I just attended a conference as one of many vendors soliciting services to healthcare providers. Many decision makers who attended the conference talked about initiating a request for proposal (RFP) to organize and manage their vendor selection process. The event got me thinking about my own experiences with vendor selection processes. I wrote this blog to share my perspective.
A lot of years ago I sat on the creditor side of the fence and did a lot of vendor management (hiring/firing, negotiating, managing, and so forth). As a matter of fact, I currently have operational oversight of a business – so to this day, I still go through many vendor selection processes. Along the way I’ve had the benefit of input from great mentors and lots of direct vendor management experience.
From it all, I can boil vendor selection down to
three “things to think about”:
1 The hazards of an RFP
2 The “can they?” test
3 The “will they?” test
The hazards of an RFP
Circa 1999 I worked for the fourth largest bank in the country and had the benefit of heading up an RFP to select a post bank merger collection agency network. From the experience, here’s what I learned:
- A formal RFP tends to favor vendors with size, money, and time. I’ve seen vendors with whole departments dedicated to RFP management. Big vendors with the marketing firepower to best answer RFPs might not best serve you given the size and scope of your problem (see the “will they?” test).
- If you pass an RFP with lots of questions to a number of prospective vendors, you’d better be prepared for how you’re going to measure lots of answers from lots of prospective vendors. In theory: an RFP should use objective grading to produce a short list of vendors to help ease the final selection process. In practice: the list of vendors who are licensed in all 50 states, have between 50 to 100 reps, and have no pending litigation may still leave you with a very long list of vendors to choose from. One other quick point to this point: be wary of essay questions like “what is your strategy for…”…put an RFP selection team around a question like this without very objective criteria and you’re going to have your hands full.
- Look out for “pile on” from one step removed divisions that you have to involve in an RFP process. Groups like “Legal” and “Compliance” will (most likely) always take ultra conservative, risk adverse positions that a) scare good prospective vendors away and b) reduce negotiating power because your first job in the vendor negotiation process will be to mitigate elements like ridiculously one sided legal requirements and/or unattainable insurance clauses.
- Follow Stephen Covey’s advice and begin with the end in mind. An RFP is “the thing” to get you where you want to go – it’s not “the thing” you do (don’t let the process become bigger than the desired outcome). Further to this point, don’t be afraid to go against the grain and come up with a 5 to 10 point selection process (identify up front the elements that really matter most and limit your questions to those that are relevant to just those elements).
The “can they?” test
“Can they?’ is half of what I think is a best test for hiring the right vendor. I break the “can they?” test down into two parts:
- Does the vendor I want to hire have the core competencies to comprehensively complete all aspects of the job I need done?
- Can the vendor adapt to (current and future) internal and/or external changes?
When I was back at the bank managing collection agency relationships, I needed vendors that could consistently deliver in four primary areas: collection performance, compliance, information technology, and administration. An agency that couldn’t deliver in one or more of these areas had to go – regardless of how much they excelled in any one area. Perhaps more importantly, I needed vendors that could quickly and effectively adapt to current and future changes in any one of the areas (policy, procedural, legal, and/or technical changes driven by internal or external events).
I’ve got one key note related to how to evaluate the “can they?” test. “Can they?” is less about who already does what processes and/or who already has what tools. “Can they?” is more about how well the vendor’s management team can -- consistently and comprehensively -- develop and execute whatever “it” is. I’ll say it differently to clarify: it’s the quality of the program vs. the content of the program that should matter more in a vendor selection process.
The “will they?” test
“Will they?” is the other half of what I think is a best test for hiring the right vendor. It says “yes they can perform” but follows with the all important question: “will they perform?”
As a vendor, I participated in the final interview of an RFP selection process. Near the end of the interview one of the interviewers asked about the debt structure of my organization. It was a really smart question because the interviewer understood that who I was motivated to perform for carried a lot more weight than any “can you do this…” type of question (my clients vs. my investors).
“Will they?” checks to see that everyone throughout the ranks of the vendor I hire consistently executes, manages, and troubleshoots all aspects of the job they’re hired to do. It also checks to see that the vendor I hire is highly motivated to always perform (for me) at optimal levels.
I’ve got one key note related to how to evaluate the “will they?” test. Aesthetics in marketing is a hard thing to filter out in the vendor selection process –“global operations”, “200 years of combined experience”, and/or “an army of analysts” won’t help you unless the vendor’s decision makers apply those resources to your business challenge.
So what are the takeaways of this blog?
The takeaways are:
- Don’t go through the motions of an RFP process for the sake of going through an RFP process
- Know all the parts of the job you need done and hire the vendor that “can”
- Hire a vendor that “can” adapt to any and all changes that might affect your business
- Make sure you find a vendor that has the right motivational fit to perform for you - they “will”