Read this article and Answer the following questions in your own words: RFP Proc
ID: 366434 • Letter: R
Question
Read this article and Answer the following questions in your own words:
RFP Process
In early May, Utting received a quotation from Bahar, which included the services to be offered and a fee schedule. The bid covered the RFP creation, list of potential vendors, vendor and site visits, consultation on the final selection decision, as well as advice on negotiation of the contract. The bulk of the work would be during the RFP creation, as a number of Coopers & Lybrand specialists would be involved in the process. Bahar guaranteed that the fees, including travel costs would not exceed $100,000 CDN (75,000 USD) which would then be split between Marsta and Atlanta. While Utting and Sahlqvist thought that this fee was high, both realized that the team could use the expertise as well as the resources necessary to choose the right software. Utting signed the contract, and work started soon after.
Bahar, Romanow, and Gonzalez put together a schedule of meeting dates to complete the majority of the work on the RFP prior to the middle of June. Sessions were to be scheduled with several members of each functional area within the parts department. The sessions were scheduled to take a half-day for the initial meeting, a half-day to review procedures from the first session and to develop a comprehensive requirements list, and a series of short follow-up meetings to finalize requirements and gain approvals. The final draft of the RFP was to be ready by mid-August, with a final review set for the week of August 25, 1995.
During the first meeting, three or four functional representatives would outline all the business processes used at Timberjack within their area. One Coopers & Lybrand expert would be the facilitator, and an alternate kept notes. Gonzalez and Romanow, who attended all of the sessions, would work with the group to try and ensure that all processes were covered in enough detail that formal requirements could be drafted. Special attention was paid to the most important processes at Timberjack, regardless of whether or not the functionality existed in standard packaged software. Each group, and its manager, was also asked to consider any additional software functionality that would improve the efficiency of their area.
After each session, Coopers & Lybrand would prepare the minutes for review at the next stage. At the second meeting, each business process was broken into a number of abbreviated requirements statements in the form of a question, such as “Does your package support EDI?” or “Does your package calculate forecasts automatically?” Once all the Timberjack requirements were determined, Coopers & Lybrand presented an exhaustive list of requirements that they and other clients had developed over the years. This list was compared to the existing Timberjack list, and occasionally new items from the Coopers & Lybrand list were added to Timberjack’s list of requirements.
Sessions were held for accounting, finance, purchasing/planning, customer service, pricing, distribution, as well as information systems. All of the meetings were completed prior to the middle of June, and the preliminary lists of requirements were sent to Marsta for review. Members of the Swedish team were not present during the RFP meetings in Woodstock. Marsta approved the requirements lists quickly and added requirements related to multilanguage capability, electronic funds transfer for payments to suppliers, and Intrastat reporting, which was used in Europe to track the movement of goods.
A benefits review was also started in Woodstock. This benefits analysis was an attempt to tie potential improvements in software functionality to savings in operating costs or improved customer service. In Woodstock, all capital expenditures required a capital appropriation, and approval was based on expected return on investment. In the European operations, capital expenditures were not as formalized. Romanow explained the rationale for the benefits analysis:
We recognized that from a project approval standpoint, the benefits analysis wasn’t necessary; we had been asked by the head office to implement the new system. We were doing the benefits analysis to weight the potential functionality improvements. This would help us decide which software had the most potential to improve our operations.
To complete the RFP, Romanow and Nikkinen gathered basic business statistics such as the number of part numbers, number of sales orders processed daily, and the number of customers. Gonzalez and Smedjer outlined the number of users, and the preferred hardware and operating systems. Gonzalez included a description of the North American dealer system, which linked dealers directly to Timberjack’s legacy system via modem. By the end of June, most of the work was done, but final approvals were not completed until the middle of August. Summer vacations, as well as Romanow’s relocation to Atlanta, slowed the approval process. The final document was 200 pages in length. It included over a thousand requirements, copies of standard reports, and instructions to vendors on the bidding process. Exhibit 5 shows an excerpt of the Timberjack RFP. Each requirement was listed as critical or noncritical, and space was available for vendors to indicate if their software would comply, comply with minor modification, or require a major modification. A minor modification was defined as having an estimated cost of $2,500 or less. Fifty hard copies were produced, and the RFP was also copied in electronic format to allow the vendors to respond as expeditiously as possible.
At this stage in the project, it was clear that there were opposing views on the approach taken on the RFP. The Swedish team was very much in a hurry to select and install a new system. Smedjer explained:
If the RFP were done in Sweden it would have been roughly five pages. Not at all as specific, just mentioning the functions that are required, and not anything of how it should be done or what it should look like. In the end the document was a lot of work for the suppliers to answer all these questions on such a detailed level.
The North American group was committed to following the Coopers & Lybrand methodology. Utting defended the RFP process:
The strength of the RFP process was that we ended up with a clear idea of what we wanted in detail. The second benefit was that we got a lot of people involved. We created some buy-in, not perfect, but some buy-in due to the fact that people were involved. This avoided the problem of people saying afterwards “No one asked me about that,” so I think the RFP established a form of consensus.
By the end of the RFP process, the Swedish side was quite frustrated with the time required to put the RFP together. While Utting felt there was value in the RFP, he recognized that in the end it had created a wedge between the groups in Sweden and Atlanta. Sahlqvist commented:
The RFP process was far too long for us, as we were much more squeezed than the other guys. We had a system that didn’t work properly, so we were very anxious for a quick process. And Atlanta was quite satisfied with its system, and was more thrust into the project to have a common system. It didn’t make compromises to shorten the process; it didn’t think about everyone else.
The Qeustion: Talk about the process of preparing RFP in Timberjack Company.
Explanation / Answer
A Request for Proposal or RFP is a formal document that solicits the proposal made through a bidding process generally, by companies interested in procuring a service or a product, to potential suppliers/vendors to submit their business proposals. It should inform the vendors about what the company is looking for to procure, what it proposed to purchase, requirement analysis results, and the vendor selection process.
For a sound RFP to be formulated, a detailed analysis of what the company needs, and more specifically what every function within the company needs from the purchased product or service, a software system in this case. The method incorporated in making the RFP by the Coopers & Lybrand methodology was sound as it involved every functional division within the company which not only ensured that the resulting software incorporates the requirements of every function, but also creates employee solidarity with the system, as they felt the process of selection of the software involved them and their input was valuable for the company’s purchase decision.
Although, the Swedish group’s frustration with the lengthy process was justified, provided they needed a quick purchase, but a software system to be implemented across the organization should be through and a long process to determine the requirements was needed to ensure that the software functions as per the requirements of the company in longer run. The lengthy RFP requirements will be cumbersome for some vendors to go through, but it shows the company’s commitment towards their requirement and their grasp on what they need, hence, vendors will be more likely to align their product offerings to the company’s RFP requirements rather than using common standard systems as expecting company processes to be aligned to them.
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