RFPs are Evil
Right now, I don't respond to RFPs (Request for Proposals). My future plans are to only respond to government or NGO RFPs, if they come close to matching my future product offerings.
A RFP (Request For Proposal) is a an invitation to potential suppliers to submit a proposal for a specific commodity or service. RFPs can be simple or incredibly complex. Here is a well written example of RFP from the University of Hawaii to purchase computers.
Generating a proposal in response to an RFP is sometimes a very time consuming and laborious process, and it is often a smaller part of a more time consuming sales process. It is common for RFPs to ask for corporate information, financial information, qualifications, description of your products or services, project stages, milestones, cost and pricing. For web design jobs they may or may not include detailed specifications.
The most common complaint I hear about RFPs (from freelancers) goes something like, "... after putting together a brilliant proposal complete with screen shots and mock ups, we didn't get the job because we were too expensive. But six months they rolled out their new web site -- just as we proposed right down the fonts and colors! The stole our specification and outsourced it to India!"
I am acutely aware that many times RFPs (Request For Proposal) can be used as tools to get inexperienced web designers to write detailed specifications for free. However, Alexander Muse (Texas Startup Blog) highlighted a recent experience with RFPs (Avoid Undue Diligence like the Plague) which not only wasted his time but may have damaged his business:
Due diligence is the verification of information given to an investor by a startup in contemplation of a potential investment. Undue diligence, the solicitation of information for competitive reasons, is perhaps the most unsavory you can commit against a startup. Not only are you wasting the company’s time, you are getting their hopes up and potentially altering their behavior toward REAL investors.
Real investors, i.e. ones that you have heard of, rarely conduct undue diligence or if they do they have someone else do it for them. You are more likely to fall victim to the services of a competitive intelligence expert like Dan Sklaire from Systems Research Corporation in New York City. Experts like Dan are hired guns engaged by your competitors to learn about your a) business model, b) pricing model, c) service offerings, d) your competitive advantages and e) anything else he can uncover.
Basically, Dan Sklaire will send you a big RFP and/or pretend to be a large customer. You think you are about to score a big sale and work to In reality, he is simply trying to get as much information as possible from you to give to your competitor:
The most common way a competitive intelligence professional like Dan Sklaire begins to understand your business is through the creation of an RFP (request for proposal). Of course if you respond to RFPs and you are not in a commodity business you deserve a little undue diligence. One of our companies recently responded to one of Dan’s RFPs with detailed responses and specific pricing. I saw the deal in a weekly funnel report and asked about it. The salesperson indicated that he had NEVER met Dan, but that he ran a marketing company that was relocating to Dallas and would need a new IT solution. I couldn’t believe we responded to his RFP, but the salesperson insisted that we were looking good. He had a meeting with Dan in a couple of weeks and hoped to close the deal at that time. Needless to say we didn’t get the deal. In fact, our salesperson allowed Dan to record their conversation where we went into great detail answering questions Dan and his client had about our proposal. When the salesperson got back to the office I asked for the name of the client and his contact and I did a little research. It took me five minutes to figure out that we were being played.
Labels: Business, Consulting, Startup


