RFPs are a waste of time
I think you’ll struggle to find anyone on the supplier side of any industry who enjoys completing RFPs. This is certainly my position as someone who sits on the supplier side of the insurance industry. I may well be biased. Cards on the table, I hate completing them; I am definitely biased, so you have your pinch of salt to take with what follows.
Despite my bias, I am a recent acquisition from the practitioner side of the market. I’ve seen both sides of this and feel pretty strongly that RFPs are a waste of time.
The idea behind them is that as an organisation that wants to purchase a bit of software (or a service) you want to create a structured way of assessing the products from a variety of suppliers. You also want to make sure that your minimum requirements are met in terms of security, technology, and functionality. Sounds good, right? Also, if you’re bringing in a management consultant to assist, they love an RFP because they have serious ‘Thud-factor’ – look how much work we’ve done, this RFP is HUGE. Is there value in the process? Some. Are they the best way to pick the best solution? Absolutely not.
My attitude is driven by a couple of factors:
- Firstly, if you’re defining what the product you want to buy does to the nth degree, you’re limiting the scope of what your solution could look like. Establishing how nine different vendors cope with updating a quote record isn’t going to transform your business or help you make a great decision in what can be a material investment.
- Secondly, you don’t know what you don’t know – technology moves fast, and where institutional biases might make you think that a problem is insurmountable, it has probably been ‘cracked’ by technology and is easy, quick, and cheap to do.
Let’s all be honest with each other, a big RFP gets a big tick in the procurement box, gives you a meaty way to demonstrate what a rigorous process you’ve gone through (or justifies those dizzying daily rates!) and has the added benefit of exerting a bit of pressure on the vendors in the mix – we know what you guys are doing with those crazy turnaround times, I used to do it myself! But in terms of being a good way of driving a truly transformational change? Forget it. Stop ticking boxes and start thinking about how best to resolve the underlying objective.
The best procurement processes I’ve seen have been where suppliers are presented with a detailed overview of how the business operates, what they want to be able to do and has clear problem statements. We suppliers are asked to show how we’d approach supporting now and building tomorrow. In the technology industry, this is referred to as ‘skunk working’, and interestingly enough, they have no need or desire for RFP’s which kind of is the point to this piece, I guess. If we want fundamental shifts in technological output, perhaps we (as an industry) need to change.
Taking the above approach allows us to tackle insurance problems as technology problems, leverage our experience of doing this, and show the art of the possible. We’ve done this so many more times than any of our clients. Our business is making technology to support the insurance industry, so us telling you how we deal with things that are, frankly, table-stakes are worthless. We’ll do it, but you’re limiting yourself. Let us and other Insurtech’s show you how your business could work enabled by technology. We’d love to.