Recommitting to Business Integrity
The March 16 issue of Storefront Backtalk featured an interesting article. “Want Truthful RFPs? Try Having Vendors Fact-Check Competing Bids” suggested that vendors do not always provide accurate responses to RFPs. I read this article with great interest as the ARTS RFP program was referenced and longtime ARTS member Gene Cornell, president of Cornell-Mayo Associates, was quoted.
The article offered several suggestions to retailers on how to improve their RFP process to ensure that responses are accurate -- and, therefore, that the product or solution they select is truly matched to their needs. The ARTS RFP program was launched in 2003 for this exact purpose: Our library contains RFPs for those applications most often purchased (POS, workforce management, business intelligence, warehouse management and, the latest, cloud computing). Every RFP has two parts:
1. The “Request for Proposal Master Agreement and Proposal Instructions” is a Word document providing guidance for scheduling and managing the RFP process, suggestions on which retailer organizational units need to be involved, formatting vendor response documents and negotiating contract terms and conditions.
2. The “Request for Proposal Response Document” presents a comprehensive list of the business processes that can be automated by the subject application (including features and functions) within each business process that the retailer should consider when implementing the application.
The article prompted me to go back and re-read the Master Agreement to re-familiarize myself with the specific advice it provides on validating responses -- or recourse, should those responses prove to be incorrect after selection. I found nothing on this issue, as the ARTS committees of retailers, vendors and consultants who developed the RFPs presumed vendors would provide “Honest Abe” responses.
As a close-knit industry, retail has in the past “weeded out” those who have misrepresented their capabilities or failed to perform as advertised. Regretfully, however, ARTS is reconsidering this assumption and updating the Master Agreement accordingly. Now emphasized within it is our position that retailers should carefully review the RFPs’ business process and feature and function lists and modify them to their specific business model before submitting it to vendors.
The article also suggests having a few vendors review the RFP responses for accuracy. ARTS can attest to the fact that vendors know their competitors’ products. I am often asked, “How does ARTS ensure a neutral position in standards?” My answer continues to be, “Get a few competitive vendors around the table with retailers to referee and you will get unbiased standards.” I wonder, however, if this would work as well in a competitive bid situation.
Another suggestion is to select several key responses from the top candidates and verify them via reference calls to customers or competitors. I would recommend doing this before settling on a group of finalists, just to be sure you have made the “right” first cut. This will take some extra time, but living with or paying to correct inaccurate responses will be worse. A possible shortcut would be to verify vendor responses by referencing the Technology Evaluation Center (TEC), a RFP service provider that has published consultant-verified vendor responses to their available RFPs.
Do you have a tried-and-true method for verifying the accuracy of RFP responses or suggestions to improve other topics in the ARTS RFP Master Agreement? We ask you to share them by using the comments function below and ARTS will factor them into our update of the Master Agreement.
Comments
RFP
Most RFPs are focused on the software to be built. Mine focuses on the vendor and their team. I believe you should select the best vendor and team, then get working collaboratively with them on the project. If your project involves custom software, it will change as you work on it. Focusing potential vendors on project details in an RFP is asking them to speculate at the point of maximum ignorance. Not only is this unlikely to be useful in the long-run, it throws everyone off the more important selection criteria. Use the RFP to select the best vendor; collaborate with your vendor to build the best project.
Retailer response
(Peter) - Good perspectives. The cloud is definitely impacting traditional MSAs. My experience has been that retailers prefer to use their own MSA, but a few years ago I had a cloud-solution provider which was able to get an attorney to move off their typical MSA and use the MSA from the tech company because it was far more applicable to the solution being provided. In addition to agreeing on IP - and given legal indemnification is involved - I continue to see retailers and vendors neglect to establish freedom to practice. That is, little or no thought is put into whether or not final deliverables don't violate prior art.
I also really like the idea of a standard process because it could help retailers and solution providers with establishing common steps. Of course each company's project management office (PMO) will have strong opinions about the project life cycle (PLC). From an artifact standpoint, IMO the PLC begins with a non-disclosure agreement (NDA) and effectively ends with the last change order. Of course there are many legal and project files which are delivered between those items.
I love the idea about vendors warranting their RFP response. There's nothing more disappointing than committing to a vendor primarily based on their RFP responses then finding out some of their key replies were misleading or vaporware.
Retailer Perspective - Revisit the Master Agreement
I am not sure a peer review process among vendors or other customers would be practical or even acceptable to the vendors as it may require they disclose proprietary information, and it may actually introduce some risks from a anti-trust point of view because it would require discussing marketing plans, customers, perhaps even what is included and what is a charged fee. There is another possible way to handle this. The step following the RFP and vendor selection process is a review of the selected vendor license agreements, review of master service agreements and final contract negotiations and signatures. It may make sense for ARTS to provide a new guideline to retailers of how to complete this next step beyond a final vendor selection process. There are many best practices for software license agreements and customization services agreements that will lead to mutual satisfaction for a retailer and vendor. These best practices could spell out what is reasonable for a vendor to require (and accept as requirements from the customer) and what is not reasonable for a vendor to require.
As CIO, it was always our practice that the finalist RFP and other vendor proposal materials were included as an addendum to any final contract and there would be language in the contract that the vendor would warranty that their response is truthful and that it will binding in terms of deliverables. More than once in my career a vendor refused to agree to this, and I can assure you that action spoke for itself and it was the end of the relationship and we moved on to another supplier. Good IT contracts with suppliers should spell out many things and truthfulness in RFP response is just one of them. All software agreements should include sections on ownership of IP, dispute resolution, non-solicitation and many others things. I am sure ARTS could get many examples from members of suggested language that is fair and reasonable for both the retailer and vendors.
As you can imagine vendor license agreements and master service agreements are getting more complicated all the time, and now with cloud computing even more considerations need to go into contracts. I think ARTS developing a best practices document that covers license agreements, Master services agreements and Statements of work would be a nice addition to the standard RFP process. I also suspect that honest vendors would appreciate ARTS doing this as well. The contract negotiation process can be expensive and time consuming for all parties, especially when retailers create new language to cover many standard terms and conditions.
RFP responses
Many issued RFPs fall into the trap of a preconceived solution that is looking for the most amount of check marks. Detailed check lists on what the system must do, will not necessarily allow the vendor to present what can be done.
The best RFPs are the ones where the business problems are presented and the vendor is asked how he would solve these. This allows for out of the box thinking and provides the customer with much more innovative and radical solutions.
Of course, the RFP responses should not be shared with competitors and should become part of the delivery contract.
Hmm...
Most RFP responses I’ve done request proprietary information and therefore require a confidentiality statement. When RFP responses will be peer-reviewed by competitors, Vendors will not include proprietary information. This increases the need for follow-on information external to the RFP and prolongs the selection process. A more effective solution is to have the vendors collectively compose the RFP up front.
The RFP Response should be part of the delivery contract. This will greatly increase the accuracy of responses.
The Vendor Perspective
I believe most of the issues result from different interpretations of the questions. Using the ARTS RFPs helps avoid the differences because those questions have been vetted by both retailers and vendors. It certainly doesn't stop all misinterpretations, but its a step in the right direction.
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