RFP 2.0
Are You Ready for a S i U d ?Sourcing Upgrade?
December, 2009Paul C. Pinto
Managing PartnerManaging PartnerSylvan VI, Inc.
Barry Diamond, Vice President, Pinstripe
The Vice President of Business Development at Pinstripe, Inc., Barry Diamond is responsible for cultivating, delivering and managing new business. As the fourth executive to join the company, he was instrumental in buildingfourth executive to join the company, he was instrumental in building Pinstripe’s sales program from the ground up. In his ongoing role, Barry leads the company’s commercial group sales strategy, and the design and creation of customized programs, initiatives, materials, and new service offerings.
A driving force in Pinstripe’s success, Barry’s successful new business development efforts result in the hires of more than 15,000 Fortune 1000 employees annually. Barry leverages his expertise in human resources and p y y y g ptalent acquisition, coupled with insights gained from diverse business experience in market research, lead generation, and operations management, to maintain and build relationships across the industry. He is responsible for mining new business through a network of existing andresponsible for mining new business through a network of existing and prospective clients, as well as managing and leveraging relationships with sourcing advisory companies
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Paul Pinto, Managing Partner, Sylvan VI, Inc.
Paul Pinto, is a Managing Partner at Sylvan VI. Inc. where he is responsible for providing a unique set of ‘Outsourcing Advisory 2.0’ services to U.S. and U.K.‐based clients. Throughout his 25‐year career, Mr. Pinto has provided advicebased clients. Throughout his 25 year career, Mr. Pinto has provided advice and council to a variety of fortune 2000 companies who were interested in experiencing the benefits of outsourcing. As part of 30+ Advisory engagements, Mr. Pinto has facilitated the outsourcing of services to vendors l d i C d Chi B il I di d R i d h ilocated in Canada, China, Brazil, India, and Russia, and has setup captive centers in India, Egypt, Malaysia, Mexico, and Slovakia. Mr. Pinto also serves as an Expert Witness in court cases that require the unbiased opinion of an expert in the field of outsourcing, breaches of contract.
Sylvan VI, Inc. is a new‐breed of outsourcing advisory firm that provides expert advice to support our clients in transforming their businesses through the application of innovative delivery models that leverage a new approach
p g,
the application of innovative delivery models, that leverage a new approach to providing services in a “2.0” environment. Our mission is to help our clients align their overall business goals by reducing costs, improving operational efficiencies, and ultimately positioning them to be free to concentrate on
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becoming more competitive in their selected markets.
We offer an array of solutions for our partners looking to us for TALENT IN SIGHT
Pinstripe Talent Spectrum provides our clients with a complete end‐to‐end recruitment partnership solution.
i i ’ j d l ff l d d l i b f d bPinstripe’s Project Focused Talent Spectrum offers our complete end‐to‐end solution but focused by types of positions, location, or specific period of time.
Pinstripe Talent Point allows our clients to select points in the recruitment process to leverage our i d h i h h d iexpertise and support their HR process where they need it most.
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Discussion TopicsDiscussion TopicsThe RFP Process
The Current State RFP Process (RFP 1 0)The Current State RFP Process (RFP 1.0)
The Future State RFP Process (RFP 2.0)
Comparison and ConclusionComparison and Conclusion
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Actors in the Outsourcing Ecosystem
Buyer InfluencerSuppliers of outsourcing related
Consumers of outsourced servicesSuppliers of outsourcing-related
information
AdvisorSupplier of customized outsourcing
ProviderSeller and provider of outsourced pp g
advice and guidancep
services
The election to involve Advisors and/or Influencers in the outsourcing process, requires a certain
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The election to involve Advisors and/or Influencers in the outsourcing process, requires a certain level of investment, while the decision to undertake a Do‐It‐Yourself approach bears a certain level of risk.
Why Upgrade the Vendor Selection Process?
Select the most appropriate vendor within the shortest period of time, in a way that minimizes the cost of the selection process, and builds consensus for the ultimate decision and initiative.
