Automation is everywhere. From paying bills to birthday reminders, the world is becoming increasingly automatic. Moving away from manually managing tedious and time-consuming tasks appeals to almost everyone. So, it’s no surprise that RFP automation is on the rise.
In this article, we’ll start with RFP automation basics and background. Then, we’ll explore how the technology works to make issuing RFPs faster and easier.
- What is RFP automation?
- How do you automate an RFP response?
- Benefits of RFP automation
- RFP automation: Is it a good AI use case?
- RFP automation best practices
- The secret to RFP automation success: Organized content
What is RFP automation?
RFP automation is the use of technology to complete the tasks required to create, manage andQ evaluate an RFP. Strategic sourcing software, sometimes called RFP management software, is the primary way that procurement teams deploy automation.
RFP software leverages the latest advances in artificial intelligence (AI), machine learning and natural language processing to power automation.
Over the past few years, the proposal management industry experienced the same transformative effect with RFP automation.
It’s a collective effort to respond to an RFP, with involvement from multiple departments—sales, marketing, legal, finance, product, compliance, IT—and the list goes on. Often (but not always) there is a dedicated proposal manager directing these projects to keep everyone moving toward the same target…a timely, quality RFP response.
In the olden days, an RFP would come in. The proposal manager would “shred” it and assign questions to an SME—the all too familiar questions the SME had answered many times before on other proposals.
The SME then would spend too much time looking through folders and documents to copy and paste previous responses. There would be little time to ensure quality control.
With RFP automation, an SME only has to answer a question once, and then it’s captured in a content library. The proposal manager can then reference the Content Library to populate the responses with relevant content. SME involvement consists only of oversight, making sure the content is accurate and optimized.
Automation helps teams maximize resources and time being spent on RFPs. Time savings allow team members to return to other high-priority tasks. Some of your most valuable and costly resources are involved in RFP responses. If you respond to 100 RFPs in a year, this really adds up. To calculate your RFP automation cost savings, check out our ROI calculator.
The challenges of a manual RFP response
If you’ve ever responded to a request for proposal (RFP), you know they tend to be about 80% boilerplate content. The remaining 20% is where you really have the freedom to adapt your proposal to a client’s specific needs.
Manual response processes mean valuable time is spent on repetitive tasks, rather than creating valuable, customized content. It’s a challenge that proposal teams are increasingly solving with RFP automation.
A pre-automation RFP response process typically goes like this: An RFP comes in. The proposal manager “shreds” it and assigns questions to an SME—the all too familiar questions the SME has answered many times before on other proposals.
The SME then spends too much time looking through folders and documents to copy and paste previous responses. There’s little time to ensure quality control.
It’s a collective effort to respond to an RFP, with involvement from multiple departments—sales, marketing, legal, finance, product, compliance, IT…. but information and departmental silos keep teams from reaching their fullest revenue-generating potential as a collaborative unit.
The benefits: Why automate an RFP response?
As technology advances, procurement teams benefit from improved efficiency, data insights and better vendor management driven by automation. This evolution reduces procurement costs by streamlining strategic sourcing — and it will make your life easier.
Beyond the value to the organization, RFP automation delivers benefits even at an individual level. Developing cutting-edge automation skills that shift how you spend your time increases your value to the organization. In addition to contributing to career advancement, as you reduce the hours you spend on necessary but tedious tasks, you free time to spend on projects that are more interesting and satisfying.
Automating the RFP response process means less repetitive labor, more time for other high-priority tasks—and the chance to make each RFP you submit pack a bigger punch.
Time and cost savings
Some of your most valuable and costly resources are involved in RFP responses. Automation helps teams maximize resources and time being spent on RFPs, RFIs, RFQs, DDQs, security questionnaires or other requests. If you respond to 100 RFPs in a year, this really adds up. To calculate your RFP automation cost savings, check out our ROI calculator
Saving time through efficient processes turns into extra hours to consider viable business opportunities—perhaps even breaking into new markets.
