An RFP, or request for proposal, is a document created as part of the procurement process, wherein an organization (i.e., a buyer) identifies a need for a product or service and solicits proposals from suppliers and/or vendors (i.e., a seller), asking them to offer solutions and submit a competitive bid for the job.
Vendors or suppliers then create and submit proposals (i.e., bids), in which they outline their ability to deliver on the buyer’s business requirement, with the goal of winning the bid and turning the proposal into a contract and the requester into a client.
We’ve created this guide to help you better understand the RFP software market. Whether you’re looking to invest in RFP software for the first time or looking to upgrade your current system, this guide can help you make a more informed purchase decision.
Here’s what we’ll cover:
What is RFP software?
RFP software, also known as RFP management software, helps buyers and sellers manage each side of the bidding and procurement processes:
- Buyers can streamline and automate the generation of RFPs.
- Sellers can quickly receive and respond to RFPs with professional and detailed proposals, ultimately helping them win more bids.
RFP software tools act as a centralized workspace, helping increase the transparency of the workflows involved with issuing and responding to RFPs and facilitating collaboration among users.
Another key function of these systems is centered around making critical information more easily accessible:
- Teams creating RFPs can connect with and share key information with internal and external stakeholders.
- Teams responding to vendor proposals can gather appropriate information from across departments into one cohesive proposal.
Common features of RFP software
Look for the following functionality as you evaluate RFP tools:
Maintain a catalog of important contacts within your industry.
- If you are a buyer, this can include the contact info and profiles of suppliers or vendors you have done business with in the past or with whom you may want to create a partnership in the future.
- If you are a seller, this can include the contact info and profiles of potential customers as well as current clients.
||Create and assign tasks to resources. Schedule start and due dates, and track progress to completion. Set up alerts to notify users when assignments are nearing their due date or are overdue.
||Assists users in performing stakeholder analysis to capture, document, and prioritize requirements during the initial planning stages, then managing change and tracking communications regarding those changes over the project lifecycle.
||Define structured workflows for various business processes via rule-based decision-making, to better manage and control the flow of work through the system. Users know where a work item has been and where it needs to go next, which increases transparency and accountability. Assists with performance monitoring and process evaluation, so business units can identify inefficiencies and strive for continuous improvement.
||Create and edit documents, share with other users, and track changes and different versions. Often includes the ability to create and save templates, set up custom fields, and add approval workflows and electronic signature. Buyers need document management for RFP creation, and sellers need this capability for generating proposals.
||Create and manage digital content. Maintain a centralized repository of past RFIs and RFPs (for sellers, this would include proposals in response to the RFPs), allowing stakeholders to easily access important information and potentially even reuse documentation for future needs. Organize content using tags, categories, filters, and attributes, making your content management system easily searchable.
||Once a job has been awarded, both buyers and sellers need to track and manage the contract throughout the project lifecycle. This includes authoring the contract, getting approvals, tracking requirements and obligations, and then maintaining compliance with the contract commitments during project execution.
Additionally, RFP response systems may include applications for, or integrations with, your sales pipeline management and customer relationship management (CRM) tools.
Both RFP creation and response systems may include applications for, or integrations with, project management tools, so when vendor proposals are awarded, the job can be transferred appropriately.
Key purchase considerations
It’s important to note that "RFP software" is an umbrella term that refers to the tools used on both sides of the RFP creation and selection process:
- Those used to issue an RFP (on the buyer’s side)
- The tools used to respond to an RFP (on the seller’s side)
While these processes are absolutely related, they are on opposite sides of the transaction process, and it’s not common to find them together in one integrated suite.
In fact, you’re more likely to find proposal generation tools tied with your sales and CRM systems than with those used to issue RFPs.
As such, it’s important to understand the differences and similarities between each process and tool set to ensure you’re choosing the right RFP software for your business:
Issuing an RFP: Businesses issuing an RFP are seeking proposals from a potential vendor or supplier for a product or service that will help them solve a specific problem and/or achieve a specific business objective.
RFPs often come after an exploratory request for information (RFI) and before soliciting an invitation to tender (ITT) and request for quote (RFQ) from a shortlist of approved suppliers or vendors.
The core steps within the RFP creation process include:
Creating an RFP in DirectRFP (Source)
- Identify a business need.
- Assemble an RFP team (responsible for internal and external stakeholder management).
- Gather requirements.
- Draft the RFP.
- Submit the RFP, and invite suppliers/vendors to bid.
- Review and compare suppliers/vendors and their proposals.
- Enter into negotiations.
- Award the contract.
- The contract gets transferred into a project.
Responding to an RFP: Suppliers or vendors responding to an RFP are being asked to deliver a product or service to help the buyer achieve a strategic business objective. As such, they need to propose a solution that will outshine their competitors and help them win the job.
To do so, they need to create a detailed, professional proposal that meets the requirements laid out by the buyer. But first, they need to receive and review the RFP before deciding whether or not it is a worthwhile investment to pursue the sale.
As such, it’s important that suppliers and vendors actively take steps to identify the prospective customers in their space and let them know they are open to receiving RFP requests. They should also create a standard RFP template that they can modify according to the request at hand.
The core steps within the RFP response and proposal generation process include:
Responding to an RFP in Expedience (Source)
- Receive the RFP.
- Vet the RFP request, and evaluate the potential ROI to see if it makes a good business case.
- Identify internal stakeholders to contribute to the proposal (and if you win the bid, the subsequent project).
- Gather the required materials (may involve opening a dialog with the buyer’s procurements team and asking additional questions).
- Create the proposal.
- Submit the proposal for review.
- Enter into negotiations.
- Win the contract.
- The contract gets transferred into a project.
Note: The applications selected in this article are examples to show a feature in context and aren't intended as endorsements or recommendations. They have been obtained from sources believed to be reliable at the time of publication.