Information technology (IT) is one of the top three categories for competitively advertised bids and request for proposals (RFPs) at federal agencies, according to the 2007 “Keating Report” (Government Product News, January 2007, page 6), which cited statistics from Onvia Inc.’s rolling 12-month report from its database of government contracts for the period November 2005 through November 2006.

When it comes to finance management and human resource software, organizations change software on an average of seven to 10 years. Without a more frequent or regular buying cycle, the ramp-up time to remember or relearn the best practices for purchasing specialized software can be cumbersome and time intensive.

Creating a regimented approach to the RFP process is the key to saving time and resources—and avoiding costly pitfalls. As the procurement expert, you can help your government agencies save a bundle over the life of their software by knowing the right questions to ask vendors and the right parties to have at each stage of the RFP process.

With a step-by-step guideline, you can make well-informed decisions to acquire the software system that meets your agency’s current and forecasted needs. Through the process, you’ll undoubtedly discover new insights for re-evaluating the software or fine-tuning the process for the next purchase or upgrade.

Clearly, there is more than one way to conduct the RFP process, but the key components remain the same to find the most appropriate software solution. The most effective RFPs include:

• Overview of the software selection process.
  
• Business requirements for the software.
  
• Implementation schedule.
  
• Contact information/method if the vendors have questions or need clarification.
  
• Evaluation process and scoring matrix.
  
• Estimated budget.
  

Eight best practices

Before your next software search, incorporate these best practices for a simplified yet powerful RFP process for procuring finance and HR software.

1. Selecting software is a business decision, not an IT issue. Avoid the pitfall of classifying new application software as a technology decision. Instead, recognize the fundamental duties it achieves for your government agency. Work with the staff to analyze their business and administrative processes so you gain a better understanding of what their current software is doing and ways that software can help the agency run more effectively. Now is the time to decide if the agency really needs new software, or to re-engineer its business or administrative process.

When software is the solution, help the agency define what it needs from the software, from managing regular payroll functions to meeting annual federal regulations. Most importantly, specify these requirements accurately in the RFP; this is the baseline criteria used to evaluate each vendor.

Communicate your agency’s software requirements and how you will rate, or weight, each of the responses in the vendors’ proposals. Use percentages to indicate the priority level you place on each criteria. For example, 10 percent on implementation schedule, 30 percent on software solutions, 40 percent on customer service, 10 percent on software costs and so on. Not only will you weed out those who cannot help but, more importantly, you also will help the providers who can help you focus specifically on your priorities and needs.

2. Get input upfront from key people. Create a collaborative environment with the staff of the agency you serve to make sure each department that uses the software is available for input. It is critical for the end users to drive the process, allowing them to maximize the capabilities of the software and identify needs that must be met.

Collecting information upfront will allow you to determine if the software can be supported with the office’s current equipment and to map out a plan with the IT department. You’ll be armed with the information you need for negotiations regarding the provider’s software, installation, training and ongoing support.

Keep in mind that while IT and procurement are integral, the ultimate decision and buy-in should come from those who must use and fully understand the software.

3. Narrow the playing field. Don’t subject yourself to sifting through piles of RFPs. Narrow your search by sending a request for information and/or a request for qualifications, and invite only a handful of prequalified vendors to submit an RFP for your evaluation. With a qualification process, both parties will save valuable time. You’ll have the information you need to make educated decisions, and vendors who are unqualified or too expensive can respectfully decline.

Be clear on the qualifications you expect. Ask vendors to include background information on their companies, implementation methods, key clients/referrals, names and location of vendor staff who would perform the implementation and a price range of what your system likely will cost.

4. Create reasonable expectations. To get the response you deserve from software providers, give them four to eight weeks to respond to your RFP. The advanced notice gives them time to develop a well-prepared solution tailored to the particular requirements you’ve outlined. Additionally, they’ll have time to ask the questions they need to meet or exceed your expectations.

5. Don’t make your budget a mystery. In your RFP, always include your budget, or at least a cost range, so vendors can make knowledgeable recommendations to meet your requirements. They’ll have parameters to help you prioritize the components you need versus those it would be nice to have. You’ll also eliminate proposals from vendors you simply can’t afford.

6. Identify all pricing upfront. Don’t sign on the dotted line before you understand all the costs. Remember that you are evaluating more than the software itself. You also are purchasing the cost of data conversion, installation, training staff, ongoing annual maintenance and any ancillary software your agency needs to run the new application.

Determine the number of visits the vendor will make and the associated costs, such as travel and daily rates, to help you budget efficiently to get up and running. You’ll get the best value when you negotiate all the pricing upfront. Remember that everything is negotiable when you are buying software. Put your key demands on the table as “must-haves.”

7. Determine the vendor’s implementation process for proper planning. Before signing any contracts, discuss time lines and general procedures so you can help the agency plan for installation and training, which will require time commitments from busy staff and other resources such as cash flow.

Most software is customized into modules to help organizations accommodate specific needs for a specific budget, so you don’t have to buy everything at once. It’s more important to allow enough funds for ample training. Poor implementation leads to poor results.

To afford the tools and support you need, make an agreement with the vendor that allows you to incorporate the software modules and training for each over an allotted time. Work with the agency to identify one person who can dedicate the time to manage the implementation and ensure its success.

8. Maximize the relationship with your software supplier. Recommend that your agency’s end users openly communicate with their software provider.

To master the system, they should take advantage of training sessions, user meetings, webinars and other ongoing support services that the provider offers. In the process, they’ll keep current on new upgrades and functionalities and have the opportunity to suggest their own “wish lists” for future software enhancements.

Diligence pays rewards

A well-executed RFP process using these best practices will make your software search manageable and productive, without information overload. You can get the information you need from software vendors and have a means to evaluate what each offers—apples to apples. With a checklist of the essentials you need to discuss with the vendors, you’ll be in the position to prioritize the budget according to the requirements of the government agency, while maximizing the relationship and offerings of the software companies.

About the author

John P. Weidenhammer is founder, president and chief executive officer of Weidenhammer Systems Corp., a diversified information technology firm headquartered in Wyomissing, Pa. An advocate of business-process re-engineering, he has consulted for numerous high-profile national and international organizations and is a frequent speaker at industry events and conferences. To learn more, visit http://www.hammer.net.