In our modern, fast-paced world, there is hardly any time to spare. Businesses need results and they need them quickly, encouraging the development of new technologies that can keep up. Yet 95% of companies still use RFPs when they need to get the job done – why is this outdated practice still treated like a business staple?
It’s Time To Move On From The RFP
Smart businesses today understand the value of diversifying away from the risk of relying on single one-stop-shop vendors. If the massive change in Forbes Global 2000 companies that outsource IT projects to single vendors is any indication, this shift is a massive trend. In 2008, 42% of these businesses worked with a single vendor for their IT or application needs; in 2018 that number is just 15%.
And yet, for lack of a better method, many businesses find themselves at a loss for reaching new vendors. Whether their project scope is too wide for in-house work, or they just need some extra guidance from creative professionals, it’s easy to turn to Requests for Proposals to scout out the talent. But there’s a glaring problem with using RFPs to do this – the results very rarely elicit the most innovative solution. Companies that use RFPs may ignore innovative startups in favor of “established” vendors, rewarding longevity over skill and flexibility.
How Do Startups Compete With Established Relationships?
When we look at startup funding trends, we are met with stats of explosive growth. In 2017 alone, the global venture capital investments for startups hit over $140 billion, and in the years between 2015 and 2017, the total global startup economy value creation was $2.3 trillion. Any way you spin it, there is some serious firepower behind startups and for good reason. Unfortunately, these talents can go ignored and even outright rejected when forced to participate in requests for proposals.
- Bidders must specify how long they have been in business to even qualify
- Not useful and counterproductive in the age of startup innovation
As a result, RFPs are actually a roadblock to reaching effective new vendors, placing incumbent vendors ahead of other bidders. For new vendors participating in RFPs, they may only have a week to respond, yet incumbent vendors are notified several weeks beforehand. Even then, many startup level vendors find it challenging to work within the confines of typical RFP guidelines and are unable to let their talents show.
- Discourages considerations of more innovative proposals
- Rewards easy solutions over flexibility and talent
- Low value and low innovation
- Long-term costs are higher than originally projected
There’s A New And Better Way
It’ll take more than a simple update to overhaul this antiquated process. Real solutions will come from a total mindset change, improved flexibility, and real ROI projection. The best way to try out a new vendor is by using Proof of Value, or PoV. This process ensures the best value projects are done for the right price and by the right people. Based on information measurement theory, Proof of Value considers the predictability of success or error using measurable, factual information. This replaces the RFP with scalable options using information and performance-based solutions as a new standard.
- Create a full working cloud-based model app
- Share the real app with business users to get an idea of what the full solution will look like
- Use PoV as a first iteration jumping off point to fast-track the project
Accounting for lost time, wasted money, and piles of busy work, RFPs, or requests for proposals just don’t work anymore. A LexisNexis survey revealed nearly 17% of businesses deal with up to 10 RFPs per month, and 15% of businesses have a load of 21 or more. Organizations are relying more on RFPs, but it doesn’t necessarily benefit their firm. Smart businesses can use more nimble vendors and methods to outperform instead.
- Intuitive user experiences
- Clean interfaces
- Deliver against tighter project deadlines
- Reliable, measurable ROI
- Diversify risks away from conventional mega-vendors
It’s Time To Ditch The Outdated RFP
Though many organizations are still using RFPs for solutions, when has following the status quo ever done business any favors? Is your company still using RFPs? Take a look at this infographic for more on how RFPs hurt innovation, stunt professional growth, and ignore real talent, and what you can do to break this cycle by developing better solutions that fit with your business’ needs.
The post How To Modernize Your Business By Ditching The RFP appeared first on Dumb Little Man.
Skelter Labs was founded in 2015 by founded by Ted Cho, the former engineering site director at Google Korea. It started out developing apps and services that made use of AI but then it pivoted to focus fully on AI tech, which it licenses out to companies and corporations that it works with. Now it is eying opportunities in Japan and parts of Southeast Asia — which has a cumulative population of over 600 million — with Vietnam, Thailand and Malaysia specifically mentioned.
The startup raised a $9 million seed round earlier this year, and Golden Gate has added an additional check to that round which came from KakaoBrain — the AI unit of Korean messaging giant Kakao — Kakao’s K-Cute venture arm, Stonebridge Ventures and Lotte Homeshopping, the TV and internet shopping business owned by multi-billion dollar retail giant Lotte.
More specifically, Seoul-based Skelter Labs works on AI in the context of vision and speech, conversation, and context recognition, while it goes after customers in areas that include manufacturing, customer operations, device interaction, and consumer marketing.
The startup doesn’t disclose customers, but it previously told TechCrunch that its vision is to bring its machine learning technology to daily life and schedules. Possible examples of that might be could include “intelligent virtual assistant technology that can be widely applied to various areas including smart speakers, smartphones, home appliances, automobiles and wearable devices.”
Golden Gate is one of Southeast Asia’s longest running tech VC firms. This deal is part of its recently announced third fund, which is $100 million in size.
In a statement, Skelter Labs CEO Cho paid tribute to the VC’s strong footprint in Southeast Asia that he said could open doors for the company. Startups in Golden Gate’s portfolio that might be of particular interest could include mobile listings startup Carousell, auto portal Carro, fashion commerce site Grana and online furnishings seller Hipvan.
Note: The original version of this article has been corrected. Skelter Labs has announced an extension to its previous round not a new round. Apologies for any confusion caused.