Managing the RFP process must do more than drive down the cost of acquiring goods and services. It should maximize efficiency, promote greater transparency, reduce risk, adhere to compliance requirements, and enable better decision making. This is how procurement can evolve from a narrow focus on cost savings to a broader goal of providing strategic value to the organization. This white paper focuses on how to change the perception of the RFP process from a “cost of doing business” to something more strategic and what steps a procurement leader can take to demonstrate the true value of the competitive bid process.

Transforming the RFP Process from “Cost of Doing Business” to “Strategic Input”

Table of Contents

Procurement as Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Procurement Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Beyond Cost and Risk: Where is the Value in RFP Management? . . . . . . . . . . . . . . . . . . . . . . . . . . 4

What to Look for in an RFP Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Giant Financial Services Organization Takes a Strategic View . . . . . 5

About OpenText™ RFx Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

About OpenText . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

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TRANSFORMING THE RFP PROCESSW H I T E P A P E R

In most large organizations, procuring goods and services requires vendors to bid on the opportunity through a Request for Proposal, or RFP process. From the buyer’s perspective the process is time and effort-intensive, and errors can be costly.

In the private sector, procurement is can be seen as a necessary but costly administrative function. In government and nonprofit sectors, the bid management process is compounded by public scrutiny and heightened expectations from citizens, partners and donors to demonstrate efficiency, effectiveness, and value.

But this view fails to account for the full value that the procurement team provides. So how do you change the perception of procurement from a “cost of doing business” to something more strategic? What steps can you as a procurement leader take to demonstrate the true value the competitive bid process brings to your organization, beyond reduced risk and cost?

Procurement as Strategy

While there are those who see procurement as a purely administrative function, people responsible for purchasing goods and services often view RFPs and other procurement processes as a burden, inefficient and resource-heavy. C-level executives typically see the procurement organization as a “hygiene function” whose budget should be managed at an adequate but minimum level. These views are supported by research from consulting firm A.T. Kearney, which paints a sober but ultimately optimistic picture for the procurement leader:

• Only 10 percent of procurement organizations “have captured the respect, understanding, and mindset” of CFOs and other C-suite executives regarding their value, despite research indicating the impact of procurement can be “massive.”

• The top 25 percent of procurement organizations generate $1.6 million in financial benefits per procurement employee.

• The most successful procurement leaders “are fully automated – with real-time access to data – and are miles ahead in adopting the kinds of technology needed to support contract management and compliance.”

The RFP process offers an opportunity for procurement teams to demonstrate their value. However, without the ability to calculate its benefit to the larger organization, the procurement team will continue to be funded at a level relative to its perceived value, and the business will fail to reap its full potential.

Procurement Compliance

The procurement department also plays a key role in their organization’s corporate compliance program.

Today more than ever, organizations must ensure they spend money wisely and eliminate waste; and in the case of government, protect against abuse of taxpayer dollars. According to the US Office of Management and Budget, more than one out of every six dollars of federal government spending goes to contractors, making it imperative that the bid process result in the best value for the taxpayer.

To support these efforts, smart organizations establish procurement policies and procedures, as well as adhere to relevant regulations and standards for the acquisition process. Legislation such as the Federal Acquisition Regulation in the US, Federal Accountability Act in Canada, and the Public Contracts Directive in Europe mandate among other requirements that business is conducted with integrity, fairness, and openness.

For buyers, the RFP process is often time and effort-intensive, and errors can be costly.

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TRANSFORMING THE RFP PROCESSW H I T E P A P E R

Beyond Cost and Risk: Where is the Value in RFP Management?

The core purpose of procurement is to arrange for the delivery of goods and services at an optimal price and in a timely manner. However, this view doesn’t account for the full value of the function. For example, according to Supply Chain Quarterly, the acquisition cost of goods and services – the “price” on an RFP – accounts for less than 40 percent of the total cost of goods and services procured. Total cost of ownership would also consider risk, storage costs, processing time, inventory cost, shrink, and other factors.

In alignment with the broad procurement function, managing RFP processes must do more than simply drive down the cost of acquiring goods and services. It should address economic and social value, sustainable business practices, greater transparency, innovation, reduced risk, and other favorable outcomes. This is how procurement generally, and the RFP process specifically, can evolve from a narrow focus on cost savings to a broader goal of providing strategic value to the organization.

A comprehensive approach to managing procurement lifecycles and RFP processes, supported by a software application that is fine-tuned to an organization’s unique needs and preferences, can help you achieve goals such as:

• Increased fairness for suppliers along with better fraud detection and prevention

• Improved alignment with the organization’s ethics, sustainability goals, and business practices with respect to suppliers and materials

• Greater transparency for executives, donors, investors, and other stakeholders, industry watchdogs and auditors, suppliers; and, where appropriate, the general public

• Increased efficiency and productivity for participants in the RFP process, including employees, partners, and vendors

• Valuable insight into historical trends regarding decisions and awards

• Compliance with regulatory requirements and corresponding reduction in risk

• Ability to reduce “rogue” spend, in part by simplifying and streamlining the RFP process to enable greater participation throughout the organization

• Automated workflow to ensure steps are followed and completed in a timely manner, along with mobile access to allow stakeholders to participate when away from the office

• More comprehensive data for auditing and reporting purposes and decision making, including insight into the effectiveness of their spend

• Verifiable management of all relevant documents, including stronger protection of private and sensitive information

• Ability to track and gauge supplier performance after a contract has been awarded

What to Look for in a RFP Management Solution

A common complaint about extensive, all-in-one procurement suites is that they can be unwieldy and require knowledge or expertise that the average person doesn’t possess. By contrast, point solutions like RFP management focus on all elements of one key business process and can prioritize on things like usability because they are not trying to embed every possible capability or be all things to all people.

