How to Write an Effective RFP for a Vendor Management Solution

I love writing RFPs!

Said no one ever.

And yet, the Request for Proposal (RFP) remains the best approach for selecting enterprise software.

If you’ve been tasked with finding a new vendor management system (VMS) for your organization, it’s time to embrace the challenge—and maybe get a little help.

Why Do I Have to Write an RFP?

The purpose of an RFP is to document your requirements so you can find a vendor management solution that best suits your contingent workforce program.

A carefully written, well-organized RFP is the key to a sound technology decision. It creates an opportunity for potential vendors to present their capabilities and vie for your business. And enables you to compare vendor management solutions more easily and helps ensure your selection process is fair and your final decision is objective.

It also enables vendors who can’t meet your needs to self-select out of the process, which saves time for everyone involved. RFPs give the remaining vendors clear instructions for their proposals.

The Surprising Benefits of Writing an RFP for Vendor Management Technology

Done well, the exercise of creating an RFP can work wonders.

How, you ask?

Well, before your selection team can document requirements for sourcing workflows, compliance management, data integrations, or business intelligence reports, they’ll have to talk to a lot of people.

This includes procurement, HR, hiring managers, IT, and executive stakeholders.

Every stakeholder in the sourcing, onboarding, and offboarding process should contribute to the requirements-gathering phase.

And that alone will spark collaboration, understanding, and perhaps even enlightenment as to how hard your contingent workforce program team works.

More on this: Unify Your Workforce: 5 Tips to Help HR and Procurement Get Aligned

Outline of an Effective RFP

So what should you include in an RFP for a vendor management system?

Here’s an outline that captures everything you need:

  • Overview of your organization and need for vendor management software
  • IT and system specifications
  • Required or desired system features
  • Information required from vendors
    • Company overview, including financial viability, market share, strategic partnerships, industry leadership, number of employees, and years in the business
    • Description of the solution, including standard and optional features, functions, and modules
    • Customer base and retention rate
    • Representative clients within your industry
    • Integration capabilities with your HCM, HRIS, or other systems
    • Support model
    • Technology security and data protection
    • Implementation approach and timeline
  • Instructions and deadline for submitting proposals
  • Selection criteria
  • Point of contact for questions.

Cost Proposals and Vendor-Funded Models for VMS Technology

Often, companies request that bidding vendors provide cost information separately, to help the selection committee focus on technical capabilities. To help ensure that proposed costs are comparable across vendors, include in your RFP a template for bidders to use.

It’s important to know that, unlike with other business SaaS solutions, your organization will likely be able to get a robust VMS without incurring licensing or renewal fees.

This is because vendor management systems typically aren’t funded by the companies who use them to manage their contingent labor. Rather, the VMS provider will charge their staffing vendors a percentage of spend for the labor they source on your behalf.

This is what’s known as a vendor-funded pricing model and it applies whether you manage your program in house, through an MSP, or under a hybrid or shared managed services (SMS) model.

Not sure which model is right for you? Book a 20-minute consultation and get expert help.

As your organization considers how to manage its contingent workforce, comparing total costs is critical. So have your candidate VMS providers forecast costs based on projected growth scenarios for your contingent labor force.

How to Manage Proposals from Candidate VMS Providers

VMS providers will respond to your RFP according to the schedule you define, which should include a period during which bidders can ask clarifying questions to ensure their proposals are responsive to your company’s needs.

Share all proposals with your full selection team and give them time to thoroughly review each one. If you can, eliminate any solutions at this stage based on ability to meet your specifications.

Finding the Right VMS is Worth the Effort

No one ever said writing a good RFP was easy.

But the time you spend compiling your requirements and assembling a clear set of instructions for VMS providers is worth the effort.

Not only will you streamline the selection process downstream, but you’ll also ensure that the solution you choose will suit your unique processes and workflows for sourcing, onboarding, and offboarding.

And that’s the key to closing skills gaps, ensuring business continuity, and driving productivity through sourcing and engagement of skilled contingent talent.

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