Ask 10 software executives how they feel about RFPs and you’ll likely get 10 bitter answers back. By and large, software sellers perceive the typical RFP process as disruptive, costly, inequitable…and not a very good way for the buyer to end up with the best software.
That’s why we were so excited when host Philip Ideson invited Software Pricing Partners CEO Chris Mele to be a guest on his popular The Art of Procurement podcast. What a great way to help a global community of over 10,000 procurement professionals improve how they implement the RFP process for their companies’ software initiatives!
“It is imperative for procurement executives to recognize the challenges the RFP process places on sellers, because it has such an impact on achieving their objective—which is to get the right software solution at the right price. And it is equally important for software sellers to recognize how their selling behaviors have given rise to these challenges.”
During the podcast, Chris shares a sales perspective on software pricing and the RFP process. Here are some of the discussion highlights:
- How software pricing morphed quickly from a “what can the market bear?” approach to “what can this customer bear?”, which created distrust within the procurement industry and led to RFPs being used to protect the buyer from being taken advantage of.
- How the RFP process disconnects the buyer from the user, and the seller from the buyer, which fundamentally alters the relationship and can hinder the buying company from getting the best solution to their needs.
- The fundamental difference between buying intellectual property like software, and static product like capital equipment. Intellectual property is always changing, so buyers are investing in the future of the product as much as the present. Reducing the buying process to a transaction reduces the buyer’s ability to influence the product roadmap.
- The key problems that software sellers have with RFPs and how they impact the buyer:
- An opaque and hidden process, including a disrespect of seller’s time, that triggers toxicity in the relationship.
- A lack of feedback for participants who lose that creates an extreme “all or nothing” situation.
- Questions constructed in a way that allows sellers to get away with “living in the gray area”, which can lead to disconnects between what the buyer thought they were getting and what they actually get.
- A process susceptible to manipulation by competitors that can lead some sellers to withdraw from participating, inadvertently increasing the buyer’s risk.
- A process that discourages product innovation, as the question and evaluation structures reward the mean rather than giving credit for non-traditional solutions.
- The importance for buyers to understand—and for sellers to be able to explain and defend—the rationale of the pricing model.
Also, be sure to read How to Utilize Programmatic Pricing when Selling Software to Procurement to learn even more about these topics.
For Part 2 of this series, Be sure to check out Reimagining the B2B Software RFP.