For software vendors like Enigma, doing business in the aviation industry – with OEMs, airlines and MROs – almost always means answering RFPs (Requests for Proposal).
The scenario is a familiar one. Business and IT managers decide it is time to check what is the “latest and greatest” out there. They sit down (or pay a consultant to sit down for them) and fill out dozens of Word pages and Excel spreadsheets specifying all the requirements and features they would like – real and imagined. They send the RFP to several companies, usually a mix of loosely connected software vendors and systems integrators. Even though the process of writing the RFP will take them months to complete, they will invariably ask the RFP recipients to submit their responses within a ridiculously short time frame, say two weeks. The process then typically entails on-site workshops with shortlisted vendors, followed by several months of back-and-forth discussions about requirements, scope, commercials, terms and conditions, etc. A year or so down the road, assuming internal budgets are approved the two exhausted parties – customer and vendor – finally sign a contract and kick off the project. By this time, strong imaginative acumen is necessary if one is to find strong resemblances between the original RFP requirements and the project SOW (Scope of Work) document.
Can things be done differently? This article, recently published in Inc. Magazine, suggests a radical approach for vendors who receive an RFP: just say no. The article lists seven reasons why companies should walk away from RFPs, the more salient ones being:
- Diluted differentiation. Because the RFP goes out to vendors whose solutions and value-adds differ widely from each other, the result is an “apples vs. oranges” comparison that is doomed to fail. By responding to the RFP, vendors are thus agreeing to be judged almost exclusively on price.
- Playing by the customer rules. Yes, the customer is king. But does the king always know best? Most of the requirements and features are, at best, “nice to have” and in many cases totally unnecessary. To get to the short list, vendors answer “yes” to essentially all of the requirements, knowing they will find a way down the road to eliminate or modify them.
- Most RFPs are rigged. This might sound a little harsh, but even if they are not rigged, in many cases a vendor close to the customer lent a “helping hand” in shaping the RFP requirements and conditions to favor its own solution. This requires the other “competitors” to jump through hoops just to qualify through to the next stage.
So what is the alternative to answering the RFP? The article suggests sending a short, polite letter to the customer extolling your solution’s value and proposing a direct discussion. Chances are, concludes the article customers will circle back to you after failing to implement the cheap solution they selected in the RFP process.
Can this approach work in the aviation industry? Can software vendors ignore RFPs from OEMs and airlines, placing their faith solely in the merits of their solutions? A colleague of mine pointed out that this approach is wishful thinking when it comes to the conservative aviation industry. Innovation is slow, regulation is binding and procurement rules mandate the issuance of an RFP. For a vendor to win business in this industry, RFPs are the only way in.
I agree. It is indeed almost impossible to do business in the aviation industry without answering RFPs. But after many years of selling into the aviation industry (and countless hours working on RFP answers), I believe vendors should adopt a more sober approach to RFPs. Gone are the days when customers would issue an RFP for an IT system and expect software vendors to jump to attention and do their bidding, costs be damned. In these harsh economic times, when customers expect heavy discounts and concessions from vendors, the “my way or the highway” approach no longer works. Vendors simply cannot afford it. Too many vendors have been driven out of business because they had no choice but to play by the rules dictated by the RFP processes. No more.
A sober approach to answering RFPs means qualifying directly with the relevant stakeholders if this is a real opportunity or just an exercise in knowledge gathering or idea fishing. It means stating clearly in the RFP answer which requirements are nothing but fantasies that will cost a lot to implement but will deliver precious little benefit. It means scheduling more online demos and conference calls and fewer on-site visits. It means not caving in to terms and conditions that guarantee financial loss in project implementation. And, most importantly, it means knowing when to walk away from an RFP and nurture direct relationships instead, thus foregoing the immediate (and probably imaginary) opportunity for a future (and more real) opportunity.
I know; easier said than done. As writing and receiving RFPs remain an inevitable part of aviation maintenance business, I urge you to download our free RFP sample, here: MRO: Requirements for Maintenance, Repair and Overhaul, to make the task less formidable.