20 Mar Is Your ITT Worth the Paper it is Written On?
We receive ITTs weekly. They are long and complicated documents that we do our best to answer as fully as possible. But increasingly, we’re questioning whether they deliver what the customer really wants, and if they truly help the customer to get the right software.
What is an ITT?
In our industry, the documents sent out to a potential supplier asking to bid on a project are typically called an ITT – Invitation To Tender. They can also be referred to as Request For Quote (RFQ), Request For Proposal (RFP), or Request For Tender (RFT).
They’re designed to put out the same information and requests to a number of vendor companies, so that the buyer can compare like with like. The idea is that this level-playing-field comparison method is fair to all and makes it easier to choose a supplier.
What’s wrong with ITTs?
The trouble with ITTs is that they encourage the customer to choose the lowest price. If all other aspects are equal – and they should be if the ITT is asking each vendor to quote for the same thing – then the buyer will only be able to distinguish the suppliers on price. And so they often choose the lowest price.
But, we’d argue, with the lowest bid comes the lowest value. And you don’t want poor value when it comes to the important business of the software that runs your company.
And then there’s the cost of preparing the ITT in the first place. Most companies will hire an expensive consultant to write a lengthy and detailed ITT. This can take as many as 20 days and cost as much as £20k.
We often find that ITTs are not very well written. This leads to misunderstanding, complications and disappointment all round. Sometimes the questions are ambiguously phrased, or have imprecise specifications and vague details. This can leave us rather uncertain of the customer’s exact requirements. Yet, having spent so much to prepare a professional ITT, we worry that companies are not getting a good return on that investment.
And all too often, there’s no process that allows us to ask further questions or to clarify anything. The only route that can be taken by us is to complete the ITT. This means that much of the time, our quotations are based on presumptions and conjecture. That’s not fair to the customer.
Although they are often very detailed, paradoxically, it’s often in vital areas that detail is missing in an ITT. As an example, a recent ITT we received asked us to quote for “EDI integration”. But the document didn’t give any other detail. We were left wondering how to quote. Five days? Ten days? All we could do was put a finger in the air and pluck out a figure. That inaccuracy is not giving the potential customer what they want. And even by answering it as best as we could, we felt we were letting down that particular company.
What should replace the ITT?
A kind of qualifications-based selection would be a viable alternative approach. The buyer could look into all the software that is available and have an overview – and perhaps a demonstration – of up to around five different products.
They could then select the products that best fit their needs. At this stage, they would then ask some providers who offer those software solutions to bid. This bid though is more about the qualifications of the vendors and the services provided by them. How qualified are their developers and project managers? Have they implemented similar projects for similar companies? Do they understand the buyer’s industry? What is their support service like? Can they offer training?
Qualifications-based selection means that the buyer will get the right software and the right supplier for their business. It may or may not be the least expensive, but it will be right. Gaining an initial understanding of what the various solutions on offer can do and whether or not they fit the overall requirements of the business is a fundamental starting point.
The qualifications-based selection method allows the most qualified company to be identified through a selection process that’s more akin to a job interview process than to a box-ticking exercise.
When it comes to preparing the ITT, we would recommend that a customer doesn’t need a 100-page document. Instead, there are perhaps eight key questions to be answered:
- What are you currently using?
- What would you like to do that you currently can’t?
- How many people will use the system?
- Are your requirements fairly standard, or do you have any unique needs?
- What are your goals?
- How has your market changed?
- What are your current pain points?
- What is your estimated budget?
As part of the pre-sales process, we offer a detailed scoping service anyway. This pretty much duplicates what might be in an ITT. Our consultants have much more experience than most ITT-writers, and this expertise means that the client gets a quotation that precisely fits their needs. Not one that is largely based on guesswork.
Besides, we will always tell a potential client what solution will fit their needs best – even if it’s not a software product that we offer.
ITTs don’t work
Ultimately, ITTs are near-impossible to answer in a way that provides the customer with the right systems.
Procurement strategies that rely on ITTs like this over-complicate the business decision-making process. Instead, our recommendation encourages buyers to research the market and possible solutions themselves. That way, we feel they will be sure that the time-consuming and costly process of replacing their ERP system returns the best value for their investment.