RFP Management System Must-Haves:

• Usability • Integration • Lifecycle Management

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TRANSFORMING THE RFP PROCESSW H I T E P A P E R

No training required

Like most new technology introduced in the workplace, RFP management applications must be intuitive and easy to use or risk lack of user adoption. Given the diverse range of roles of those who will participate throughout the RFP lifecycle - which may include non-technical personnel creating RFPs, executive management viewing reports, as well as vendors and suppliers submitting responses - the software must add value on Day One, and require little to no user training. Participants should see an increase in productivity and efficiency, as well as improved visibility into the process and data, with as little disruption and learning curve as possible.

Integration with large ERP applications

In addition to usability, integration is critical. The RFP application must include the ability to seamlessly access and interact with data stored in other systems, such as ERP applications that contain vendor information. This integration enables the RFP solution to leverage the wealth of procurement data already accumulated and eliminates the possibility of creating separate silos of information.

Central repository to manage procurement records

The RFP creation-to-award lifecycle generates numerous business records that must be managed. A good RFP management solution will have a secure back-end repository enabling the indexing of objects for easy search, full audit trail of actions that have been taken, sophisticated access controls, and automated records management. These features play a large role in demonstrating the integrity of the bid process and protecting important documents per regulatory requirements.

Giant Financial Services Organization Takes a Strategic View

In 2009, a leading international development bank implemented OpenText™ RFx Center as part of a strategic overhaul of its procurement processes. Today, this global financial services organization uses RFx Center to handle approximately $1 billion in procurements every year, managing the lifecycle of competitive procurements from end to end.

The larger purpose, according to the chief of corporate procurement, was to transform the procurement organization “from an administrative function into a strategic business partner.” Specifically, the corporate procurement team took steps to articulate its mission for stakeholders inside and outside the organization, demystify the procurement process, create greater transparency, and increase the amount of spend managed by the procurement team. OpenText RFx Center was vital to each of these objectives.

According to statements from stakeholders within the procurement office at the development bank, the solution had a significant impact:

“Aligning our processes across our organization improved business productivity.”

“Reduced our operational costs by efficiently managing our end-to-end processes.”

“Automating our key processes takes strain off internal IT resources.”

“We are now able to evaluate opportunities and make decisions faster.”

By year three, the customer had experienced a 15 percent increase in business produc-tivity and a 30 percent increase in IT productivity. In addition, the organization had saved more than 2,000 hours in auditing time through better compliance with internal and external requirements, for a cost savings of $270,000 per year. According to a subsequent report by Forrester Research, introducing OpenText RFx Center provided the following three-year risk-adjusted results for this financial services organization:

• 90 percent ROI

• Payback in 12 to 13 months

• $4.4 million three-year benefits

“ We are now able to evaluate opportunities and make decisions faster.”LARGE INTERNATIONAL BANK, AFTER IMPLEMENTING OPENTEXT RFX CENTER

W H I T E P A P E R

www.opentext.com/contactCopyright © 2016 Open Text SA or Open Text ULC (in Canada). All rights reserved. Trademarks owned by Open Text SA or Open Text ULC (in Canada). (03/2016)04533EN

TRANSFORMING THE RFP PROCESS

About OpenText RFx Center

OpenText RFx Center is a point solution targeted at automating and improving the efficiency of bid management – creating, advertising, distributing, evaluating, and awarding opportunities. Customers using OpenText™ Content Server or OpenText™ Process Suite can easily deploy RFx Center on their existing infrastructure.

OpenText RFx Center automates procurement lifecycles to eliminate manual steps, reduce errors and inefficiency, and cut costs:

REVENUE

Provides strategic insights on

operational value, impact, and cost.

Offers visibility into operational metrics.

Maximizes return on spend.

COSTS

Allows you to manage vendor

and supplier relationships, monitor

performance, and identify supplier risks.

Helps to align appropriate vendors

with project requirements.

AUTOMATION

Automates processes and eliminates

reliance on paper and email. Provides a central repository for

documentation or communication between buyers

and suppliers. Enforces schedules.

INSIGHTS

Eliminates offline processes and manual scheduling to provide

better visibility into spend, procurement office performance,

vendor performance, and contract compliance.

SYSTEM

Ensures information flows to contract

management, vendor management, and financial systems. Eliminates manual

work and data re-entry.

RISKS

Provides a level playing field between vendors and reduces

vendor protests, which can cause

delays and additional expense. Supports

consistent execution, engagement,

compliance, and auditability.

For more information on OpenText RFx Center, email sales@opentext.com. or contact us here www.opentext.com/contact

About OpenText

OpenText enables the digital world, creating a better way for organizations to work with information, on premises or in the cloud. For more information about OpenText (NASDAQ: OTEX, TSX: OTC) visit opentext.com.

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