Rigged Managed Services RFPs Harm Suppliers and Buyers Alike
As a seller of IT managed services, you may spend hundreds of hours on a quote only to find that you really had no chance because the game was rigged. It can be obvious and heavy handed:
- The RFP ignores your strengths, but itemizes your competitor’s advantages;
- You’re given a week whereas others are given a month to respond;
- Any small error is grounds for disqualification rather than a clarification request.
Buy-side bid rigging can also be more subtle and behind the scenes. Sometimes you won’t even know it’s there. Ultimately it harms both clients and suppliers, so it’s one of the things we’re training each of our client engagement staff to identify and prevent.
Although we’ve seen this practice in all domains, including data centers, bandwidth, and CDN, it is most frequent and intense in managed services and desktop support because of the importance of cultural fit and the difficulty of measuring it in an RFP. It’s also exacerbated by the prejudices that some IT managers feel with regard to offshore providers, which constitute a good portion of quotes in modern RIM or managed desktop project.
Rigged RFP Perpetrators and Victims
There are three audiences we’ve encountered in this situation:
- As a seller, if you suspect that you’re not given a fair shake, it’s hard to escalate or circumvent the process because you’re viewed as biased. So the most common response is to just sandbag the quote process or even no-bid
- As a CFO or CIO, you may suspect your staff is avoiding change that may materially benefit the company but have no way of verifying it
- As a perpetrator of bid rigging, you might want an external authority to rubberstamp the practice for one of two reasons:
- It can seem perfectly ethical and legitimate to rig a bid if you believe the “powers that be” are uninformed and misguided.
- Less appropriate is being part of what economists call the “agency problem” and we informally call “hockey ticket procurement” — using personal favors rather than benefit to the company as the selection criteria
Although I’m happy to recommend a DYI solution in most cases, for the first two situations, it’s critical to get an unbiased 3rd party framework that has sufficient domain fit and credibility. This makes a sourcing advisor useful to both sellers and buyers — providing a neutral ground for evaluation. When it comes to bid rigging that is fundamentally rooted in trust and ability to explain strategic and cultural value, we can also build a model that will demonstrate to upper management the folly of being penny-wise and pound foolish.
For the last case, well, you probably shouldn’t call us. The SPY Index doesn’t have a field for sports event tickets and junkets, and objective evaluation is our reputation.