Max: 00:16 RFPs suck, and if you’re using an RFP process to make sure you’re getting the best possible service or price for your business, I hate to break it to you, but you’re just not. Let’s talk about RFPs. How do RFPs work? So somebody owns the RFP process for the business, and this can be an individual person. This can be a team.
Max: 00:37 This can be a, department. It could be formal. It could be relatively informal. Usually, what happens is there is a selection committee that’s formed to evaluate and determine, you know, what vendor is gonna win the process. Right?
Max: 00:54 So that selection committee then ends up creating the RFP, which means that somebody on that selection committee is actually taking and generating the RFP. So here’s the first issue with the RFP process. Does that person that’s writing the RFP know what the heck they’re writing in the first place, and what is the actual important components of the service or product that your business needs? Usually, the answer is no. So how do they generate the RFP in the first place?
Max: 01:23 Well, they go and they download a template. They find an example of one that was already done, or, most likely, the vendor that they’ve been talking to, that they actually want to use and either renew the service with or, that they like because this is who they found already helps them. Alright. So the first dirty secret with RFPs is RFPs are written by the preferred vendor. So if you’re looking to have neutrality in an RFP process, just know that you already don’t because chances are the the preferred vendor is writing the RFP with the person on your team that is supposed to be neutral and and impartial.
Max: 02:08 And, I so that’s the first dirtiest secret about RFPs. And any vendor that’s receiving an RFP knows this is the case, and this is why so many people will not respond to RFPs. If they didn’t participate in the process of writing the RFP, then they know that they’re just not gonna win the RFP and it’s not worth the time. Okay. So what happens there?
Max: 02:25 Okay. Let’s let’s, let’s pretend that your selection committee has 4 people on it. Right? So now you’re gonna write you’re gonna generate the RFP. You know, that’s gonna probably take I don’t know.
Max: 02:37 Call it half a week. Right? So let’s let’s be generous. And actually, let’s just pretend it’s a quarter a week. Right?
Max: 02:42 So it’s 20 hours times 4 people. So you’ve got 80 hours now invested in just in just generating the RFP. Now you have to figure out who to send this RFP out to. So how do you find out who to send this RFP out to? You’re gonna look at a, independent research organization.
Max: 02:55 You’re gonna go to a Gartner. You’re gonna go to Forrester. You’re gonna go something like g 2. You’re gonna do one of these things. You’re gonna say, oh, okay.
Max: 03:01 Okay. Who are the competitors for this product? Right? So, you know or they’re gonna be on Google and they’ll be typing Google search in. So preferred vendor name versus and then let Google auto complete and fill out a vendor list from that, and then continue to do that through the process.
Max: 03:21 So find a new company name, then you put it back in Google, and you say this company name versus whatever. Right? So if you’re doing a a network, let’s just say you’re you’re this is pretty benign example. So you’d start off and say, like, Cisco versus, and you find out that, you know, there’s Meraki. You do Meraki versus, and that takes you, and you could say Juniper EX versus, and then you’re gonna do extreme or, you know, Broadcom, or you’re gonna do Dell, and then you’re gonna do, you know, ubiquity and you’re just gonna go down the list.
Max: 03:50 Right? Oh, who did I forget on that list? I forgot Fortinet. Right? Oh, well, whoops.
Max: 03:54 Got Fortinet. Right? So now you’re dependent on your RFP committee actually knowing who should be included in this RFP in the first place. And if the people on the committee don’t know which names to include because they aren’t being actively tracked or paying to be included in piece of marketing or whatever the case may be, that’s a pretty big miss already out of the gate where chances are there’s a vendor that you wanna be doing business with or you wanna be talking to at the very least that isn’t even included in the RFP process because they you just don’t even know they exist. K.
Max: 04:26 So second issue with the RFP. 3rd issue with the RFP. So now you sir you you get a list of vendors. You spent another, you know, 10, 20 hours across this committee, and you go out and you say, okay. Here’s the RFP.
Max: 04:39 We’ve sent it to you. What’s an RFP process look like? It would say something along the lines of, today is the first. You can ask us questions until 15th. Responses are due on 21st.
Max: 04:54 We might ask you clarifying questions, in which case those would be be due by the 31st. Right? I’m just picking arbitrary dates here, but that’s pretty pretty normal. Right? So you’ve got a month of timeline.
Max: 05:04 So you distribute this RFP that was written by the initially preferred vendor to however many names that you find. Right? Let’s just say what was one that was great? I saw 28 vendors in the RFP list. Okay?
Max: 05:18 So now each one of those 28 vendors is gonna want time to talk to you to ask clarifying questions because they didn’t write the RFP, and the RFP was written with specific language, based on capabilities of the preferred vendor. So now they’re gonna go back, and they’re gonna try to clarify. Why do you need this thing? This is very unusual for a company like you. This is strange language.
