developing a new way to source IT services: The request for solution (RFS)
The RFP. The tried and true, standard approach to buying complex or customized services. For many years, the RFP approach has served the buyers well by creating a level playing field and leveraging competition to get the best "deal" from the market.
Our experience gained over several years and multiple sourcing deals has led us to believe that it is time to re-think the RFP. Whilst we recognize that the RFP is a useful tool - it is just not a universal tool. There are times when a different tool is needed.
Our position that today’s rapidly changing technology services market requires a more sophisticated approach than the traditional RFP led us to the creation of the RUMJog Adaptive Sourcing Initiative - a new way to buy outsourcing services.
Tremendous gains in cost efficiency
transparent & collaborative Contracting
An open Process that builds trust
A TRADITIONAL APPROACH: THE RFP
Underlying the classical RFP are three primary premises at the foundation of the process, specifically (i) The buyer knows what they want, (ii) RFP competition will give you the best deal, and (iii) Normalization can put all bids on an "apples to apples" basis for comparison. These premises are being challenged by the changing market and forcing us to rethink our approach to procuring services in today’s market.
A NEW APPROACH: THE RFS
The pace of change in today's market is having an impact on services and pricing, but our commercial models were not designed for this new world. The RFS assumes that (i) The buyer does NOT know what they want, (ii) RFP competition will NOT yield the best deal, in many cases prevents it, and (iii) There is no Normal in a rapidly changing environment. What is the point of putting different solutions on the same footing?
A Buyer Driven Prescriptive Solution
The focus of the Classic RFP approach is to get to the “perfect” Base Contract that will support a services agreement for a typical term of 5-7 years. This process displays several characteristics:
- Focus on Getting to "Perfect" Base Contract
- Formal process - Trust is Thin
- Approach is Closed Book
- Seller is Restricted in Solution
- Buyer is Prescriptive
- Slow and Expensive
A Seller Innovative and Creative Solution
The focus of the progressive RFS approach is to seek a solution from the market that fits your company's environment, but does not prescribe the solution. This process displays several characteristics:
- Focus on Evolutionary Contract Phase
- Process Builds Foundation of Trust
- Approach Requires Transparency
- Seller is Innovative and Creative
- Buyer Unconstrained
- Fast and Less Costly
At RUMJog Enterprises we recognize that the RFP is a useful tool - it is just not a
universal tool. There are times when a different tool is needed. It is our position that today’s rapidly changing technology services market requires a more sophisticated approach than the traditional RFP.
THOMAS YOUNG - MANAGING PARTNER OF RUMJOG
What Needs to Change?
The focus of commerce needs to shift from the “deal” or event of signing, to the framework and evolution of the deal as we move through a dynamic market. A new base contract framework needs to be established with the following characteristics:
- It looks more like 100 pages than 1000 pages
- Ease of expansion AND exit for both parties
- Focus on bi-lateral transparency
- Rely on trust not legal terms
What is Evolutionary Contracting?
The primary focus of most sourcing initiatives is to get to the base contract. However, the value of a relationship is to be derived in the evolutionary contracting phase.
Evolutionary contracting exhibits the following characteristics:
- Mindset that the contract is an understanding not a document
- Focus on change and evolving structure
- Both parties need to ensure that the other party is succeeding.
- Evolutionary Contracting is not the same as Contract Term
Interested In Our Services?
We would love to hear from you and learn more about your business to see how we can deploy our skills to help you thrive in tomorrow's challenging but exciting world.