Today, businesses need fast and reliable solutions. So why are 95% of businesses still using Requests for Proposals to reach vendors with the right skills they are looking for? This antiquated process may have worked in the past, but many businesses are left wanting more from the results of what RFPs can deliver. What’s more, the RFP leaves startups and small businesses unable to compete, which can in turn hurt innovation. In short, no one really wins in the RFP ecosystem. Why do businesses still use the RFP?
RFPs Are Not A Good Use Of Time Or Resources
No modern business can afford the time, money, and effort spent to deal with RFPs. But old habits die hard, as they say, and the RFP is not an exception. Before we can make a change, we must look at the facts and determine exactly why RFPs are failing us.
Vendors spend on average $5,000 before even winning a bid. When considering the workload of RFPs that come on a monthly basis, the cost of RFPs can soar into hundreds of thousands of dollars worth of unfinished projects, wasted time, and rejection. According to a LexisNexis survey of RFP responses:
- 17% of firms respond to 10-21 RFPs a month, or 120 per year at least
- 15% of firms respond to OVER 21 RFPs a month, or 252 per year at least.
- For project management professionals who focus on IT say that among their strategic initiatives:
- 42% failed to recoup budget
- 28% deemed failures
- And only 60% met project goals
Those companies that spend resources on RFPs only do so because they are part of an antiquated business ecosystem, and it’s clear this ecosystem is lacking in the kind of flexibility it takes to be innovative.
RFPs Make Business Harder For Everyone
Many organizations respond to their vendor issues by sending out even more RFPs, hoping to find the diamond in the rough, but in the long run this does not benefit them in the long run. Smart businesses are beginning to understand the risks of entertaining RFPs on a monthly basis are just not worth the possible outcomes. Fortunately there are more nimble and viable options than the RFP, one of which is Proof-of-Value software:
- Clean, intuitive user experience and interfaces
- Deliver against tight deadlines and budget constraints along with tangible, measurable
- ROI-Diversify risk away from conventional “mega-vendors”
Ditching the old, cumbersome way of doing things opens the floor to newer, more nimble competitors, driving innovation and shaking up the incumbent system.
What’s Next For Businesses?
Is your business still using RFPs to get the job done? The business of today needs to move more quickly to keep up with innovation. Small experiments done in a short amount of time can offer proof of concept, eliminating the need for RFPs. Competition breeds innovation, leaving the best team to win.
It’s time for an upgrade; stop relying on a 1950s process to solve a 2020 problem. Take a look at this infographic for more on the current state of Requests for Proposals, why they don’t fit in with modern business operations, and how to develop streamlined strategies for meeting new vendors and finally get projects done right. After all, as the saying goes, “done is better than perfect!”
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