This article is the second in a three-part series which will culminate in a new eBook: How to Build the Business Case for Life Insurance Modernization. In this installment we identify pitfalls and opportunities to watch out for in your RFI/RFP process, based on our 25 years’ experience in the industry.
Subscribe below to make sure you don’t miss the next installment in this series or the upcoming How to Build the Business Case for Modernization eBook.
If you missed the first article in the series, catch up with Part 1: Set the stage for success – the business kick-off.
Developing an effective and efficient RFI/RFP process
The RFI/RFP process can be an unexpected landmine for companies preparing to modernize. For many, the desire to gather as much intel about potential solutions and vendors creates an information overload that can not only slow the entire process, but needlessly pull key resources from critical day-to-day activity. In some cases, the glut of information makes decisions less clear and harder to agree on.
Don’t let your RFI/RFP process dictate how you work. In our experience, the most effective companies drive an efficient process that delivers results without wasted effort.
The first article in this series helped identify ways to maximize clarity in the initial kick-off stage of your modernization preparation. The more precise you are about the outcomes you want to achieve, the more effective you’ll be in defining the criteria by which you will evaluate proposals.
You’ll be able to develop more targeted RFIs and RFPs, as well as make better decisions about the responses you receive. The RFI/RFP stage is the beginning of the formal vendor evaluation process.
Before preparing your RFI and RFP, it is often most effective to start with creating the scorecards for each, to determine what information is important to your organization, and how the vendors will be scored on each element.
It can be a weighted scorecard if there are areas that are more important than others. This enables you to rank the importance of the elements that vendors are being evaluated on, and objectively determine alignment with the priorities of your company or project. The scorecard criteria should differ between the RFI and RFP.
Forming an evaluation committee
The creation of an evaluation committee is also critical to success as it engages key stakeholders from across the organization that will be impacted by the PAS modernization, and ensure their particular business needs are covered, and not adversely impacted. They should be involved early in the process, help to review and provide input on the scorecards.
Developing an efficient RFI process
The purpose of an RFI (Request for Information), is that it will give you a good initial take on a vendor’s capabilities and limitations. In preparing an RFI, focus should be on helping you to determine which vendors have the expertise, credibility and technical capabilities to achieve your modernization objectives. An effective RFI should contain no more than 20-25 targeted questions It should be sent out to the top 10 companies you would consider.
After using your RFI scorecard to evaluate the responses, you can meet with the strongest 6 contenders for a capabilities presentation, which gives you the opportunity to get a sense of how each vendor works, their cultural fit with your company, and further probe on any questions that might need clarification. The candidate list is then whittled down to the strongest 5 or 6 companies who will be given the chance to respond to an RFP (Request for Proposal).
Potential Pitfall: Legacy thinking reduces RFI effectiveness
Modern PAS all have rules configuration capabilities. They are configurable to meet whatever needs you have. So, the question is not, “can this system do X or Y out-of-the-box?”
Too many organizations are still thinking about technology through the lens of the limitations of their old legacy systems—and what those systems historically enabled or prevented them from doing.
Bringing that old mindset to the evaluation of a new, modern solution leads to unprofitable questions in an RFI/RFP. We’ve seen questions like, “How many beneficiaries can the system support?”
Which doesn’t have much value when the answer is, “How many do you want to support?” Or, “Does this system support the latest regulation change?” The answer: “It doesn’t support any specific regulation, but can be configured to comply with any, including those that will come later.”
These types of questions have no bearing on the capabilities of modern systems or on which vendor a company will ultimately select. They are a product of the constraints of the decades-old tech you’re trying to replace.
Shortcut to success: Consider today’s needs and those you will have in 3, 5 and 10 years
Instead of focusing on legacy principles like out-of-the-box functionality make your RFIs more targeted by thinking about and defining the unique needs you will have over the next decade.
Choosing a new PAS and vendor should be about how you want to drive business, not how the vendor thought you should operate when they created their platform.
Define your needs and then ask how those requirements can be met through rules configuration. Ask questions that will give you confidence that the vendor you select will also still be able to service your PAS 10 or 20 years down the road.
Avoiding pitfalls to create an effective RFP process
Where the RFI asks potential vendors for more general information about their company and expertise, the RFP is a more focused request for a description of their proposed solution and estimated costs.
Investing time in developing your RFP scorecard at the beginning of the process, helps you and the evaluation committee to stay laser focused on what is important to your organization. During the RFI process, it’s possible that new information will come to light and your RFP scorecard may benefit from updating before beginning this stage.
Effective RFPs should contain 50-100 targeted questions that drill down into how a vendor plans to address and solve your modernization requirements vs a checklist of yes/no questions that don’t add value. These targeted questions should be grouped into categories that directly tie back to the RFP scorecard criteria.
Based on the responses to the RFP and resulting scores, the evaluation committee can objectively determine your organization’s shortlist of two or three companies to invite in for a final proposal presentation with your evaluation committee, senior leaders and decision makers.
Potential Pitfall: RFP responses strangle productivity
In our experience we have seen that, in many cases, ineffective RFPs are sent out that contain anywhere from 500 to more than 3,000 questions. The truth is, that generates too much information, much of it not critical to the decision at hand.
Consider what you are really going to do with all of the information you collect. Do you or your evaluation committee have the time and resources to actually review and score it all? Is it all necessary?
Shortcut to success: Avoid RFP Question overload
Instead of burying everyone under a huge volume of data, the best practice is to create RFPs with fewer, more targeted questions. Keep the RFP short and tightly focused on the information you need to determine if a company can meet the objectives you set out in your initial business kick-off and RFP scorecard.
Many companies find it helpful to partner with an analyst or consulting firm (i.e. Celent, Gartner, Novarica, etc.) who can provide a framework for how to structure the RFI/RFP process and what to ask.
If your organization is light in experience with modernization projects, this kind of partnership can save you time and costs, and ultimately lead to a better decision on who to work with.
Putting it all together
Conducting an RFI/RFP process that is efficient and manageable without taking staff away from core responsibilities is critical to the success of your modernization project.
Creating effective RFI/RFPs means carefully thinking through your requirements, developing evaluation scorecards and identifying the short list of questions which are most likely to reveal the information you need. Companies that don’t let the RFI/RFP process become a project in itself are the most likely to have success in their modernization journey.
Subscribe now to make sure you don’t miss the next installment in this series or the upcoming How to Build the Business Case for Modernization eBook.
Vice-President, Account Management
+1 888 989 3141 ext. 342