RFPs are back
Stuart Tandy, Head of Bid Management at Agiito, answers the key questions on RFPs in our new section, Ask the Expert
How and why are RFPs now coming back?
RFPs didn’t completely stop for us during the pandemic but there was a significant slowdown. For those that did initially continue, decisions tended to get postponed as organisations utilised the Government’s furlough scheme, prioritised activity and redeployed staffing resource where required and, in some cases, made the difficult decision to make redundancies and restructure their business.
But in recent weeks we have seen a notable increase in organisations issuing RFPs. Some organisations that perhaps have more defined procurement policies governing contract timeframes are issuing formal RFPs while others are clearly conducting a more informal market review, maybe unsure as to whether now is a good time to change suppliers but wanting to see what’s out there.
Is now a good time to do an RFP?
Yes, there are a number of reasons. Firstly, the pandemic has had a significant impact on the industry with widespread restructuring and redundancies. Service levels may have taken a hit as organisations ramp up their business travel return. So ‘noise’ around service levels could be deemed a reason to go to market, but it should be noted that this is likely an industry-wide issue and shouldn’t necessarily be used in isolation as a reason to do an RFP.
That said, many organisations will have come out of the pandemic looking very different. Some will perhaps have more remote workers or a more open attitude to home-working, or maybe a greater focus on employee wellbeing has seen a policy change on when people can or should travel on business and when to connect virtually.
All of this may mean that their travel spend profile has significantly changed and would suggest it might be a good time for them to go to market.
What are the key differences you are seeing post-pandemic?
In the past employee wellbeing and sustainability were covered to some extent in RFP questioning but post pandemic there seems to be a greater focus, and hence a greater weighting within the decision-making process, on these two areas.
The workforce demographic has changed with Millennials and Gen Z now making up a significant proportion of most organisations’ employees. Both groups care deeply about protecting the environment so it’s no great surprise that sustainability is high on the corporate procurement agenda.
Organisations recognise their people want to see them take proactive action on environmental commitments, contribute to addressing climate change and drive social value from their supply chain.
Traveller safety and security has always been a key consideration but organisations are now recognising that general employee welfare is hugely important as well. They recognise that their duty of care extends beyond their safety to protecting them from the medium to long term impacts of excessive business travel.
For example ‘road warriors’ can suffer burnout, so some organisations are looking for reporting to go way beyond standard transactional and spend data and include wellbeing reporting, identifying those ‘at risk’ travellers so they can advise line managers to be able to intervene.
As well as addressing duty of care, this approach makes business sense as the longer-term impacts of excessive travel has a knock-on effect on absenteeism as well as recruitment and training costs.
Are you seeing a change in commercial models?
I think there is definitely a recognition from most buyers that a hybrid model is perhaps more appropriate with booking fees for any atransactional elements and a management fee payable for account management projects and activity, rather than rolling up any account management costs into a transaction fee model.
During the pandemic lockdown we were still working with many customers providing advice and helping develop policy but many of those customers were not actually travelling so the typical transaction fee model was not sustainable.
What are the main RFP pain points?
RFPs require a lot of time and effort and some organisations will have limited resource to manage more than a handful of major procurement RFPs per year. So, when it comes to dealing with the time pressures of RFPs, the best place to start is finding tools that best fit your sourcing events.
Search for tools that streamline the sourcing process instead of adding unnecessary steps or questions and don’t think the choice is between the leading-edge sourcing app or a Word doc, there are plenty of other options in between.
Another potential pain point for buyers is that RFP submissions might be inconsistent. Ultimately, you can’t fully control how suppliers will respond to your RFP and no matter how well you’ve designed and drafted your RFP, it’s inevitable that bidders will want to answer it their own way.
Some of the sourcing apps and tender portals will help address this inconsistency by applying templates but it’s worth giving bidders some flexibility to be able to tell their story and demonstrate their value proposition.
What are the biggest RFP frustrations for TMCs?
A lack of any willingness to engage or have any kind of dialogue throughout the procurement process is a big frustration. Another is the unrealistically short submission timeframes followed by months of radio silence from prospective customers, as well as inappropriate template formats such as Excel which don’t allow for any kind of creativity or visual representation. Having inappropriate word or character count limitations imposed for sometimes complex, far-reaching questions are also frustrating.
However, for me, the biggest frustration is when no, or very limited, data is shared regarding the current travel spend profile. This data is essential to understand the complexity of a client’s travel requirement and how we might resource to service it adequately and provide a meaningful pricing proposal. Information about hotels booked in key locations, air city pairs, rail booking horizons, travel class etc all help us to propose a robust, deliverable savings plan. Without data, we simply revert to service capabilities and standards and experiences rather than what we might be able to deliver in real, bottom-line savings.
How can technology help?
There’s a variety of technology applications out there to help buyers such as tender portals – websites that streamline and manage the whole RFP process including pre-qualification, non-disclosure agreements, online questionnaires and messaging. Also, the pandemic lockdown has meant that people have got more used to connecting virtually and using video-call technology such as MS Teams and WebEx which can be great when looking to engage with a wide and varied stakeholder group for a shortlist presentation rather than trying to coordinate diaries and get everyone in the same room.
Some buyers use e-auction technology but in my experience they simply don’t work in travel unless bidders are working to a very strictly defined scope. The minute a prospective customer tells us that the process will include an e-auction, the perception is that price is the sole key consideration, irrespective of any statements in the RFP to the contrary.
On the supplier side, there are some fantastic content management systems available which can help index boilerplate content, search archived bids, enable good governance and apply a rigorous audit of bid content review and sign-off.
What are the limitations of an RFP?
The purpose of the process is merely to get to a shortlist of potential suppliers that have demonstrated they understand the prospective customers’ business and sector, their values, the challenges they are looking to overcome and their short, medium and long-term goals. What it doesn’t do is tell you what the people you will be working with are like. The mantra ‘people buy people’ still holds true and meeting suppliers either face-to-face at a site visit or a shortlist presentation, looking into their eyes and asking yourself “Can I work with these people?” should not be under-estimated.
Is price the main consideration?
It’s always going to be a key consideration but any commitment to a defined plan delivering bottom-line savings on an organisation’s annual travel spend far outweigh any likely negotiated transaction fee savings. Other criteria also play a huge part in the decision making when choosing the perfect travel management partner, such as sustainability, wellbeing and duty of care, aligned values, service, reporting, account management and innovation.
What are the key questions?
Buyers need to move away from capability-led questioning and focus on questions that ask a bidder how they are going to address key challenges, solve problems and meet core objectives. For example, don’t just ask a bidder about their management information reporting capability, ask what value it will deliver to your organisation.
This approach will mean that bidders need to demonstrate that they understand you and your business and articulate their value proposition better. This will make it it easier for you to differentiate between them.
What’s your advice for SMEs doing an RFP for the first time?
Do your research on the market and seek advice from your peers. Perhaps reach out to other procurement people via LinkedIn for guidance and also speak with potential bidders as part of the procurement process.
Don’t just create an RFP and send it out without any engagement. It’s also important to involve relevant internal stakeholders in the process to gain buy-in and help develop a defined specification of what they want from their supplier and what they want to achieve from the RFP process.