IT Trenches

Jun 24 2009   2:00PM GMT

Tips for negotiating a managed services contract – anatomy of an RFP

Troy Tate Profile: Troy Tate

The first post in this series covered two questions: Where are you? and Where do you want to go?

The second article in the series described the calendar of events or how many shopping days do we have?

This third article in the series will cover the actual RFP (request for proposal) anatomy and contents.

The fourth article will discuss the vendor selection process – planning for the wedding.

Hopefully you are now ready to dive into the RFP itself.

The purpose of a Request for Proposal (RFP) is to provide detailed information for suppliers about requirements discussing an implementation and possible budget limitations. It is focused on addressing a business issue with a solution for the customer organization.

Here are the typical elements of an RFP:

  • Cover letter
  • Project overview and administrative information
  • Technical requirements
  • Management requirements
  • Supplier qualifications and references
  • Supplier’s section
  • Contracts and license agreements
  • Appendixes

Now, more detail about each element.

The cover letter should have most, if not all of the following:

  • Invite the provider to submit a proposal
  • Present your company briefly
  • Briefly describe existing environment
    • What are your pain points and critical success criteria
  • Present the project timeline – goal: on time & on budget
    • Pre-proposal submission meeting: mandatory or voluntary
    • Notice of intent: is vendor interested? Ask them to acknowledge interest.
    • Proposal timeline
      • Submission date
      • Contract award date
  • Thank the provider for time and interest
  • Close the letter with contact and reference information

The project overview and administrative information should briefly cover:

  • Executive summary – high level objectives
  • Information about the management of the RFP
    • Where & when to submit proposal
    • If and when a bidders conference will be held
    • Relevant dates for procurement
    • Requirements for preparing proposals
    • How proposals will be evaluated
    • RFP contact names and addresses
    • Other information as needed

Since we are focusing on IT managed services there must be a technical requirements section in the RFP. The technical requirements section will probably take the most time to produce. The clearer this section the better; show your knowledge!

  • Summary of the problem
    • What is the business application?
    • What is the technical environment?
  • Goals and objectives for the project
    • What are your pain points & how do you expect the vendor to address them?
  • Critical success factors
    • Must have / Need to have / Nice to have
  • Functional specifications: both existing and projected
  • Performance specifications
  • Hardware/Software requirements
  • Communication requirements
  • Reporting requirements

Another section in the RFP will be the management requirements.

  • How will the project be implemented & managed?
  • Internal staffing requirements
  • Site preparation responsibilities
  • Delivery & installation schedule
  • System acceptance test requirements
  • System maintenance requirements
  • System training requirements
  • Documentation/reporting requirements
  • Ongoing care & feeding. “Free puppies are not always free.”

It is important that you know who is trying to get your business. So, the supplier’s qualifications and references section is also important to the outsourcing process. Consider gathering details from the vendor about:

  • Brief history of suppliers firm
  • Installation & maintenance offerings & capabilities
  • Description of the relationship between the supplier and manufacturer & how long has the relationship existed
  • Evidence supplier has technical skills, staff & financial resources to perform the contract
  • Number of currently installed systems
  • Customer references with similar solutions provided by this supplier – get names & numbers

The supplier’s section is where the customer is asking the supplier for additional information.

  • Tell me what you think I have not thought about
  • What else should I know or consider?
  • Pricing document template
    • Clearly formatted to enable better comparisons between vendors
    • Example spreadsheet for categories (one time vs ongoing, fixed vs variable) such as:
      • Hardware – lease, buy
      • Software – OS, App, Reporting
      • Installation – hourly, fixed cost
      • Maintenance – remember if you want annual maintenance
      • Training – onsite, offsite, electronic
      • Documentation – there may be additional charges for some documentation
      • Project management
      • Other integration fees
      • Licensing fees – annual, one-time

The contracts and license agreements section may request specific details about  the following:

  • Purchase agreement
  • Maintenance contract
  • Warranty details
  • Software license agreement
  • Non-disclosure agreements

And finally, the appendixes should include materials that do not really fit into other areas of the RFP. Some of these materials might include:

  • Workflow diagrams
  • Statistical information spreadsheets – to support requirements
  • Communication network drawings – if network involved
  • List of current equipment/software – for integration
  • Company standards
  • Tentative project plan with dates & responsible parties – project work breakdown schedule (WBS)
  • Etc.

That is a lot of information but it will be a great communication tool between you and potential suppliers. It helps your organization ensure the requirements are documented and understood at the beginning of the process.

Stay tuned – more to come!

Thanks for reading and let’s continue to be good network citizens!

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