Max: 05:40 What’s actually going on here? What feature are you really trying to get to? Now they’re gonna try to get you on the phone. They’re gonna try to have a meeting with you. Why?
Max: 05:47 Because they know what they’re up against and that they actually need to get you in person in order to help convince you that what you’re actually asking isn’t what you really need, which is probably true. And let’s just say you keep it to email. So you’ve got, you know, a dozen vendors that are gonna each ask you 3, 4, 5, who knows, clarifying questions. And then that’s gonna have another round of clarifying questions. And that’s gonna take you probably an average 2 to 3 hours per vendor.
Max: 06:13 Right? So you got a dozen vendors. You’re gonna invest another 36 hours worth of time into, into just responding and trying to clarify questions. And chances are, nobody on your RFP committee actually knows how to clarify or answer these clarifying questions because they didn’t write them in the 1st place. They have no idea what they actually mean.
Max: 06:32 Right? So I don’t know what this is. It was just, you know, it’s important to us. Right? Okay.
Max: 06:37 So you go through that phase. You get all the responses from your RFP. You start putting them onto your spreadsheet, you know, and you go down the spreadsheet, and now your spreadsheet looks like a list that says, you know, yeses and nos. Right? Does this vendor meet the requirements of the RFP, or do we believe that they meet the the requirement of that section of the RFP question, the RFP based on we how we laid out.
Max: 07:00 Right? You’re you’re gonna go down this RFP responses, and you’re gonna mark yeses or nos, or you’re gonna score them with some numerical score based on what you think, you know, how close they are that they meet. And again, 9 times out of 10, the people that are actually scoring the RFP responses don’t understand the underlying technology, and so they have no idea whether or not they’re that it’s, you know, is it scored accurately or not? And some of this becomes phrasing. You know, the the vendor that wrote the RFP for you or that you copied the initial RFP for, has a a trademarked term for how they use technology.
Max: 07:31 Right? So, you know, do you conform to x, you know, fill in the blank? Right? Well, no, we can’t because that’s a trademark term for a competitor. So instead of doing that thing, we do this thing instead, which is our version for it.
Max: 07:42 Well, how do you how do you how do you clear how how do you validate that, you know, and do anything with it? Well, the answer is that you don’t. So then you get you get all the way down to the end. You know? And maybe you’ve got a process where you’re gonna shortlist.
Max: 07:57 You’re gonna shortlist 2 vendors, and then you’re gonna actually come in and and, hopefully, you’re going to do some sort of POC process. You’re gonna do a evaluate, you know, you’re gonna you’re you’re you’ve got some sort of technical process at that point that’s gonna actually evaluate the differences between 1 vendor and the other. A lot of times you just don’t because, you know, now you’re a month end, you’ve dedicated, you know, a team of 4 people to this. They’ve collectively spent a couple 100 hours each on this, actually, probably 2 months in at this point, and everybody’s exhausted, and they just wanna get this thing done and move on with their life. Right?
Max: 08:29 Because you probably got some business user that needs whatever the thing was in the first place in order to actually meet their objectives that they have for the business, and it’s being held up because now you’ve got this RFP up. What’s another example? Let’s say you’re on the market for a CRM. Right? And your CRO or your CMO wants you to run Salesforce.
Max: 08:49 Maybe you’re already running Salesforce and your CMO needs a marketing automation suite and wants to run Marketo. Right? You’re gonna go through and you’re gonna create an RFP for marketing automation, and you’re gonna go out and evaluate Marketo versus Pardot versus HubSpot versus I mean, you know, go down that list. And at the end of the day, you’re gonna have a selection committee that says, oh, we’ve we’ve decided that, you know, our CMO wants Marketo, but in several Marketo, we’ve we’ve found this other thing we think is better, and we’re gonna run that instead. Are you really gonna run that thing?
Max: 09:20 No. You’re not gonna run that thing. You’re gonna give the CMO the choice that the CMO wants, that she wants, and you’re using the RFP to justify that, yes, we went out to market, and we beat everybody up, and we got a better price from Marketo because they had to compete on this process. Now what Marketo knows there is you sign whatever duration term that you sign. And even if they have to go back for an RFP on renewal again, incumbents win renewals 80% of the time because guess what?
Max: 09:46 They also write the RFP for the renewal, and your migration and your switching cost is so high. So what do you do instead of an RFP? RFPs work really good, by the way, if you’re purchasing some sort of commodity. If you are purchasing something and you’re just trying to figure out which distributor, which reseller you’re gonna purchase that commodity from, then then maybe the RFP is good. Now resellers are onto you and they know this.
