Outsourcing customers gain innovation with Request for Solution

Several years ago, we launched an innovative new way for an enterprise to contract for services, the Request for Solution (RFS). It was conceived of as a way to harness the service provider community’s best thinking in situations where a client couldn’t or didn’t want to be prescriptive. It was an alternative to traditional RFPs that would still lead buyers and sellers to strong, sustainable relationships with market-correct terms and conditions but leave much more of the solution decisions up to the bidders.

We thought it would be an overnight success. We thought buyer and sellers, in what was a stale outsourcing marketplace, would embrace it. They didn’t. We built it, but nobody came.

Over the years, we helped a few progressive clients with RFS processes, but the vast majority of the deals in the industry continued to happen the old-fashioned way. In the past six months something has changed. I’ve seen an impressive surge in demand for RFS processes. I’d say that close to 50 percent of the new deals we see are using the RFS method, or a hybrid method that combines RFP and RFS. Why is this happening, and why now?

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1. It’s easy to be prescriptive when solutions are standard. Today, more and more buyers want bespoke solutions, so what works for company X may not work for company Y. A key criterion for buyers, whether they admit it or not, is feeling unique, and they want a solution that feels customized for them.
2. The technology changed, so nobody can claim they’ve done it many times before—it is too new. Yesterday’s marketplace was built on more or less thirty years of fairly well-established and consistent commercial and technical practices. They had evolved over time, but they weren’t turned upside down until recently. With the recent advances in cloud, automation, social and mobility, no provider can demonstrate vast experience, so a buyer is more open to letting them experiment and propose their own creative solutions.
3. Companies are more comfortable with outsourcing than they ever have been. Before, buyers wanted everything locked airtight to avoid as much risk as possible. It was hard to believe that anyone could handle any given function better than “us,” so we created parameters, rules, processes and hard lines never to be crossed. Today, there are no rules. Sure, clients expect to be kept compliant with regulations and some standards—but what are the standards for something that has never been done? The RFS serves these clients well. And more and more large companies are willing to enter a true partnership with their providers to innovate. You see it everywhere—the Internet of Things, engineering services, social media.
4. The new technologies are hitting the mainstream, but they are still new. What did we think of the cloud three years ago? Scary. It had all kinds of security, privacy and architecture issues. The cloud today? Table stakes. But that still doesn’t mean it comes in only one flavor. Engaging the creativity of the market can often yield the very best ideas, and the RFS process is designed to allow a buyer to benefit from the ideas of multiple providers, regardless of who they actually select for the work.
5. The value of intellectual property is declining. This is not something I welcome, but I believe it is a reality. Information is readily available to anyone who is sufficiently motivated, and buyers and sellers of IT-enabled services realize that these aren’t the areas to focus on for protecting the secret formula. The RFS encourages sharing of ideas that would have made us all very uncomfortable just a few years ago.

I don’t believe the more traditional RFP will go away. How many large companies still have mainframe? How many have truly adopted a BYOD policy? There will always be a place for the RFP. In fact, as the pendulum swings and we discover and authenticate the best practices of the emerging technologies, we may swing back to the RFP. The service provider industry, through sheer size and exposure, has far more capability to think big thoughts and turn them into actionable ideas than any single one of their clients. Why not harness all that capability? If you want to prescribe your solution, the RFP will always be there to support you. If you want to engage a broad community in developing the solution, the RFS is the way to go. More and more of my clients are going that way.

Source: Cio.com-Outsourcing customers gain innovation with Request for Solution