• Increase the speed ith hich the
Faster
• Increase the speed with which the ultimately qualified vendor will be selected
• Gain access to qualified vendors to which you have no prior exposure
BetterGreener
• Administer the process while reducing the amount ofamount of resources being consumed (e.g. paper, toner, mailings …)
CheaperSafer
• Minimize the cost associated with selecting the ultimate vendor
• Build consensus around the ultimate decision and
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the ultimate decision, and lay the groundwork for a successful relationship
Discussion TopicsDiscussion TopicsThe RFP Process
The Current State RFP Process (RFP 1 0)The Current State RFP Process (RFP 1.0)
The Future State RFP Process (RFP 2.0)
Comparison and ConclusionComparison and Conclusion
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High‐level RFI/RFP 1.0 Process
Develop Business CaseBusiness
Case
Process Flow Deliverables
Total Cost of Ownership, Return On Investment, In‐source vs. Outsource decision
Develop RFI
Distribute to Prospective
Long-list of Vendors
Short-list of
High‐level requirements, long‐list of potential vendors (10 – 20)
d h l f d ( )p
Vendors
Develop RFPStatement of
Requirements
VendorsVendor responses, short‐list of prospective vendors (5 ‐7)
Detailed requirements, Service Level Agreements
Evaluate Vendors
Facilitate Due Diligence (bilateral)Proposed Solutions
Evaluation Results
Proposed solutions
Selected Vendor(s)
Negotiate T&Cs with selected Vendor(s)
Results
Contractual Agreement
Typical ScenarioAgreement
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• 9 Vendors favorably responding to RFI• 5 Vendors favorably responding to RFP• 3 Vendors engaged in due diligence• 4 Evaluators reviewing vendor responses
• 1 vendor negotiating contractual Ts&Cs• 6‐9 months of calendar time• 1,500 – 2,100 person‐hours of internal effort• 4,200 – 5,500 sheets of paper produced
• Focused on Math (price) and Physics (fit)• Keeps the vendors at arm’s length• Does not always yield a unanimous decision• Uses spreadsheets, and word processers
Characteristic of RFP 1.0
Area Characteristic
Proven Process The RFP process has been in use for a very long time, and is well‐tested and proven to build consensus for the selection of the ultimate vendor. The process clearly yields actionable results.
Template Deliverables Most organizations have a set of dedicated word processing documents (e.g. RFQs, RFIs, RFPs…), and spreadsheets (e.g. TCO, ROI, vendor weighting and rating…)RFIs, RFPs…), and spreadsheets (e.g. TCO, ROI, vendor weighting and rating…)
Comfortable The majority of decision‐makers have prior experience being involved in selecting a vendor through the use of the traditional RFI/RFP process. As such, they understand their role in the process and are relatively comfortable in providingunderstand their role in the process, and are relatively comfortable in providing their input and feedback through this forum.
Proven Results The majority of large and medium‐sized outsourcing projects have used the RFP process to facilitate the selection of their external service provider. The majority of these relationships have been mutually beneficial and deemed to be successful.
Promotes Competition The process allows for a like‐for‐like comparison of costs between vendors, which
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p p p ,enables the Buyers to aggressively negotiate the cost of services in normalized terms.
RFP 1.0 Improvement Areas
Area Approach Area of Potential Improvement
Faster
The standard process of RFI (long‐list of vendors), to RFP (short‐list of vendors), to vendor evaluations (2‐vendors), to negotiations, to final
This approach, while very thorough, can take to longto complete, and runs a risk associated with the needs of the business changing dramatically during
selection, can take between 6 and 9 months to complete.
needs of the business changing dramatically during the evaluation process.
Better
The RFP process strives to develop detailed requirements, so the vendors have a clear
The more detailed an RFP is, the more prescriptive it becomes, which forces vendors to commit to Better understanding about the scope of services and
the Service Level Agreements.providing services in a manner in which they may not be comfortable.
CheaperThe RFP process is focused on driving the price of services down, as opposed to driving up the value
This approach encourages the vendors to manage the components of scope, resource skills, and
lit i d t ti f th d t d i ip , pp g pof the relationship.
quality, in order to satisfy the mandated pricing requirements.
