June 29, 2023 12:45 pm

David Wadler

Collaboration is often touted as a key to success in the corporate world. However, research out of UC Irvine and Humboldt University indicates that it can take over 23 minutes for an employee to get back on task after an interruption. The Harvard Business review has written a somewhat more digestible article on the same topic, very subtly titled, “Collaboration Overload Is Sinking Productivity.”

We know you might have read a number of blog posts you read about the importance of collaboration when responding to RFPs — some of which we’ve written — but it's important to realize that the focus is generally on the upside, not the cost. And to be clear, we’re not suggesting that collaboration is inherently bad or should be avoided. Rather, we want to make sure that you have a more holistic view of the costs and the benefits involved.

Teamwork makes the dream work...or is it a nightmare?

RFP collaboration may seem like a no-brainer as responses typically involve a team of people working together to craft a compelling proposal. This team often includes subject matter experts (SMEs) who hold key information that is necessary for the response. However, their involvement in the collaborative work can interfere with their ability to focus on their core responsibilities. In general, the RFP response process is a series of repeatable steps that respondents follow to submit a bid in a prescribed timeframe. More sophisticated companies have outlined key responsibilities and tasks, and build timelines so that all contributors know what’s expected of them and when. However, this process can be costly in terms of time and resources. For example, according to a survey by RFPIO, 42% of RFP responders struggle to find accurate answers quickly and 45% have difficulty collaborating with subject matter experts. This can lead to delays and missed opportunities.

On top of this, the cost of responding to an RFP can vary widely depending on the size and complexity of the proposal. Tony Corrigan published an interesting article with the results of a study his company did to understand the costs to an SMB to respond to an RFP

  • SMB Investment in RFPs worth less than $140,000

For low value contracts, typically those published by state, city or county buyers, 57% of SMBs spend a maximum of $2,100 on their proposal, while 26% spend in the region of $5,300.

  • SMB Investment in RFPs worth more than $140,000

For higher value contracts, typically those published by federal buyers, 48% of suppliers spend up to $5,300, while 50% spend up to $10,000 and beyond.

This is definitely interesting data, but it misses a few key points.

Additional Costs in RFP Collaboration

Mid-market and enterprise companies likely spend more — and probably much more —per RFP.

The number of people who typically work together on RFP responses varies depending on the size and complexity of the project. However, it is not uncommon for teams of 5-10 people to be involved in the RFP process. In some cases, even larger teams may be necessary. For example, a large company that is responding to a complex RFP may need to involve a team of 20 or more people. Of course, as the number of participants increases, so does the cost.

The cost contemplated in the study only applies to time spent working on the proposal.

Remember, it takes a bit more than 23 minutes to undo a context shift after an interruption. While some organizations have really dialed in their RFP response processes, most have not. And those that haven’t generally take a more ad hoc approach, which involves unscheduled and intermittent inclusion of other participants like SMEs. Let’s do some math here and use some numbers for simplicity and convenience. Imagine an employee has a loaded cost of $75/hr. This employee gets tapped on the shoulder 10 times during the RFP response process and spends a total of an hour (in very short bursts) working on the proposal. The cost as it relates to the RFP is $75 ($75/hr x 1 hr). However, the cost to the business in terms of context switching is over $143 (10 interruptions x 23 minutes/interruption x $75/hr). This is truly a hidden cost in the RFP response.

The pricing bands are somewhat arbitrary, but larger organizations are likely looking at larger opportunities.

There is a multiplier effect as businesses get larger. More people are required because the scope of the information is much broader. SMEs might have expertise on a particular topic but not all topics. Stakes are higher with larger opportunities. Not only do companies spend more on the RFP responses themselves, but the hidden costs increase commensurately. Ultimately, the cost to participate can get well into the tens of thousands of dollars.

RFP Collaboration

AI to the Rescue

One way to reduce the costs of RFP collaboration in the response process is to use software the incorporates AI, trained with previous RFPs and other collateral like marketing documents, white papers, and more. An AI-based RFP response platform that has a "semantic understanding" of the training data and RFP, can answer the questionnaire automatically, almost replicating human intelligence. This can dramatically reduce the time and resources required to respond to an RFP. When using a well-trained AI tool, the person or people who are steering the RFP response process effectively have access to SMEs knowledge without having to tap them on the proverbial shoulder. This can lead to faster and more accurate responses while also reducing the burden on SMEs. Almost all the benefits of human RFP collaboration at a fraction of the cost. On top of this, AI is faster. Vendorful’s AI Assistant for RFPs has shown 90%+ decreases in RFP response time.

In conclusion, while collaboration can be beneficial in many situations, it is important to consider the hidden costs when it comes to responding to RFPs. By being aware of these costs and taking steps to minimize them, companies can improve their chances of success while also ensuring that their employees are able to focus on their core responsibilities.

About the Author

David Wadler is a co-founder and Chief Revenue Officer at Vendorful. Prior to Vendorful, he was the General Manager for Rich Media & Cloud at Lexmark Enterprise Software, where he was responsible for strategic direction of Lexmark’s initiatives as they related to rich media and cloud products. He came to Lexmark in 2013 with the acquisition of Twistage, where he was a co-founder and CEO. Prior to Twistage, he worked in a variety of industries and roles while trying to figure out what he was supposed to do with himself. David is a holder of a degree in economics from Brown University and is a resident of New York City.

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