Are complicated RFPs really necessary? Bob Papworth fi nds that getting the best deal can often be made a lot simpler
At this time of year, as Gaviscon's little white firefighters struggle to gain the upper hand vis-à-vis festive dyspepsia, a smidgeon of seasonal comfort and joy may well be found in the unlikeliest of places - the credit card statement. As the tremulous forefinger traces the lengthy list of December transactions, a glow of self-satisfaction begins to grow - another year and you still haven't bought a Nintendo Wii Fit.
Wii Fit is up there with the six-blade razor and those watches that tell the time to a depth of 60 fathoms - 21st century 'solutions' to problems that don't really exist. Plus the Wii costs a lot of money - Jane Fonda's workout video is under a fiver on eBay, and getting off your backside and jogging round the garden is absolutely free. As an exercise in senseless superfluity, however, all the aforementioned still fall way short of that exemplar of over-priced pointlessness - the corporate travel industry's request for proposal, or RFP.
To be fair, the RFP has come on in leaps and bounds. The previous vast, Argos catalogue-sized slabs of paperwork have given way to more eco-friendly 'eRFPs' - common standard templates have reduced the number of boxes to be ticked, and properly composed and conducted they can still form at least the basis of a legally-binding contract.
To be fairer still, the RFP's dog-eared reputation has little to do with inherent failings: on the one hand, closer and better buyer-supplier relationships have diminished its importance; on the other, an ignorance of, or cavalier disregard for, the facts - on both sides of that buyer-supplier divide - have often rendered its contents suspect. And to be fairest of all, RFP 'requests' seem to have reached a point where the only accurate response is often "it can't be done".
The result of all this is that a mini-industry is rapidly growing up around the business of 'tailoring' the RFP process. Buyers - particularly those who have recently added travel to an otherwise commodity-orientated procurement portfolio - apparently have to be advised not to ask for the Moon, partly because it's not available, and largely because it costs an awful lot of money to say so.
Paul Tilstone, chief executive of the Institute of Travel & Meetings (ITM), says: "I do think there is a tendency to go out to RFP just because that's the automatic thing you have to do after a three-year period, rather than going through a simple benchmarking process and seeing what's missing from the programme you have.
"The first step is not to go automatically to RFP, but to ask your supplier to raise their game - if they cannot focus on your goals, if the gaps cannot be addressed, only then go out to other suppliers." Better the devil you know, it seems ...
Chris Reynolds, senior partner at 3Sixty Sourcing and the ITM's industry practitioner director, argues that the RFP is only part of a process, rather than a process in itself, and it is not necessarily even the first step in that process. Prior knowledge of, and an established relationship with, a potential preferred supplier, should precede any RFP. You may have clinched the deal of the century on London-Jo'burg with South African Airways, but there's not a lot of point in asking them to repeat their generosity on London-Moscow.
In 3Sixty's case, Reynolds says: "Airlines are not a case for an RFP - I know enough about airlines to avoid the bulkier stuff, the 'getting-to-know-you' bit." In other words, the RFP shouldn't be "the 'getting-to-know-you' bit" at all, but rather "the 'getting-to-pin- you-down-to-a-deal' bit".
Equally, he says, there is little point in going to RFP for something like a self-booking tool. They all perform the same basic function, so go straight to an RFQ (request for quotation) and make a value judgment.
Similarly, Tilstone argues that travel management company (TMC) RFPs are unlikely to yield significant financial benefi ts. "In the current economic climate, you might get lower rates than you could have done a year or 18 months ago, but I am not sure buyers would want to fight to reduce the cost of the TMC in the knowledge that they are going to get a worse service for what will only be a short-term gain," he says. "Indeed, I suspect that the present economic environment has probably improved the RFP process. At ITM we have looked at contracts that are coming to an end and made a logical assessment as to where we need to go out to RFP. Where it's doing what we want, we can offer an extension to the contract."
In other words, the present economic climate has probably improved the RFP process in that it has obviated the need for an RFP: if it ain't broke, don't fix it; if it is broke, fix it - just don't throw it out and pay for a new RFP when it's not needed.
"I suspect some people will revert to type [once the recession is over], but others will realise that they don't need to go out to tender every three years - it will have changed some people's practices," Tilstone adds.
One practice that is long overdue as a rethink is that of using the RFP to test the competitive waters. Ever the diplomat, Reynolds merely suggests: "Using the RFP as a benchmarking tool is not the best use of anybody's time."
Tilstone speculates: "I suspect a lot of suppliers have declined RFPs because they're not sure they stand a chance of winning the business."
