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Malcolm Roach, Open Door Technology Inc.

How to Write an Effective RFP When Looking for an ERP System


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Blog RFP Selection

Looking for a new ERP or financial management system can be an arduous process. The traditional model of sending a Request for Proposal (RFP) to a number of possible suppliers of ERP software does not do anyone any favors, least of all the organization selecting a new ERP system. On the surface, sending a detailed RFP out to as many vendors as possible seems like the best way to reduce your risk, but it is arguable you are actually doing the opposite.

The Complex Process of Creating a RFP

Many years ago while working as a professional accountant in the information systems group of a large accounting firm, we used to carry out requirements gathering exercises to help clients select new software systems. We carried out extensive interviews with client staff to determine their needs and wants and record them in a spreadsheet which was used to compare those answers to a wide variety of possible systems. There were hundreds of answers to process, many of which were simply ‘wants’, not ‘needs’. Realistically, how does the end user determine which system is the better fit when the important items are buried in those hundreds and even thousands of questions? Eventually, I came to realize there really were only five to ten issues that would be the critical factors.

Traditional RFPs Can Lead To Limited Responses 

A complex RFP may discourage the best vendors to respond. A vendor who is busy, because they are very good at what they do, may not have the time to respond to an RFP with hundreds of detailed questions. Perhaps those with time on their hands, or those with ‘professional’ sales resources who will do whatever they have to do to get the deal, will respond. I knew one supplier salesperson whose stated policy was to answer everything as positive so he could get to the shortlist. These misleading responses make it extremely difficult and time-consuming to evaluate the responses and separate the contenders from the unqualified.

Staff Can Be Overwhelmed With Detailed Responses

Detailed RFP’s with many pages of required information will take an extraordinary amount of time to sift through and staff may not be able to accurately process hundreds of answers from potentially ten or more respondents. I have seen individuals rapidly become inundated with detail and fall into the trap where supplier responses start to combine in their mind. For example, the reader may remember one system as having two key requirements, but in reality two different systems each had just one of the two required items.

Focus On What Is Really Important

The answer to a more effective RFP is to concentrate on only key differentiating questions. The first is to poll your key stakeholders who have likely worked with various systems at other organizations and know your business intimately. Define the key functional areas and identify a few key criteria and processes for each one. This will assist you to define some key questions or functionality that you can focus on to make your process more efficient.

Here are a few sample key questions to consider when creating an RFP 

  1. Integrated System – Are all aspects of your organization including financials, payroll and service in a single database? Having a disconnected system means delays in reporting and increased errors due to data entry or integration routines.
  2. Technology Base – What technology is driving the system you are considering? Will you have to worry about future compatibility? Choosing a system built by the industry leader Microsoft for example means that you would always have the most current technology and you can expand to use additional products such as Office 365 and Skype for Business for an even greater competitive advantage. It also bears saying that Microsoft spends more annually in Research and Development than many other systems will earn over the course of a decade. Another important consideration is whether you want to keep your system installed in-house, hosted or on the cloud.
  3. Mobility Options – There’s no question that the workplace is getting more mobile and new staff coming into your industry will expect to be able to accomplish their work on a variety of devices. The freedom of mobile workers will also make your operations run smoother and more efficiently. How important is this to you and how do you see it rolling out?

Selecting a Vendor

Writing a more concise and targeted RFP will allow more vendors to respond and make it easier for you to narrow down to a shortlist. You will get better value if you do this yourselves and not hire an outside consultant, but if you feel more comfortable hiring one, hire one that has the same philosophy of identifying only key requirements. From my experience I can tell you to be very careful about hiring outside consultants to help you with this process if they also sell computer software that could be included in your search. You would be better to insist that they not be eligible to participate as a possible vendor.

The second step is to identify key suppliers to approach with your shortened RFP by researching their product offerings and industry knowledge and consider the cost of implementation. Remember you are not only purchasing new enterprise resource planning software, you are choosing a vendor to partner with for the long term so make sure they have an acceptable level of industry knowledge and product expertise.

By Malcolm Roach of Open Door Technology, Canadian provider of Microsoft Dynamics NAV ERP systems

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