The Request for Proposal (RFP) is a critical early step in procuring Enterprise Business Applications and sets the foundation for vendor engagement and ensures that the selection process is structured, transparent, and aligned with organisational goals.
By inviting vendors or service providers to submit proposals, often through a competitive bidding process, the RFP offers a formal mechanism for organisations to evaluate capabilities, compare offerings, and identify the best-fit partner for implementation.
Key Activities
- Develop and circulate a comprehensive Request for Proposal (RFP) document for Enterprise Business Applications.
- Engage vendors through a formal, competitive bidding process to ensure transparency and objectivity.
- Define business, functional, and technical requirements for accurate vendor evaluation.
- Set evaluation parameters to assess proposals on cost, functionality, scalability, and vendor expertise.
- Ensure alignment of vendor proposals with short- and long-term organisational strategies.
Why RFP Matters
- Brings structure and discipline to the procurement process.
- Clarifies organisational goals, aligning vendor responses to business priorities.
- Identifies potential risks, costs, and benefits upfront.
- Encourages fact-based, requirement-driven vendor proposals.
- Creates a transparent and equitable vendor evaluation framework.
Key Features of an Effective RFP
- Strategic Alignment: Reflects business goals, industry needs, and future scalability.
- Detailed Requirements: Includes functional, technical, compliance, and integration specifications.
- Standardised Response Format: Enables consistent vendor comparison.
- Evaluation Criteria: Defines measurable parameters for objective assessment.
- Structured Selection Process: Promotes fairness and transparency throughout evaluation.
RFP Service Offerings
- Business requirement gathering and documentation.
- Defining functional, technical, and integration requirements.
- Drafting standardised RFP templates and response formats.
- Managing vendor communication and proposal responses.
- Setting up evaluation frameworks and scoring matrices.
Outcomes
- Structured and transparent vendor selection process.
- Standardised RFP documentation and evaluation methodology.
- Alignment of vendor capabilities with business objectives.
- Reduced procurement risks and improved decision-making confidence.
The Total Cost of Ownership (TCO) is the complete cost of the enterprise application over its lifecycle, including both initial and recurring expenses associated with implementing, operating, and maintaining the solution. TCO must balance cost-efficiency with the fulfilment of business requirements. Achieving lower TCO with higher business value requires aligning the solution design and ongoing costs with key business metrics.
Key Factors Influencing TCO
- Company Size & Structure: Larger and more complex organisations typically have higher TCO.
- Number & Profile of Users: More users and varied user roles increase licensing and training costs.
- Depth & Breadth of Functionality Deployed: The broader the application modules deployed (Finance, SCM, HCM, CRM), the higher the costs.
- Customisation Level: Higher customisation increases implementation effort, support complexity, and long-term costs.
- Expected Business Benefits and ROI: TCO must always be viewed against expected ROI and value delivered.
TCO Components
- Software Costs: Licensing, subscriptions, user-based pricing, and add-on modules.
- Implementation & Services: Consulting fees, implementation partner costs, customisation, integration, and testing expenses.
- Infrastructure Costs: Hardware (if on-premise), cloud hosting charges, database costs, networking, and security.
- Resource Costs: Internal staff time, backfill requirements, training, and change management programs.
- Ongoing Support & Upgrades: Annual maintenance contracts, support staff, patches, version upgrades, and security compliance.
- Miscellaneous Costs: Travel, third-party tools, data migration, and unexpected customisation or compliance requirements.
- Cost Benchmarking: Against industry standards.
TCO Optimisation
- ERP Center of Excellence (CoE): Organisations with a CoE consistently manage TCO better by retaining internal skills, reducing dependency on vendors, and ensuring consistent standards.
- Simplification over Complexity: Standardised, out-of-the-box solutions are easier to maintain and cheaper over the long run than heavily customised systems.
- Lifecycle Cost View: Viewing the enterprise application as a long-term investment (5–10 years) ensures realistic budgeting and resource planning.
- Transparency of IT Costs: Making costs visible to business users improves decision-making and resource allocation.
Key Deliverables
- RFP Document Pack (General, Functional, Technical, Integration)
- Vendor Response Matrix (Fit, Workaround, Customisation, 3rd Party, Future)
- TCO Model (Detailed lifecycle cost model)
- Evaluation Dashboard (Side-by-side vendor scoring)
- Final Advisory Report (Risk analysis & recommendations)
