is the rfp dead? contracting for innovation
DESCRIPTION
Outsource RFP is becoming irrelevant. Automation is driving managed service pricing down by 30% or more - best in class today is average (or worse) in a year or two.TRANSCRIPT
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The RFP is dead*
*well, not dead, but is becoming increasingly irrelevant
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The RFP struggles to deliver innovation.
Would the iPhone have succeeded if it started with an RFP?
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An RFP locks in a solution that may become irrelevant.
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An RFP struggles to keep pace with rapid market shifts
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Market prices are declining by 10%-
15% per year
An RFP only delivers savings every 3-5 years.
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Automation is accelerating delivery mechanisms – and reducing cost structures
7.6 Hours
43-minutes
Legacy Operations (2012)
Automated Operations (2014)
2-Year Transformation Delivers • 73% reduction in FTE• 50% cost reduction
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Supplier’s solution works, but there is no incentive to keep pace with market advances
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Negotiating mid-term corrections is difficult without leverage.
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But savvy Suppliers know they are at-risk of losing out-of-market business….
…and are increasingly willing to write-down business before it’s poached by competitors
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Interests are aligned to lower Client Price by lowering Supplier Costs.
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Fine Line has a collaborative process to continuously improve Cost and Price.
People
ProcessTools
Price
• Global Placement• Correct FTE count• Skill level
• Efficient Client inputs• Interfaces• Regulatory requirements
• Market Targets• Project vs BAU• TCO
• E-Bond• Automation• Investments
…both Client and Supplier must be receptive to evolutionary opportunities
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Fine Line uses Carrots versus Sticks to drive behavior with a scorecard tool.
If Supplier declines participation, traditional procurement methods are used (e.g. RFP)
People Process ToolsPrice/ Value
Overall
Vendor A 3 3 2 3
Vendor B 4 2 5 3
Vendor C 4 4 5 4
Vendor D 4 3 4 3
Vendor E 3 2 3 2
Vendor F 2 3 3 2
Silver
Bronze
Silver
Silver
Gold
Bronze
Susceptible to RFP
Fine Line Innovation Scorecard
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The Payoff is significant. Client savings range to over 30% over next 4-years
$325
$242
$200
$225
$250
$275
$300
$325
$350
2013 2014 2015 2016 2017 2018
$M
M
Current Rates
….and the RFP cycle is averted or diminished
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Fine Line’s 16-week Start-Up Timeline
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Gather Data
Develop Targets
Customize Framework
Adaptive Contracting
Ongoing Negotiation & Optimization
4-Month Start-Up Period Collaborative process with Client and Vendor(s)
Lifecycle Management
Decision: Continue/Expand program?
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Sourcing Advisory Business Services• Strategy & Assessment• Business Planning• Business Requirements/RFP• Supplier Negotiations• Supplier Termination Planning• Transition Planning