Love me tender
Supply pain management
Lisa Simmons, Technology & Business magazine - 21 October 2003.
Tendering is an expensive, complex, and lengthy process. Here's how to make it easier
ZDNet Australia: News: Business
On the flip side from what buyers can do to alleviate the tender headache, suppliers can also outsource their responses, which means that in theory instead of having to wade through thousands of unsuitable or poorly managed proposals, buyers receive proposals from relevant, capable suppliers in a timely and digestible manner.
Morrison-Dowd highlights two kinds of companies to which an IT supplier can outsource its tender responses. The first are tender notification companies, which he says use broad category search criteria to direct tenders to suppliers. "For instance an office supplies company would receive notification of every tender which had the words 'office' and 'supplies' in it, which means it will receive a lot of tenders it can't do," says Morrison-Dowd.
Morrison-Dowd says there are three things a supplier needs to bring to the tender process--capability, credibility, and value add. If the client responds to the wrong tender, which he says they invariably do because it is difficult to turn down business, they lack these three criteria and therefore they fail. They will then blame the tendering process for not working for them, says Morrison-Dowd, and as a buyer, you receive 100 tenders, of which 10 might be relevant, making your workload heavier.
"From a consulting perspective, companies should avoid any service that operates on keyword search and broad industry categories, as our experience shows that this can only lead to inaccurate information and companies responding to tenders they cannot win. Ninety percent of companies fail during the contracts process because they respond to contracts that they do not have the capacity to win," says Morrison.
Morrison claims TTI group uses high-filtering software to seek suitable tenders for clients, producing a 98 percent match. At the outset it captures market information and assists in creating a tender strategy for an IT supplier, in terms of its main industry (eg IT), its market system (eg hardware), its capabilities (eg its areas of expertise) and its critical success factors (eg what sets it apart from the competition). It then scours the market for tenders using its in-house filtering software program and produces contract reports matched against the company profile and ability to win. The report is then generated and dispatched to the vendor. The system continues to track the current and planned contracts and dispatch them to the vendor online.
Other features include a contract closing alert function, multi-delivery points (so that more than one person can receive tender notices), and an archive database of closed contracts for research purposes.
Caught in the tendering web
Perhaps the biggest overhaul of the tendering process is occurring-- where else?-- but online. Morrison-Dowd claims that within two to three years, 90 per cent of all tenders will be conducted online.
Tenders.net provides an online platform for buyers and suppliers to put out and respond to tenders. The buyer advertises on the Tenders.net network, where the tender can be made public or restricted to certain suppliers. "Buyers don't have to advertise the tender in the normal way or provide physical documentation, and the distribution and amendment process is automatic, cutting down on paperwork and time," says Jon Barnard, managing director of Tenders.net.
The buyer pays nothing for a public tender, and pays a fee if the tender is restricted. Suppliers signed up to the service, of which Barnard says there are thousands, pay a fee to be advised on open or public tenders which meet their criteria.
But this is a new trend which still has some fundamental flaws, warns Morrison-Dowd. "Most of the current e-lodgement facilities are based on a format where suppliers answer set questions, which doesn't allow any form of individuality," says Morrison-Dowd. "Tendering is a sales situation and a supplier has to have a point of difference to grab attention," he adds.
The other problem with online tendering at the moment is that it doesn't allow the respondent to include many graphics. "For example, we would suggest that a waste management company responding to a tender for an education department should include a picture of kids running up green hills with blue skies, showing the final outcome, because in a tender document organisations ultimately buy the outcome," says Morrison-Dowd.
Morrison-Dowd says state government and some federal government departments are the only ones tendering online at the moment. Peter Henry, the tender coordinator for the Open Interchange Consortium (OIC), a Sydney-based group which encourages the development of electronic technologies to automate business processes, explains that this is because the federal government is committed to all federal, state, and local government agencies providing tenders online. Henry is also concerned that SMEs are suffering from slow download times that are associated with online tenders.
But Morrison-Dowd claims that by December, TTI Group will have got the technology mastered. It is developing an e-lodgement portal, due for launch at the end of the year, which will allow suppliers to submit individualised responses, complete with security measures including time and date stamps to ensure noone submits responses after deadline.
Firm foundations
Whilst online tendering can streamline the adjudication process it does not reduce the time and effort required to prepare responses, warns Pragmatech's Blom. "The challenge is to reduce the overall time it takes to write and publish the tender as well as to significantly reduce the effort required to respond," he says.
On or offline, Lange say there are four pillars which should hold up the tender process. The first is governance, and knowing where the parameters lie. The second, he says, is the stakeholders in the tender, and looking outside the corporate sphere to the larger picture of who is affected by the tender. The third pillar is structured content. "The tender has got to be spot on" says Lange. Finally there is the technology to facilitate the process and evaluate the tender.
"Lots of our clients say they use our software because what most others offer they can just as easily do themselves in a spreadsheet. Its one thing to have clever technology but its got to add value and not just duplicate a manual process," says Lange.
And at the heart of decisions about tendering must be the tender itself. "If the tender process is represented as a human being the arms might be the evaluation tools, the brain might be the stakeholders but at the heart will be the tender," he adds. "If the tender itself is wrong, the house of cards collapses.
Tamworth City Council in northern NSW worked with Lange Consulting & Software to handle a tender for the replacement of its local government software solutions, including financial, property systems, and geographic information systems. "We had seven modules to fulfill and employed Lange to help build specifications, analyse responses, and generate a report based on the criteria we set," says Chris Wansink, information technology manager at Tamworth City Council. The council had not dabbled in an IT tender for 20 years so it was a new process and worth $2.4 million to the successful supplier or suppliers. The consultancy and software cost Tamworth $40,000 and gave the council "a more professional result than we could ever have achieved in that time frame," says Wansink. Lange first stepped in to offer Tamworth Council a framework of documents with which to generate a tender. "We finessed these to our own organisation through a series of workshops and then used Lange's Apet (all purpose evaluation tool) to generate evaluation criteria and an analysis database for when the tender responses came back in, in this case in electronic format," says Wansink. The tender received around a dozen responses, four of which have since been selected. The tendering process took 12 months and Lange Consulting was involved for six of those months. "The methodology used gives us a degree of independence and there is less risk of being swayed by personalities from different suppliers," says Wansink. Another important feature of the service Lange offered was the ability for staff, during the tender process, to include ad hoc comments to the final report, so for instance if Tamworth attended a demonstration of a product and made an observation about how the product performed under certain circumstances, these comments could be taken into account. "This gives us the capacity to calculate not only the business and IT best fit, but also the best fit from a specifically council perspective," explains Wansink.