How to Write the Optimal Software RFP

An ERP software is an expensive, time-consuming investment. Before committing to one vendor, you should do proper research to find the perfect match for your business. A request for proposal (RFP) can be the perfect tool for that.
This article will explain how to put together an RFP that includes valuable information, and makes the ERP vendor selection process much easier. Before we dive in, let’s take a look at a request for information (RFI) and request for quote (RFQ), and see how they are different from an RFP.

Difference between an RFP, RFI, and RFQ

The world of ERP software is full of abbreviations. It can get confusing. The main difference between the three requests is their relevance during the ERP selection process.

A request for information (RFI) is usually a short document you send out to a long list of vendors to get a general sense of their offerings, experience, and even prices. Typically, an RFI is utilized early in the ERP selection process as a part of market research.

An RFP, which is the focal point of this article, is much more extensive compared to an RFI. An RFP would typically be sent to a short list of vendors that were selected after sending out an RFI. In the RFP, the vendors are provided with more details about the requirements your company has for the ERP system. This is necessary to determine if they are truly capable of delivering a system that fits the needs and overall strategy of your company.

An RFQ is the last stage in the selection process. It includes detailed questions about prices, timelines, terms and conditions etc. In other words, it’s one of the final steps before the decision is made and an ERP vendor is selected. RFP is your tool to communicate to the potential vendors what your requirements are, and for them to tell you how they can meet them.

But it’s also important to understand that an RFP is a promise on the part of the vendors. It is your job to get enough information in order to understand which vendor is most likely to fulfill that promise. That starts with a good list of requirements.

How to put together a list of requirements

A good RFP that makes the vendor selection process easier is based on a well-defined list of requirements for your future ERP system. Having a list of requirements will ensure that you are getting the best combination of price/value/expertise. The bids you will get will no doubt be on a wide range of price but you have to remember that any price savings might be spent later in the project due to a lack of expertise from the vendor’s side.

Start by going back to your core business strategy. Your business objectives and the things that are holding your business back from executing should be the foundation for most of your requirements. Remember that ERP systems are often implemented company-wide. This means an ERP system will have different users all of whom should have a say in what they need from the ERP system. Interview team members from different parts of the business to identify the area of improvements and requirements that are not met today.

Accurately identifying your requirements can be a challenge. If you and your colleagues are unsure what specific requirements should go on your list, try the reverse engineering technique. It entails finding ERP vendors that operate in your industry or area of business to see what capabilities their systems can offer. Don’t forget to read customers reviews to get the full picture. Then you can have a better idea of what features of an ERP system can suit your business.

Avoid open-ended questions or requirements. It will make the rating process more difficult for you, and take more time for the vendor to reply. This is a Lose-lose situation.

The process of identifying necessary requirements can be long but it should be viewed as an investment. Missing requirements that are uncovered during implementations are the major cause of delays and budget overruns in ERP projects.

How to organize your requirements

The way you organize your requirements will depend on the size of your company and the scale of the ERP system you are looking to buy.

If you are working in a small to medium size business, creating a spreadsheet for all the requirements should be enough. This has two purposes. Firstly, an ERP requirements list can get up to 1,000 items. Having your requirements in a spreadsheet will keep them transparent and traceable. Use separate tabs for different functional areas, such as general systems, accounts payable and receivable, reporting etc. Secondly, it will make comparing vendors much easier. You can also implement a scoring system that feels most natural to you to make the process easier.

Another feature your spreadsheet or system should have is a priority labeling. This will allow you to separate “must-have” features from simple “nice-have”. It will also show which vendors are able to deliver on the most important requirements. Rating the requirements, as well as recording who is the owner of each of them (a process can be the owner), increases traceability and makes sure that necessary requirements are not included on the list.

What to include besides requirements

In addition to what the requirements are,  most supplier will want to know a company’s motivation for change. This entails both the reasons for each part of the software but also the overall goals your company would like to achieve by implementing the ERP software. For many vendors, it is important to understand what context your business is working from. The more details you can provide, the better feedback you are going to get.

Additionally, consider making a glossary if you are using terminology that is specific to your industry or company. This will avoid misunderstandings, and save your time from answering follow up questions from vendors.

By Marcus Harris