Choosing the right ERP software can be tricky. With a huge array of systems and vendors, and new software emerging all the time, a strategic approach is needed to find suitable solutions for your business needs.
That’s where an RFP – or request for proposal – comes in. Recognized throughout the ERP sector, these invaluable documents are designed to simplify the ERP software selection process, giving the information you need to make an informed decision about your ERP software investment.
Describe the ERP Software RFP. Are They Required? What’s the First Step?
What is an RFP, and Do You Need One?
An RFP is a means of getting precise information and insights from ERP software vendors, so you can make an informed decision about the service that’s right for your business. Think of it like using a comparison website to buy home insurance: you provide a profile of yourself and your requirements, and businesses come back to you with what they can offer.
Creating an RFP is considered a best practice means of narrowing your ERP selection criteria and finding the ERP vendors that offer suitable solutions for your business. Without it, you risk wasted time and the potential for a poor investment, not to mention a considerable amount of legwork finding, contacting, and liaising with unvetted ERP software service providers.
While it is possible to find and invest in ERP software without an RFP, it’s recommended for businesses to ensure that they focus their selection process on their system requirements instead of getting wowed by what appear to be impressive functions and features showcased by the ERP vendor that may not actually deliver the value required. By narrowing your search to just a small handful of vendors, you’ll be better placed to assess their individual pros and cons against your specific system requirements.
How Does RFP Differ from RFI and RFQ?
There are lots of initialisms associated with enterprise resource planning software, which only adds to the confusion of selecting the appropriate system. RFP is just one of the terms used in the selection phase, with others including RFI and RFQ.
While some people use these initialisms interchangeably, they are distinct and do carry a different degree of intent. As such, it’s important to learn what each term means before entering into any ERP software research or negotiations with software vendors.
Let’s take a look at what we mean by RFI and RFQ and how they relate to RFP within the ERP selection cycle.
An RFI, or request for information, is a broad-stroke version of an RFP. It falls right at the start of the ERP software selection journey and is designed to give you a starting point from which to narrow your search and start pitting vendors against one another. Vendors will provide an overview of their services, experience, and typical pricing, but with none of the specifics which come later in the selection process.
While we’ve already set out the definition of RFP, it’s worth noting how it relates to RFI and RFQ. An RFP is considered a step above RFI in that vendors will respond to the individual pain points and requirements of your business, rather than just providing a general overview of what they can offer. For this reason, a lot of businesses skip the RFI step and move straight to RFP – reducing the lead time and ensuring that vendors are aware of their needs from the outset.
Posting an RFQ, or request for a quote, is typically the last phase of the ERP selection process. This is when you’ve gotten to know the services and offerings of one or two vendors, and are now ready to talk money. An RFQ will contain payment terms, budget, service level agreements, and other costs associated with your investment. From there, you’ll be in a position to make an informed decision on the right system for your requirements, with all cards on the table.
While RFI, RFP, and RFQ are norms within the ERP sector, software selection often isn’t as clear-cut and segmented as this. For example, some vendors may include a quote as part of their RFP or go into more detail than others in an RFI. It all depends on the vendor in question, so expect some variance in the responses you receive.
Read More : Most Common ERP Implementation Challenges
What to Include in an ERP Software RFP?
So, you want to create an RFP to receive detailed information and insights from relevant ERP software vendors – but what do you include? And how can you ensure the responses you receive marry with your expectations and requirements?
Below, we outline things to include and questions to ask as part of an RFP for an ERP selection.
Current Software and Hardware Setup
What software does your business currently use? And on what devices and hardware do your team rely? If you have a server on-premise specify how long it has been in place and if it is managed by your current provider or an external ICT team. Vendors will want to gain a grasp of your legacy systems and equipment in order to offer the most suitable solutions for your setup. If you wish to adopt a new deployment infrastructure such as Cloud deployment or a hybrid model, ensure you specify that here too.
In-house Maintenance and Support
Do you have a dedicated in-house IT function? Or perhaps you rely on third-party IT support? Have you or do you plan to appoint internal resources to work on this project full-time? If so, detail their background, length of time in the company, etc. The project and then ongoing support you can provide will have a huge influence on the solutions a vendor will put forward, as well as how much it will ultimately cost.
Brief Overview of Your Business’s State of Play
Include an honest and transparent appraisal of your business’s current state of play, including present challenges, obstacles, and goals for the future. This will allow vendors to align their offerings more accurately with the scope and requirements of your business.
ERP Software Aspirations and Plans for Growth
What do you want an ERP system to bring to your operations? And how do you see the software aiding future growth? What are the limitations of your current system? Also, what are its good points (if any still exist)? Vendors are keen to satisfy your ambitions, so be clear about what you want and how you hope to achieve it from the off.
Current Operational Pain Points and Bottlenecks
What are the biggest challenges currently affecting your business? And what pain points and bottlenecks do your teams tend to encounter as part of day-to-day operations? Providing vendors with a breakdown of the biggest issues facing your organization will help them tailor their RFP response to target and remedy key operational problems.
After researching ERP software and visiting vendor websites, you probably have a reasonable idea of the type of requirements and features you’d like your new system to possess. However, it’s important to ensure you don’t overcomplicate the project by including functionality in an RPP document just for the sake of it. Understand your requirements and segment them accordingly.
Include any must-have and nice-to-have requirements in your RFP document so that vendors can align their responses with your features wish list. You may also decide that you would like the must-have requirements to form part of a Go-Live phase 1 project with those nice-to-haves scheduled in post-Go-Live when operations are running smoothly. At this stage, your team will be ready to embrace phase 2 functionality. This is often a sound approach to ensure employees are not overwhelmed and budgets are managed succinctly.
Information from Vendors
An important part of ERP software selection is getting to know your new software vendor, so include a list of questions that you’d like them to answer. Ideally, they should provide their qualifications, references, and areas of specialty, as well as a handful of case studies to support their claims. It’s important to remember that your ERP vendor is not a supplier to your business.
They must become a partner in your business. They will be working closely with your team to implement the solution, but this can only have a successful outcome if both the client and the ERP vendor work collaboratively. Also, when you invest in a new ERP software solution it is an investment that typically lasts 10-15 years, therefore you want to ensure that the partnership ethos required to make the initial project successful can be sustained for the lifetime of the solution.
Project Scope and Desired Go-Live Schedule
What is your desired timeframe and are there any specific dates – operational or otherwise – which could affect the ERP implementation process? At this stage, it’s worth remembering that ERP software deployment can be a lengthy process, so include a desired timescale but be prepared for quoted implementation times to be longer than you might expect.
How much are you looking to invest in ERP software? And what is your top-end budget for the project? Cost is a significant deciding factor when choosing the right software for your needs and will impact the level of service you can expect from vendors. If budgets are tight your vendor may suggest implementing the solution in a phased manner.
What to Do After Receiving ERP Software RFP Responses?
After sending your RFP to your chosen ERP software vendors and receiving responses, you’ll need to begin the difficult task of comparing the various offers and proposals.
Naturally, the overall cost can be a significant eye-catcher here, but be sure that all stakeholders – including operational teams – review the details of each proposal so that you can guarantee maximum value.
Drawing up pros and cons for each vendor, before passing these through the organization for managers to review, is a great way to whittle down your vendor list. This ensures a fair approach that doesn’t favor certain business functions over others in terms of ERP capabilities and costs.