Seven reasons not to utilize an RFP to select a new accounting or ERP system

By Malcolm Roach on Sep 11, 2017.

When is an RFP "expert" not worth it?

The issue of whether to utilize an RFP (Request for Proposal) when looking for a new computer system arises because most people looking for new computer systems are not systems experts. So how should they source new systems?

In many cases, an RFP is utilized because a systems analyst or integrator recommended that choice.  That expert, though, may have a conflict of interest in that they stand to gain some serious consulting fees if the RFP process is chosen. The expert may not have the industry background to provide real value to the organization seeking the new system and is relying on the following principle. 

“We are the experts. We will employ a process to ensure only the best products and vendors are considered and then walk you through a process to ensure you purchase the system that best suits your requirements.” 

Sound a bit too good to be true? Sometimes.   

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Perhaps now is the time to tell you that as a Senior Manager with KPMG’s Information Systems Group, I used to help people find new systems. Even though we may not have known anything about the seeker’s industry, and sometimes not much about accounting or ERP software, we positioned ourselves as having an expert process to guide people. After leaving that position to found a mid-market ERP implementation partner and spending twenty-five years being on the other side of receiving RFP’s, I can tell you this is a very flawed process, neither producing good value to the seeker nor guaranteeing a match to the best possible system. 

Let’s start by reviewing some of the reasons why you shouldn’t utilize an RFP and then we’ll talk about some alternatives to the RFP process in a future blog. 

1. This is an expensive process 

“Experts” translates to dollars. These people aren’t cheap and almost certainly will cost you more than $200 per hour with no cap. Depending on the size and complexity of your requirement, you could find yourself spending north of $30,000 fairly quickly. Now that number pales in comparison to the cost of selecting a poor system or partner, so this reason alone is not enough reason to reject the RFP process. 

2. The RFP process often substitutes quantity for quality 

This is especially true when the RFP expert does not have experience in either your industry or in the field of ERP software. I have received an RFP without any prior notice from an analyst who was asking thirteen companies to respond.  To me that means someone hasn’t done their homework, which is unacceptable these days when so much is available over the internet. Can you imagine being the client and being expected to review thirteen systems in any level of detail? A real danger in dealing with too many choices is the features or details from different solutions start to blend in your mind. The result can be what happened to us one time when we were selected as the final vendor, only to hear the new client say, “I know feature X was included in your software” and it obviously wasn’t. It didn’t blow up the engagement but it creates some awkward conversations as you try to figure out how to correct the person. 

3. The best vendors may not respond to your request for an RFP 

Completing an RFP is an onerous and expensive exercise. Especially, if the company is one of a large number of vendors responding. It simply isn’t worth it, even if you have a legitimate chance of winning the competition. As a vendor, it may be better to rely on your own marketing and sales efforts to generate leads where you control the sales process rather than jump onto a steep downhill slide where you have little control over what happens.   

A successful vendor may choose not to engage at all even though they could be the best choice for your industry. 

4. It may be the “blind leading the blind” 

Often times, the “expert” is a professionally qualified person of some kind but not usually in the area of ERP selection. They don’t know enough about your industry to ask the right questions and you may risk missing some critical details. The expert may also miss checking out systems well-suited to your industry. 

5. The RFP process is incredibly slow 

There are so many steps to go through, which can turn the selection process into a six month or more exercise. If you need a new system sooner than later, consider alternatives. 

6. The prejudices of the expert may influence the choice 

It sounds a bit silly now but I sometimes would hear comments about “not buying anything from Microsoft”. Ten years ago some experts were strongly in favor of open source systems and their selection choices or RFP questions would reflect that bias. You do need someone who has a balanced view of the future of technology as well as the various choices of systems. 

7. In many cases, there are better choices. 

There are a number of alternatives that are faster, less expensive, and more likely to produce a better match. Watch for our next blog on alternatives to RFP’s due out in a few weeks. 

Don’t throw out the idea of doing an RFP but pick your expert, internal or external, carefully. You don’t want someone learning on the job and make sure they understand your industry.

If you want to skip the RFP process and inquire what a Dynamics NAV equipment rental system can do for your organization, please contact me directly at 877.777.7764 ext. 105.

Read part two of this blog series on utilizing RFPs titled "Steps to finding a new computer system that don't involve an RFP."

Topics: ERP Software, technology trends, business tips

Malcolm Roach is the CEO and President of Open Door Technology, providers of Open Door Rental Software for the equipment rental industry. Malcolm is a CPA with 25+ years of ERP experience and unique insights into the unique needs of equipment rental companies and how technology can address them.