Tendering is an expensive, complex, and lengthy process. Here's how to make it easier.
It may be a matter of sink or swim for many organisations, but the tender process is often viewed with contempt by IT buyers and sellers alike. For many, it is a labour intensive, tedious but necessary evil which they would relish handing over to a third party.
Outsourcing can happen at both ends of the tender spectrum. As an IT buyer you can outsource the development of new tender processes and tender documents, the analysis and evaluation of responses and presentations, and even the management of the new system. Your IT supplier can outsource market intelligence, tender notification, response and presentation tools, and document management, which if efficiently managed, can also make the buyer's task less laborious.
But at both ends it's a fine line between risking a business process, which if done incorrectly can be expensive and damaging, and employing the services of third party consultancies, software or online tools, to ease the pain of the tender process. But with tender response times dwindling, it might be the only way to stay afloat.
Emerging trend
Over the last 12 months the average tender response lead time has decreased from three to two weeks, and there has been a dramatic increase in the number of tenders, says Peter Morrison-Dowd, group business manager of contract research and OMC (opportunity management consulting) at the TTI Group, a business information specialist with clients in Australia and Asia.
According to Morrison-Dowd, the number of tenders in Australia has increased by 38 percent across all industries whilst the number of companies outsourcing part or all of the process has risen by 60 percent. The increase in demand for tender responses coupled with the fact that there are still only 24 hours in the day, seems to have forced an increase in outsourcing.
Colin Lange, founder of Canberra-based Lange Consulting & Software, has seen the outsourcing of tendering emerge as a definite, but unexpected, trend over the last four years. Lange prepares tenders for mainly government IT buyers, ranging from government agency Centrelink, which has 24,000 staff, 6.3 million customers, and spends millions of dollars on tenders annually, right through to city councils. Clients spend on average around $35,000 for Lange's tendering services and software.
Lange says he fell into offering outsourced tendering solutions by accident. "I had the software in my back pocket, and it was a small client which didn't have the resources to manage its own tender process which suggested I do it," says Lange, who has since worked on over 35 tenders. "I generally handle the once in a blue moon complex tenders worth around $14 to $15 million. It's an eye opening trend even for me, and I'm doing it!" adds Lange.
Lange's offering starts with either tender document templates or custom-made documents, depending on the client's requirements. "Having an existing framework gives clients a bit of a momentum but I consult with the client to make sure the tender document has its fingerprints all over it," says Lange.
Once the tender documents are prepared, Lange steps back during the distribution and receiving of tenders, and busies himself with preparing the evaluation strategy for when the tenders are in. The soft copy tender responses are uploaded onto Lange's evaluation software Apet (all purpose evaluation tool), which is licensed out to the buyer and offers evaluation and risk analysis of the tenders, based on criteria set by the client.
"The client sets the goalposts and identifies which criteria are more important than others," says Lange, who then produces a report of his findings, which he calls a desk analysis. He also assists in evaluating vendor presentations, but does not get involved in contract negotiations.
Unbiased and independent
According to Luke Silcock, principle consultant at PA Consulting, which helps buyers with IT sourcing and tendering decisions, outsourcing the tendering process removes some of the human foibles and vendor tricks that can bias the outcome. For example a supplier might try to get a buyer on side by taking the IT manager round a few laps of the golf course.
"There is often a lack of probity, which results in one or two vendor solutions being considered as vanilla, when a whole scope of alternative solutions could be bypassed," says Silcock. He also warns that many consultancies offer little more than brochureware about vendors, when tendering is about asking the right questions rather than receiving canned answers.
As an IT buyer, Silcock recommends that before you even begin you need to ask yourself: what you are trying to achieve; who your potential suppliers are; what is the scope of products and services they offer; how you are going to measure the performance of the supplier; how that relationship will be managed; and what role the supplier is going to play?
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“The distribution and amendment process is automatic, cutting down on paperwork and time.” --Jon Barnard, Tenders.net |
Lange also claims it can take between 30 and 40 people in a large organisation to evaluate a large tender, possibly taking them away from their normal jobs.
"If people who may have never read a tender before, and have to make sense of an enormous amount of detail, are taken from each department to evaluate the tenders, it can be a huge drain on resources. I provide an opportunity for clients to shield the staff from this labour intensive desk evaluation," says Lange, who claims that in some cases up to 50 person hours a week can be saved through letting a third party company do the legwork.
See through tendering
Another major issue in the tender process is the need to demonstrate transparency and probity, which means that a buyer has to be accountable for the decisions it makes. Outsourcing tendering can only make the process more transparent, says Lange.
In the name of transparency, when evaluating a tender Lange's system produces two things: a numerical figure, or the score; and a reason for the score, or the accountability. "If a respondent scores 10 out of 10 no more needs to be done. If it doesn't, we need to show why it doesn't, to achieve an outcome of transparency and probity," says Lange.
On the left-hand side of Lange's report there will be the numerical score and comments, and on the right hand side there will be a copy of the original tender criteria. "The alternative is to have the original tender criteria stuck in a separate box in a cupboard somewhere, which makes it impossible to properly compare what you've got with what you wanted in the first place," says Lange. "Having the two side by side for direct comparison provides real transparency," he says.
Lange says not many people understand what transparency means. "People often say that it means everything must be documented, which in translation means ‘I don't have a clue'," says Lange. Another blunder, says Lange, is if you list "value for money" as criteria. "Value for money is an overarching principle of all tenders, not evaluation criteria on its own," he says.
And don't get him started on cost. "Why do buyers put cost as criteria? Because again, they don't have a clue," says Lange. "Public money particularly makes people do strange things, and in government it is often mandated that the buyer has to tell the board why they didn't get the cheapest IT supplier," says Lange. "Lots of clients struggle to defend an extra $5, but it's like buying a car for $100 that lasts a week or one for $500 that lasts a year," says Lange.
Software soothes a tender process
In addition to using consultancies, some IT buyers simply use tender automation software. Andre Blom, managing director of US-based Pragmatech Software, a company offering proposal automation and sales effectiveness software, believes that the tender process shouldn't be outsourced.
"Responding to tenders is an integral part of the process of winning business and to me this is a critical issue and I do not really understand why companies would want to outsource it," says Blom. "Some companies outsource their tender process, typically if they do not have the internal resources to prepare the responses or they need specialised presentation design skill. To me this means that that company does not have the business processes and intellectual property in place to effectively respond to tenders," he adds.
Pragmatech's software has been implemented by Australian customer communications company Salmat to streamline the tender process across its two separate business divisions, business process outsourcing (BPO) and customer contact solutions. "Historically, every business unit in every state conducted their own tenders, amounting to hundreds over a year, so we used Pragmatech to shorten lead times and to ensure a consistent message from all departments," says Stephen King, CIO of Salmat.
Without automation, tender documents can take hours or even days to write, and can be a fiddly case of cutting and pasting huge chunks of information from previous tenders and struggling to make it fit the new tender criteria. Tender automation products claim to fill this void and Pragmatech claims its clients generally report a 50 percent reduction in the time it takes to create customised tenders.
Blom also refers to a US survey of Fortune 1000 companies targeting the use of sales effectiveness and proposal automation software, which showed that organisations experience 47 percent time savings, spend 27 percent less time gathering background information, and turn 48 percent of their proposals into closed contracts as compared to only 26 percent of proposals by non-software users.
that was good reading, thankyou