Is the PBX RFP disappearing? Some say yes, we don't need it. That is an observation that has been surfacing in the last few years. When an enterprise decides to replace the legacy TDM based PBX, the enterprise will wonder if the RFP effort is worthwhile. There have been many occasions that enterprises have solicited proposals from their incumbent PBX vendor and infrastructure vendor, which is usually Cisco. If one of these vendors looks acceptable, then no RFP is issued.If the enterprise is required to open the bidding for the PBX replacement, then an RFP will be forthcoming. Other enterprises issue an RFI and then proceed to negotiate with one or more vendors. In some cases, the incumbent VAR is asked to propose a PBX solution, especially if that VAR offers two or more IPT product lines.
Part of the problem of not issuing an RFP is that the enterprise may be assuming that there is significant equality in the products offered. Over the years, Miercom has tested many IPT configurations and drawn a different conclusion. In their 2007 VoiceCon presentation, they concluded that there were six evaluation categories with six different vendors coming out best in each category. These are the conclusions drawn by Miercom:
* Architecture and survivability--3Com * Endpoints--Mitel * Management and Administration--ShoreTel * Features--Avaya * Security--Cisco * Performance--Siemens
Henry Dortmans, in his May-June 2009 column "On The Line" visited the question of issuing an RFP. You can subscribe to Henry's column at http://www.henrydortmans.com/OntheLine.shtml. Here is what he had to say about not issuing an RFP.
Getting Results Without an RFP, Revisited: A formal acquisition process may cost more than it saves
Heresy of the month: Sometimes you're better off not issuing an RFP. Sometimes a Request for Proposal process takes too long and sometimes the costs exceed the real benefits. Sometimes you should just skip it. But only--this is the catch--if you can achieve the same or similar results in another way and if your organization's procurement policies allow it.
An enterprise organization (yes, private sector) asked us to review one of its bigger telecom contracts. They were spending just under a million dollars a year on very basic telecom items. They were happy with the service and support, but the contract was up for renewal and they thought there might be some better deals available.
Normally this would have been a perfect case for an RFP: a simple acquisition of an existing commodity, where price is the only big issue. We could easily have obtained a few quotes from reputable suppliers.
But this company had multiple divisions spread all across the country. Each division had a high degree of autonomy and every one was very protective of its "rights." The last time they changed vendors it took more than eight months to get all the business units to agree on a single supplier and a central contract. We wouldn't have to go through that if the contract were simply renewed. Internal politics would make changing suppliers a time-consuming process.
And this time, we didn't have eight months. The contract was due to expire in three and, more seriously, the new execs wanted quick results to meet new budget constraints.
A Different Approach I suggested a simple and quick approach. The key was to get the benefit of an RFP--competitive pressure for the best contract and best rate-without actually issuing one.
So we went to the existing supplier, and told them the truth:
* that the client was generally pleased with their service; * that they've begun shopping around for a new two-year agreement with fewer commitments and the best possible rates; * that they wanted a simple deal-keep what they have today and no "If you'll buy A then we'll give you a special rate on B."
And the most important point: if they came back with a proposal that met the client's criteria within two weeks, we would advise all to renew the contract. If not, we'd go to a formal bidding process that would cost them a lot and maybe lose them the contract.
Two Rounds The account rep responded with a routine letter, offering a modest rate reduction and no change to the commitments.
So we called back, spoke to the managers, and reiterated the points. If you don't want to deal with an RFP, improve your offer. If you don't want the client's business, say so--we're sure that someone else will. [Remember that you still can have leverage even with an existing vendor].
Result The second version met requirements entirely, including a significant rate cut across the board. Big savings over two years. What's more, the supplier offered to terminate the existing agreement and start the new one right away, so the new rates went into effect early.
Plus: The client's management team spent very little time, and they avoided the costs of moving to a new supplier, modifying admin procedures, etc. etc.
Did they get the lowest possible rate? Probably not. A tough bidding process and a longer term contract could have saved them a little more. But would that saving have justified the extra fees, and the internal cost and effort involved? Almost certainly not.
This wouldn't work in every case-and it definitely won't work if you aren't happy with the existing supplier, or if you're looking for a complex solution, or if you need something new and different, or if you want lots of changes to the products and services you're looking at. (Or if your organization won't allow it).
But when the conditions are right, there can be big payoffs for doing less work.
Heresy of the month: Sometimes you're better off not issuing an RFP. Sometimes a Request for Proposal process takes too long and sometimes the costs exceed the real benefits. Sometimes you should just skip it. But only--this is the catch--if you can achieve the same or similar results in another way and if your organization's procurement policies allow it.
An enterprise organization (yes, private sector) asked us to review one of its bigger telecom contracts. They were spending just under a million dollars a year on very basic telecom items. They were happy with the service and support, but the contract was up for renewal and they thought there might be some better deals available.
Normally this would have been a perfect case for an RFP: a simple acquisition of an existing commodity, where price is the only big issue. We could easily have obtained a few quotes from reputable suppliers.
But this company had multiple divisions spread all across the country. Each division had a high degree of autonomy and every one was very protective of its "rights." The last time they changed vendors it took more than eight months to get all the business units to agree on a single supplier and a central contract. We wouldn't have to go through that if the contract were simply renewed. Internal politics would make changing suppliers a time-consuming process.
And this time, we didn't have eight months. The contract was due to expire in three and, more seriously, the new execs wanted quick results to meet new budget constraints.
A Different Approach I suggested a simple and quick approach. The key was to get the benefit of an RFP--competitive pressure for the best contract and best rate-without actually issuing one.
So we went to the existing supplier, and told them the truth:
* that the client was generally pleased with their service; * that they've begun shopping around for a new two-year agreement with fewer commitments and the best possible rates; * that they wanted a simple deal-keep what they have today and no "If you'll buy A then we'll give you a special rate on B."
And the most important point: if they came back with a proposal that met the client's criteria within two weeks, we would advise all to renew the contract. If not, we'd go to a formal bidding process that would cost them a lot and maybe lose them the contract.
Two Rounds The account rep responded with a routine letter, offering a modest rate reduction and no change to the commitments.
So we called back, spoke to the managers, and reiterated the points. If you don't want to deal with an RFP, improve your offer. If you don't want the client's business, say so--we're sure that someone else will. [Remember that you still can have leverage even with an existing vendor].
Result The second version met requirements entirely, including a significant rate cut across the board. Big savings over two years. What's more, the supplier offered to terminate the existing agreement and start the new one right away, so the new rates went into effect early.
Plus: The client's management team spent very little time, and they avoided the costs of moving to a new supplier, modifying admin procedures, etc. etc.
Did they get the lowest possible rate? Probably not. A tough bidding process and a longer term contract could have saved them a little more. But would that saving have justified the extra fees, and the internal cost and effort involved? Almost certainly not.
This wouldn't work in every case-and it definitely won't work if you aren't happy with the existing supplier, or if you're looking for a complex solution, or if you need something new and different, or if you want lots of changes to the products and services you're looking at. (Or if your organization won't allow it).
But when the conditions are right, there can be big payoffs for doing less work.
I thought this example is worth sharing. If however, the enterprise is contemplating the move to Unified Communications, I strongly recommend that an RFP be issued. First, UC vendors are not the same in the offerings and the architecture to support those offerings. Secondly, the RFP process will discipline the enterprise to articulate their requirements before looking for a UC solution. I have often met IT staff in the same organization that defined UC in different perspectives and levels of importance.