Presupposing, of course, that there is business to be won, and that this is not just some clumsy way of establishing whether there's a few quid to be saved by switching sides - or threatening to.
The recession has not only changed the savvy buyer's approach to the entire RFP concept, however - it has also changed the RFP itself.
Companies such as Reynolds' 3Sixty Sourcing and the newlyestablished Bouda - headed up by former Capita Business travel bosses Simone Buckley and Clare Murphy - now advise corporates on the best ways to tailor an RFP.
"RFPs are only useful if and when relevant questions are asked, and clear and concise answers are given," says Buckley. "Sometimes RFPs are bastardised documents that have chunks of irrelevant data in them, and that merely detracts from the purpose of the document and confuses the buying process.
"RFPs are costly to create and costly to respond to. To write a good and relevant RFP for travel-related services, the author needs some knowledge of the service or product they are trying to procure. There lies the dilemma - how do you write a good RFP if you aren't knowledgeable about the subject?"
She continues: "I would also advise buyers to use specialist consultants before they embark on the RFP process. Because we see so many contracts, we are able quickly to spot areas where price and service can be improved - and those areas that aren't worth focusing on because the cost of the RFP process is greater than the reduction in price that can be achieved.
"This can help companies spend their time and money in the right areas."
3Sixty's Reynolds sings from the same hymn sheet. "A lot of people have been tarnished by awful RFPs - and there are a lot of them out there. You can have an RFP for £20,000's-worth of business with 250 questions, but, equally, you get ones for £20 millions'-worth with only 25 or 50 questions. A well-written RFP is essential - I will sit down with my client, and understand their requirements, and tailor the RFP according to those requirements."
The trouble, according to Peter Dennis, head of hotel booking agency BSI's ICOR division, is that those requirements - at least in hotel terms - are beyond the scope of all but the most clued-up of hotel companies.
Standard RFPs may not be suited to self-booking tools, or airlines, or TMCs, but they still land thick and fast (with the emphasis on the "thick") on hoteliers' desks. And, increasingly, they are asking the almost-impossible.
Time was, Dennis explains, when all corporate buyers wanted to do was nail down a volume-based deal - a minimum number of room-nights in return for as hefty a discount as possible. Nice and simple, except that many buyers notoriously failed to produce the promised volumes, and then got all shirty when the discounts mysteriously evaporated.
Worse still, buyers who have scrupulously kept their side of the volume bargain have been dismayed to see that hoteliers, confronted by fiscal woes not of their own making, have been offering increasingly-attractive deals - some, many or all of which may or may not undercut the corporate's painstakingly negotiated rate.
Enter the BAR (best available rate). The buyer might say: "I'll give you the volume, if you give me a discount on the best available rate at the time of booking. If you're stupid or desperate enough to sell your rooms at £10 a night for a limited period only, and my bookings fall within that limited period, I'll have my percentage off that £10, thank you very much."
Which is all very well, except that all the £10 rooms have long since sold out - corporate travellers are not noted for booking too far ahead - so the best available rate may well be a couple of grand for the presidential suite, and even with the discount (this is still within policy, mind), that's a budget-buster.
So, via their RFP tomes, buyers are now looking for deals based on volume, at the best available rate, but at a 'ceiling' rate. In this case, the buyer might say: "I'll give you up to, but no more than, £100 a night, even if it is the presidential suite, but if the best available rate drops to £90, I'll have that, and my 10 per cent into the bargain."
As one might imagine, hotel companies aren't exactly falling over backwards to take this new concept on board. The technology, they argue, isn't yet sophisticated enough to handle such complexities.
Oh, yes it is, says Dennis - and he's got a former employer to prove it. In an earlier life, the ICOR boss used to work for Marriott International, and he tends to keep an eye on what they're up to. And what they're up to is called PGOOS (property guest object orientated system).
PGOOS automatically audits the hotel chain's computer reservations system - and thus the individual hotels' property management systems - to see what's happening in the marketplace. Having done so, it then automatically switches corporate clients between fixed 'ceiling' rates and 'discounts off best available rates' to offer the most preferential deal.
Other major chains, says Dennis, don't have this facility, and they even suggest that it is not yet technologically possible - despite the PGOOS's evidence to the contrary.
So, when you're compiling your list of RFP requirements and ask for a PGOOS equivalent, the box is only going to be ticked by one respondent. And, since you now know all about it (if you didn't before), and it is an essential pre-requisite of any hotel deal you're planning, there's no point in going out to an RFP, because you already know the answer.