you what, this hasn’t been a long episode and it really wasn’t meant to be. This was supposed to be kind of just a candid conversation about how agencies can really manage this process. And maybe we’ve been able to kind of pique their interest in a couple of different things to consider. It’s not all of the answers. Some of it may not be earth shattering and some of it may be, “Well, our agency has specific requirements. That’s why we have to certain things.”
But maybe you’ve kind of got the wheels turning there a little bit to where people can go, you know what, let’s go out and look at that procurement software that you referenced in the final answer there, or hey, does this really need to be done in such a quick schedule or can we open that up? And would we actually have better information if we allowed the vendor a little bit more time to fully give us a quality demonstration with Q &A and with layers and layers in there that sometimes that gets a little mundane, but I would rather know that upfront?
Then you get on down the road and realize, we should have asked that question. Well, now you’re kind of married to the product because you’ve already selected the winner or the vendor that you’re going to go with. And sometimes it gets a little rough for both parties when stuff like that happens. But Kerry, do you have any closing thoughts on this?
Kerry Boudreaux
Yeah. You know, the only closing thought Jim, I would say is if you are looking to procure software, I encourage you before the RFP process even takes place, if you’re like, Hey, we’ve got to go out to an RFP there’s no way around it. That’s great. But I would highly recommend that you engage some vendors prior to the RFP, and this is perfectly fine, there’s no rules against it.
Engage with them, have them come in and do what I call pre-RFP demos. These are just very high-level flyover demos, just so you can get a taste and flavor of what’s out there in the marketplace. Ask the vendors, they’ll be more than happy to do it. We love when we get involved early before the RFP.
Get a budget, okay? Have them give you a budgetary estimate on what it’s going to cost, so you have clear expectations and understanding of what it’s going to cost. That would be a big thing.
And then the other thing that I would say, I brought up the idea of the budget. Don’t hide the budget. Even when the RFP is released and have a Q & A session. Invite all the prospective vendors who are interested in the RFP. You know, there’s always a vendor meeting at what they call a pre-bid meeting and everybody there. There’s always, “Do you have a budget for this?” And they’re like, yeah, but we’re not going to share it. I encouraged the agency to share what that budget number is.
Now you’re, I know the audience is like, yeah, Kerry, you as a vendor want to know what the budget is. All right. So, you know where you want your price to come in? No, that’s not the case at all. Because if I’m a vendor and I know that my fees are going to be a million dollars. But maybe your agency has only budgeted a half a million dollars.
Listen, if that’s all you have in budget, I don’t want to waste your time. We certainly don’t want to waste our time. Let’s make the decision right now saying, hey, they simply don’t have the budget for the solution that we have. A lot of time is saved on both sides. So it’s not a matter of, Oh man, they’ve got a million dollars budgeted for this. Yeah, we can really add some fat and some margin to our proposal.
No, that’s not it at all. We want to know from a budget standpoint, are we going to be a good fit? Are we going to be wasting our time? And wasting, more importantly, the agency’s time, you know? So those are my final thoughts. That’s what I would encourage agencies to do.
Jim Ray
And just to build off your point there, if I think, okay, there’s the budget, I still have to compete against the other vendors who are participating in this. Just because I know the number doesn’t mean that’s going to be the ultimate number. I mean, it may actually be lower if I think this is a competitively good project, I still have to sharpen my pencil as a vendor and to make sure I give the most value in terms of not only what we can do, but also what the price of that capability is going to be.
So I’m still competing. So it’s not a matter of, well, I hit the number so I should get the project. No, this is a competitively bid contract. So there’s that part of it, which actually kind of protects the agency.
Conclusion
Kerry Boudreaux
Yeah, you’re exactly right. Anyway, so we thought this was going to be a short episode, but we came up with some additional nuggets of gold here, at least I hope they’re nuggets of gold for the audience, Jim. I really appreciate you taking the time to engage with me on this conversation today.
And I also want to thank the audience for attending. I hope this has been an informative conversation. If you want to learn more about what we do here at FourthSquare, you can visit us at our website at FourthSquare.com. We’re out there on social media on LinkedIn. And you can always visit us on other social media platforms such as X and Instagram.
So with that, until next time, I hope to see you again and always be asking yourself, how can you transform your business through technology and innovation?
Jim Ray
Thanks a lot, Kerry. See you next time.
Kerry Boudreaux
You too.
If you’d like to learn more about FourthSquare and the services we offer, click here to contact us. You can also call us at (972) 919-6135. We’ll be happy to speak with you.