How (and why) to avoid an AP Automation RFP
At face value, RFPs seem like a prudent path when selecting an AP Automation tool. They formalize decision criteria, engage stakeholders and ideally will secure the best pricing. But there are downsides.
RFPs are expensive
They are time consuming and delay the implementation by 4 to 6 months. That translates into lost opportunity using the system and the productivity and monetary gains that come along with it. Also, RFPs are very expensive to set up and operate. Consider the amount of time users in Finance, IT and Procurement are involved writing specifications, reviewing submissions and scoring responses before finally making a decision. And then, what happens when the selected vendor and the company are unable to come to acceptable terms and conditions in the contracting phase?
There is a better way
A company can get the benefit of an RFP without the significant investment in time and resources and do so in a fraction of the time. Here are the steps.
- Develop a slate of vendors that provide a SaaS-based AP automation solution. Why? SaaS solutions are a service, not a capital expenditure. Most capital expenditures need to follow an RFP process to support the significant upfront capital outlay to license software and procure servers. SaaS offering have no capital outlay.
- Invite the selected vendors to demonstrate their software. Set up back-to-back demonstrations of the software in a condensed time frame…no more than 2 to 3 days apart. This ensures that perceptions remain fresh. Tell the vendors to demonstrate their out-of-the-box functionality, not a customized version of their software. You want to see what they deliver on the first day, not the deliverable after 120 days of customization.
- Ask to see the standard implementation project plan. A good SaaS solution will have implementations down to a science. Roles and responsibilities will be clearly defined between you and the vendor. The best SaaS vendors have a well-defined process and are able to have systems up and running in 30 business days or less, with minimal IT support.
- Request a proposal with pricing based on your annual invoice volume. The best vendors…those with true out-of-the-box functionality…are transparent about their pricing model and will have no difficulty giving you a quote for implementation and usage. It the vendor balks, delays, or asks to engage in extensive requirement discussions, they are not out-of-the-box. While you’re at it, ask them to enclose their standard contract for review.
- Arrange a reference call with an existing customer. Ask to speak to both the end user sponsor as well as the IT lead on the project. IT resources tend to have better insight into the implementation and support effort, and an appreciation of how the solution integrates with the underlying ERP system.
- Pick the right solution for your company. It may sound like I am over-simplifying this. I am not. In our experience, customers that follow the above process know which vendor and which solution is right for them.
The above selection process, from beginning to end, can be completed in 4 to 6 weeks. Compare that to an RFP which takes 4 to 6 months, or 4 times as long!