All this to say nothing of the burden of inefficiency. Delaying automation may actually cost your business more in the long-run.
Productivity and scaled response capacity
Achieving more with RFP automation also means responding to more RFPs. Organizations that use RFP software respond to 43% more RFPs per year, on average. Because the time-savings realized from automation can be re-invested to maintain or improve response quality, imagine what this scenario, based on data from our research, would do to your revenue forecast:
- Prior to RFP automation, let’s say you responded to an average of about 50 RFPs every year.
- Each RFP win equals, on average, $1-3 million.
- Add 43% more responses per year with RFP software.
- At an industry average of 45% win rate, that equates to 22.5 more wins per year.
In this scenario, your revenue forecast from RFPs could increase upwards of $22.5 million to $67.5 million in a year!
Without automation, response management teams can only dream of increasing RFP responses, let alone revenue forecasts. They respond to RFPs in a reactive state, which, of course, is not the way to produce a quality deliverable for the prospect.
RFP automation gives your team the space to establish a proactive process, where technology handles much of the heavy lifting. Team members are brought in to use their strengths to strengthen the content—and the chances of winning the deal.
Consistency and compliance
Much of the inefficiency in the RFP process is traceable to a single core issue — siloed knowledge. Manually issuing RFPs often involves using countless emails, messages, calls and spreadsheets.
Siloed knowledge increases the risk of sending inaccurate RFPs, discouraging vendor participation and investing in the wrong solution. Solving this problem by centralizing knowledge is where RFP management tools really shine.
Improve consistency and compliance by removing the barriers to knowledge. RFP software offers a collaborative environment where your procurement team and RFP contributors can work together on RFP templates, requirements, questions and more.
Data capture and analytics
With automated processes in an RFP software platform, data is more easily captured and analyzed. A long-term benefit of RFP automation is increased visibility into which content is most popular and where you have gaps. Data from these insights will be valuable in your content strategy moving forward.
Many believe that data and analytics are the future of procurement. In fact, a report from Deloitte indicates that 54% of CPOs surveyed believe that analytics will have the highest impact on business in the next two years. Data gathered from automated processes allows businesses to quantify RFP software ROI. Moreover, data empowers cost optimization, process efficiency improvements and more.
If RFP data was more reliably and widely collected it could predict supply chain risks, track trends, better evaluate procurement costs and evaluate vendor performance.
To make sure we built a solution for proper RFP automation, we focused on three aspects:
- Artificial intelligence: (AI) is changing the way we all work, including how proposal management teams “shred” their RFPs. It’s easier to break up relevant sections, auto-identify response content, and assign questions to subject matter experts.
- Integrations: Our integrations keep all team members working in their preferred tools. Salespeople don’t want to leave their CRM to respond to RFPs and they no longer have to. SMEs are unreachable by email, but they’ll engage through Slack.
- Content management: The Content Library is the content management hub — not only for RFPs, but for all company information. Anyone has access to the latest and greatest content, which can be easily searched, selected, and inserted into a variety of business documents … even emails.
Benefits of RFP and proposal automation
Achieving more with RFP automation also means responding to more RFPs. Organizations that use RFP software respond to 43% more RFPs per year, on average. Because the time-savings realized from automation can be re-invested to maintain or improve response quality, imagine what this scenario, based on data from our research, would do to your revenue forecast:
- Prior to RFP automation, let’s say you responded to an average of about 50 RFPs every year.
- Each RFP win equals, on average, $1-3 million.
- Add 43% more responses per year with RFP software.
- At an industry average of 45% win rate, that equates to 22.5 more wins per year.
In this scenario, your revenue forecast from RFPs could increase upwards of $22.5 million to $67.5 million in a year!
Without automation, response management teams can only dream of increasing RFP responses, let alone revenue forecasts. They respond to RFPs in a reactive state, which, of course, is not the way to produce a quality deliverable for the prospect.
