The RFP Process is Broken
The request for proposal process (RFP) used by many insurers to evaluate software packages and vendors is broken. While we at Guidewire welcome every RFP, I believe there is a better way for Property/Casualty insurers to assess vendors at this stage of their evaluation process. I acknowledge that I have a credibility gap on this topic as I work in marketing at a vendor, so my objective with this post is to make a substantial case for an alternative approach, based on our experience in working on hundreds of RFP responses and in serving more than 150 insurers that have become Guidewire customers over the last 10 years.
So, what is the current RFP process? Today for core system selections, insurers send RFPs to between 15 and 20 vendors. The list of vendors is often sourced from a third party report which often lists more than 50 vendors in a particular category (e.g. claims, policy administration, billing, etc). The average RFP contains 250 questions, although some contain thousands. The objective is to provide a level playing field to judge whether a vendor’s products, technology, track record, strategy and cost are a fit based on what the insurer wants to achieve in the short and long term. Evaluation teams use RFP responses to develop a short-list of vendors and then proceed with deep-dive reviews including demos, proofs of concept, reference checks, etc. The months-long RFP process has existed for many years, has remained relatively unchanged, and consumes the time of some of your most valuable people. It is broken.
The alternative? Skip the RFP completely. Instead, use your business case, advice from your peers in the industry, and trusted third parties to develop a short-list of three vendors. Then, conduct a series of one week trials in which you meet with each vendor to understand their products; their approach and track record for implementations; their underlying technology and vision; their strategy; to discover what sort of people they are and what drives them. We call it the “Vendor Immersion Process” or VIP for short. It is possible to complete a VIP process in a month, and it can save you hundreds of thousands of dollars and valuable time. A VIP process allows you to develop a deep understanding of the viable alternatives based on your evaluation criteria and ultimately to answer this question: Which company do we trust to make us successful in the years and decades ahead?
I hope you found this post valuable. Please feel free to comment by posting on this blog or emailing me at bdesmond guidewire.commce_href="mailto:bdesmond guidewire.com". To learn more about our point of view on researching and evaluating software vendors please visit this page: http://guidewire-com.guidewire.net/smart-approach-property-and-casualty-core-systems-replacement.