Max: 10:09 And and especially in the tech space, they deal with this by doing deal registration. So if you go let’s just use Cisco. You go out and you say, we wanna buy some Cisco switches and firewalls and access points. First reseller that you talk to is going to go through a deal registration process with Cisco and register that deal in Cisco systems. That way, they’re gonna be protected in that sales cycle.
Max: 10:30 So then when you go talk to another Cisco reseller, they can’t register that deal. That’s gonna prevent that 2nd reseller from getting maximum discounts for you. So the first one’s gonna have a leg up. And really what you’re doing at that point is you’re gonna be talking to different resellers, and the second reseller is gonna be like, oh, Cisco sucks. You should buy Juniper instead.
Max: 10:49 Well, two reasons for that. 1, you know, they can’t register the deal, and 2, well, they probably have a better margin price for, you know, sales of Juniper than they do on Cisco. So a lot of these things are just influenced by money and, you know, you know, program, what program they’re in and how they actually exist in the program. Okay. So what’s the other version of this?
Max: 11:09 So let’s say, you’re not running an RFP, but you have a mandate that your staff goes out and gets 3 quotes. This is another one we see all the time. You know, simple example, you know, phone system. But we need a new phone system. Right?
Max: 11:21 So let’s go out and get 3 different quotes from 3 different phone system vendors. You’re in a process where you have a person driving this for you that has probably never done this before in their lifetime. Or if they have, the last time, you know, that most contracts for technology and and, you know, any sort of SaaS service runs on, you know, 3 year 3 year terms, 3 year renewals. Right? So you’re doing this once every 3 years.
Max: 11:43 It’s like going to buy a car and thinking you’re competitive buying a car every 5 years. You’re just not. Right? You’re at a at a default information disadvantage against somebody is who’s a professional on the other side that does this every single day for their life. You know?
Max: 11:55 Like, who’s gonna win there? You’re not gonna win. You’re not a you’re not you’re just not gonna win. So, you know, phone systems. You know, there’s you go out and talk to 3 different vendors, pick pick 3 out of the magic quadrant, and go talk to them, and and they’re gonna come back, and they’re gonna tell you an average seat price.
Max: 12:10 Right? And the industry’s average seat price is almost the same. So you’re gonna come back and and, you know, the person on your team doing this for you is gonna say, okay. Great. Look.
Max: 12:20 Hey. We it’s all this, you know, they’re you know, they all came in at $25. Right? And then you’re gonna go back and forth. You’re gonna tell them all, you know, that you’ve got, these other vendors in.
Max: 12:31 They, you know, you really like them, but you need better pricing. What can they do for you? And all these different things. And they’re gonna come back. And and let’s just say you discount to, you know, to $19.
Max: 12:40 You get under the $20 threshold, which just looks phenomenal because of course, if you look at a a percentage basis, you just got a huge discount. I mean, this is fantastic. Sign the contract, high five, everything is great and wonderful. And then you find out 2 things. You find out that the floor price, the actual, you know, price that that vendor would have done deals at is probably $10.
Max: 13:00 So, you know, you’re high fiving at $20 versus, you know, $9. And you also find out that some critical piece of integration that you thought you were that you that you needed, they they you didn’t even know that you needed doesn’t exist. Why would you know? Why would you know that? You have no reason to know that.
Max: 13:17 It’s not your business to know that. You’re trying to run the business. So, you know, moral of the story, if you’re relying on RFPs or these nonsensical cockamamie, you know, go out and get 3 vendors and and make them be competitive with each other, and let’s get the best price because we’ve been competitive with those vendors. You’re you’re just you’re you’re not getting what you think you’re gonna get. And if you actually care about getting these things right, the first thing is is that you need to have you need an expert involved that knows what the heck they’re doing and what actually needs to map with your business.
Max: 13:49 Right? So, you know, if the CMO wants to run Marketo because they’ve run Marketo in the past and they know Marketo and they like the Marketo capabilities, you should be buying Marketo. Right? Your CRO wants to run Salesforce because that’s what they know, you should be running Salesforce. If, you know, you’ve hired an IT team that has experience with Cisco and not with Juniper, you should not be pushing Juniper on them because they don’t have any experience with Juniper.
Max: 14:13 So that’s there there’s there’s some things that they’re just that basic. And the other side of this is just, you know, if you’ve got a selection committee trying to purchase services and technology for your business that does not know what the heck it is that they’re buying in the first place, do not assume that the RFP is gonna get you what you actually need. So it’s so just RFP suck. They’re terrible. Don’t use them.
Max: 14:35 Don’t think you’re getting something great out of them. Do something different.