SaferKeeping the vendors at arms‐length provides for amore competitive bidding process, where apples
While this approach does create a level playing field for the purposes of evaluating vendors, it does not encourage the assessment of the vendors cultural fit
can be compared to apples.encourage the assessment of the vendors cultural fit with the User’s environment.
The RFI/RFP process is produces a significant set of documents (RFPs Responses Evaluations) and
This approach is extremely paper intensive, and does not take advantage of the Internet, online collaboration tools and available content All RFPs
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Greener of documents (RFPs , Responses, Evaluations) and requires time and effort to organize, and manage all of the documentation.
collaboration tools, and available content. All RFPs can be rendered, responded to and evaluated electronically, without ever producing a piece of paper.
Discussion TopicsDiscussion TopicsThe RFP Process
The Current State RFP Process (RFP 1 0)The Current State RFP Process (RFP 1.0)
The Future State RFP Process (RFP 2.0)
Comparison and ConclusionComparison and Conclusion
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High‐level RFP 2.0 Process
D l B i CBusiness
Process Flow Deliverables
Total Cost of Ownership Return On Investment In source vs Outsource decision
Develop RFP
Develop Business Case Case
Short-list of Vendors
Total Cost of Ownership, Return On Investment, In‐source vs. Outsource decision
Detailed requirements, Service Level Agreements, short‐list of potential vendors (2 ‐3)
Evaluate Vendors
Facilitate Due Diligence (bilateral)Statement of
Requirements
Proposed Solutions
Proposed solutions
Selected Vendor(s)
Negotiate T&Cs with selected Vendor(s)Evaluation
Results
Contractual
Agreement
Contractual Agreement
• 3 Vendors favorably responding to RFP
Typical Scenario
• 1 vendor negotiating contractual Ts&Cs • Focused on Chemistry (cultural fit)
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y p g• 2 Vendors engaged in due diligence• 4 Evaluators reviewing vendor responses• Uses SaaS‐based tools
1 vendor negotiating contractual Ts&Cs• 3‐4 months of calendar time• 700 – 950 person‐hours of internal effort• Uses collaboration tool to manage the process
y ( )• Engage the vendors in innovation• Does not always yield a unanimous decision
Characteristic of RFP 2.0
Area Characteristic
The Proven Process The RFP 2.0 process produces the same proven deliverable as the standard RFP process, but does so through the use of an innovate set of tools and techniques.p , g q
Match Making The standard RFI process has been replaced by the use of research data that tracks and monitors the profiles and capabilities of over 10,000 vendors. By matching the Buyer’s specific requirements to those contained in The Outsourcing Institute’s d b bl d l h l f h hl l f d d hdatabase, we are able to develop a short‐list of highly qualified vendors, within a fraction of the standard time.
Use of Tools The RFP 2.0 process uses tools that contain the needed RFP content as a cafeteria‐style menu from which one can select the needed requirements These tools arestyle menu from which one can select the needed requirements. These tools are provided to the User as a service (SaaS‐based), and are focused on facilitating the Users through a very natural workflow.
Electronic The RFP2.0 process is administered through a collaboration environment where theRFP is built, distributed, responded to, and evaluated electronically There is no need to printout an sheets of paper.
Faster Results Proven results are reached within half the time of the standard RFP process, due to
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the removal of the RFI process, and the reduction in administration time associated with managing paper.