Saving time through efficient processes turns into extra hours to consider viable business opportunities—perhaps even breaking into new markets. RFP automation gives your team the space to establish a proactive process, where technology handles much of the heavy lifting. Team members are brought in to use their strengths to strengthen the content—and the chances of winning the deal.
Responding to RFPs: Is it a good AI use case?
Someone has to say it. Doc Brown of Back to the Future fame wasn’t a scientist. He was a tinkerer who built Rube Goldberg machines. Everything from his dog Einstein’s automatic feeder to the Delorean’s lightning rod was an overly complex chain-reaction contraption. Until he invented the Flux Capacitor. That was the real science that made time travel possible.
How is Doc Brown’s evolution from tinkerer to scientist relevant to automation? In the case of responding to RFPs, you cannot simply automate all of the manual tasks that go into a response. If you do that, then you’ll end up with an RFP Rube Goldberg machine that may not be as reliable as the manual processes you’re trying to eliminate. But in situations where AI is appropriate? That’s the real science that makes automation possible.
As promising as AI is, it’s still just plain hard. Projects are costly, unwieldy, and difficult to complete. According to the Wall Street Journal, only 53 percent of AI projects make it into production. And, according to Venture Beat, those that do are only profitable about 60 percent of the time.
RFP automation in action: use cases
Many steps in the RFP process are manual, repetitive and time-consuming. But what can you actually use RFP technology to automate? From reminders and notifications to project management and stakeholder collaboration, there is a wealth of automation opportunities.
Stakeholder requirement gathering
Rather than manually sending emails to each stakeholder involved in the procurement project, gather stakeholder RFP requirements in one place. RFP software centralizes your initial research process and catalogs feedback for future reference.
Save dynamic RFx templates and questions
Stop searching for old RFPs to patch together using copy and paste. Store all of your RFx templates and questions to make creating new projects faster and easier. For example, you can create question groupings for boilerplate background information, data security questions, technical information and more. Or, you can save individual questions and categorize them based on the type of procurement, region, department and so on.
Create vendor profiles or RFIs
If you maintain a catalog of vendor profiles or onboard potential vendors using a request for information (RFI), RFP software enables vendors to update their information proactively. So, you have the latest vendor offerings when you need to send out a new RFP without having to search through your inbox for the info.
Issue RFPs and communicate with vendors
With the click of a button, you can select the right vendors for your RFP, include instructions, issue an RFP, share updates, amend your RFP and send follow up reminders — all without clogging your inbox.
Track vendor proposal progress
Want to know who is responding to your RFP? RFP software empowers you to just check a dashboard rather than manually inquiring with every vendor. With time, you’ll be able to use this information to optimize and shorten your RFP timeline.
RFP automation best practices
For example, within the Responsive platform automation works to:
- Populate the “first pass” of a response for an entire project or section of a project.
- Reference content library records in conjunction with a series of filters and the ranking of metadata
- Use a recommendation algorithm to prioritize and rank the results
- Preview results so users can decide whether or not to use the answers
To do this, AI operations factor in, among other things:
- Access to the Content Library content by user
- Similar questions or alternate questions in the Content Library
- Answer Type/Compatibility
- Content-to-search match percentage
- Star rating (content quality)
- Used count (how often the content is used)
- Last used date
- Last updated date
- Exact word/phrase match
When effectively executed, AI enables RFP automation because the solution has been built by qualified data scientists, extensively tested, based on accurate data models, and designed to scale. It’s also important to note that AI isn’t meant to be used to replace humans; it’s intended to enhance us.
The future outlook for RFP automation
A recent survey of chief procurement officers (CPOs) indicated that adoption of digital procurement tools, like automation, is growing. The study reported that 33 percent of procurement leaders believe technology will help deliver on their objectives and value.
As digital transformation continues to change the way we work, procurement leaders increasingly view automation tools as essential. These tools fulfill the need to optimize processes and dedicate staff time to high-value, strategic initiatives.