The Outsourcing Accelerator
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Buyer Profile Questions
Recruitment Process Outsourcing
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Suggested Path Through the Services
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Suggested Approach to RFI or RFP
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Buyer’s Dashboard of RFI/RFPs
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Assigning Other Buyers
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RFI/RFP Executive Summary
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Scope of Services
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RFI/RFP Service Level Agreements
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Ask an Expert for Advice
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Client References
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Rate Card
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Seller’s Response to Executive Summary
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Seller’s Response to Service Level Agreements
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Evaluator’s Assessment of Vendor Responses
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Match Making Process
Buyer’s Requirement Capabilities of 10,000 Providers
Math
Physics
Math
Physics
Chemistry Chemistry
Short‐list of Highly qualified
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Vendors
Discussion TopicsDiscussion TopicsThe RFP Process
The Current State RFP Process (RFP 1 0)The Current State RFP Process (RFP 1.0)
The Future State RFP Process (RFP 2.0)
Comparison and ConclusionComparison and Conclusion
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Changing Tenets of the RFP Process
RFP 1.0 RFP 2.0
Privileged access to proprietary outsourcing information Open access to artifacts through online communities and libraries
Low‐volume of large outsourcing engagements High‐volume of small outsourcing transactionsLow volume of large outsourcing engagements High volume of small outsourcing transactions
Advisory assistance is required to enabling outsourcing Advisory assistance is desired to support Do‐It‐Yourself‐Outsourcing
Process focused (process for the sake of process) Outcome focused (get to the results)
Due diligence‐based sourcing (driven by Procurement) Accelerated sourcing (driven by the Line of Business)
Stand‐alone tools and point solutions Collaborative, SaaS‐based tools
‘Random‐walk’ approach to understanding the business Surgical focus on outsourcing components of the business
India is the primary destination Considerable capabilities available in multiple geographies
Focused on transitioning work (lift and shift) to offshore Focused on transforming the business
Time & Materials fees, best level of effort Performance‐based fees, paid at the outcome
Pyramid approach to project staffing, with a part‐time Senior Advisor coupled with a number of onsite Junior Consultants
Apply only experienced Senior Advisors (20+years) throughout the entire life‐cycle of the project
d l d l (l l h l b k l h k ll b b
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Traditional vendor selection process (long list, to a short list, to a bake‐off, to a selected vendor)
Facilitated match‐making and collaboration between Buyers and Providers
Are You Ready to Make the Move?Area of Concern Traditional Approach Accelerated Approach
Organizational view of outsourcing
The organization has had limited and/or mixed experience with outsourcing, and is undecided about its true level of added value.
The organization is already a proponent of, and a firm believer in the value associated outsourcing and offshoring.
Business need There is an ongoing effort to reduce costs, and the organization would like to explore outsourcing / offshoringas a potential option.
There is an imperative business need that is driving this initiative (e.g. mandated reduction in headcount). The organization has a strong reason to move fast.
Sponsorship This is a departmental initiative, and is being sponsored at the Manager or Director‐level.
The need is so great, that this initiative is sponsored at the leadership level, and is being championed by a C‐levelthe Manager or Director level. leadership level, and is being championed by a C level Executive.
Involvement of Procurement
The Procurement department has a rigid approach to vendor selection and contracting that must always be followed, as part of any outsourcing event.
The Procurement department understands that this is a different approach to the traditional vendor selection and due diligence process, and is willing to actively participate in the processprocess.
Gathering of Requirements
The organization feels strongly that the requirements must be fully described before vendors become involved in the process.
The organization appreciates the value of collaborating with prospective vendors, as part of shaping the services that will be outsourced.
Approach to Solution The organization fully understands the detailed The organization understands the business objective, and is Development components of the solution that is being sought, and
would like to put it out to bid.interested in accepting innovative solutions from experienced vendors.
Approach to working with Vendors
The organization prefers to keep the vendors at arms length, in order to negotiate the best possible commodity‐based pricing
The prospective vendors will be brought into the process early, in a collaborative mode, in order to develop the final solution and value proposition
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based pricing. and value proposition.
Cost of Advisory Services
The organization has budgeted dollars that are dedicated for use in seeking the advice and guidance of experienced outsourcing advisors.
The outsourcing process is only deemed valuable if something is outsourced, and proven to yield at least a 25% savings in operating costs.
Questions?
Paul C. PintoManaging PartnerSylvan VI, Inc.
ppinto@sylvanvi com
Barry DiamondVice President
Pinstripebdiamond@pinstripetalent com
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[email protected](678) 644.6170
[email protected](262) 754‐5065