We recently analyzed 50 of the most recent RFP responses we provided.  Here are some interesting facts:

• 28% had contradictory specifications – ones where one question contradicted another
• 12% contained specifications that are impossible to deliver – not limitations in our solution but limitations in what’s possible with current technology
• 19% contained requirements for what we could call misrepresented needs – i.e.  A customer might specify the use of a certain common method of accomplishing something and that method may become part of the specification.   The customer may really want a solution that meets a particular need but if we solve that problem innovatively, by means other than a particular protocol or design, we could be disqualified for having a better solution because of the irrelevant specification.
• 14% specify irrelevant needs.   There may be a required component or protocol that has no bearing on the actual solution
• 30% do not establish written evaluation guidelines – scoring criteria gives vendors valuable insight into a response and customer motivation.   It is impossible to give every RFP response the attention it deserves because of the ‘buying season syndrome’ so vendors must often evaluate scoring to see where the emphasis needs to be placed in the response, delivering the best quality to the section that means the most to a customer.
• A majority include questions that can be interpreted (and therefore manipulated) by the vendor – while this is good for the vendor it’s bad for the customer.  Questions are written in a way that makes it possible for every vendor to have a unique yet compliant response.
• Most RFID bids ask education questions.  By this I’m referring to ‘technical’ questions that are really not technical, but are asking how to do something.  A vendor is often very willing to share with a customer but not with competitors.  On occasion it illustrates that the customer isn’t sure of the facts so they are seeking knowledge in the RFP.  These are difficult to answer because vendors in this category are providing turnkey solutions and in many respects, customers are asking vendors to share ‘the secret sauce’ with the competition.

One novel solution to mitigate many of the above problems is offered by a product called OpenRFP.  This approach is complementary to RFPs created by consultants or directly by customers.  OpenRFP provides an online system in which a customer can select from hundreds of predefined questions, all vetted by industry experts who remove ambiguity and who work to ensure against the problems illustrated above.  They ask vendors to submit specifications and they reword and rework the submissions to make them fair and unambiguous.  They handle those things that are yes/no types of answers and help customers get technical responses that are easy to evaluate as facts.   This has no bearing on the consultant, if involved, who educates customers about the needs, guides in selection of criteria, helps with demonstrations and evaluations, and often plays a vital role in contract negotiations.  Aside from ensuring a consistent technical comparison, this makes the job of responding on the part of the vendor almost trivial.  Vendors can take as little as 20 minutes to respond, depending on the complexity.  Making it easier to respond translates to more choices for customers (because there is more time to respond to more RFPs) and it gives vendors the time to put emphasis on the presentation and other aspects not covered by the technical portion.   Removing conflicting information and ambiguity creates a much fairer environment for all parties.  While there is significant investment on the part of the company offering OpenRFP both in terms of technology infrastructure and the line by line review and editing of RFP questions, the cost to libraries is nominal.  In fact, it’s fair to say that the value vs the cost makes this a remarkable bargain.

The most our company has spent on an RFP response is $37,000.  The average is $10,000.   Using the OpenRFP approach to that portion of the RFP, the cost to respond could be as low as $1-2,000.   Consider that an investment by the vendor of $10,000 for a $10,000 sale is a bad investment. Even with tThe odds of winning at 100%, it would still be unwise to respond.   While many RFPs stipulate that the cost of RFP preparation is not the responsibility of the library, you can be certain that the cost is accounted for internally and that most organizations must consider those costs as part of the cost of a project.  This factor alone makes it very worthwhile for a customer to make an RFP something that can be responded to easily.  A well developed RFP can give your library up to $37,000 more value.

Annually, our Company declines to respond to approximately 20% of the RFPs we receive.  The factors affecting this are:

• Whether the cost of responding results in a profitable reward
• Whether the likelihood of winning is favorable
• Whether the RFP is written fairly with an intent on evaluating all solutions, or heavily weighted by the use of a single vendor’s specifications.
• Whether an opportunity exists to respond in a way that emphasizes unique offerings of our Company as opposed to boxing us into a response that, at the most, allows all vendors to be equal except for price.  This type of document can miss great value and innovation.
• Whether the overall intent of the RFP reflects a customer that wants to be a technology partner (some RFPs make it obvious that the customer is concerned solely with internal schedules and needs and things like vendor schedules and conflicts are irrelevant.  That is not a good indicator of a long relationship and a factor in whether a vendor wants to enter into a long term relationship)

As a vendor, our ideal RFP would be one in which:

• A consultant is involved in the process
• OpenRFP is used for the technical response
• The customer does sufficient advance work so that the document provides everything needed to respond.
• The customer would ask vendors to three 3-day date ranges within a 4 week period that are ideal presentation times as opposed to establishing a firm demonstration date
• The budget is revealed  – An RFP is about delivering the best value and that often means a need to understand the customer’s budget so that we can deliver something that offers the best value without exceeding the limit.
• The document requests pricing by solution and not component – each vendor provides different packages/bundles
• The vendor is given the latitude to answer and to exploit reasons why the vendor’s solution is different.

Approaching an RFP with consideration for the vendor will result in a better solution, greater value, and more choices.  It will serve as an indicator that the library wants to enter into a long term customer/vendor partnership and that translates to a strong effort on the part of the vendor to deliver a solution that will exceed a customer’s expectations.

Would you?

I am neither stingy nor particularly rigid about personal accounting. My family and I consider Olive Garden to be a nice meal.  It’s not Ruth’s Chris but Olive Garden is nice.  The outing is the exception, not a nightly fare. A really nice outing to Ruth’s Chris is ok too but that’s a REALLY nice night out. I believe that I give generously to those in need. I do select charities  based on the effectiveness of their use of funds. If the charity requires 25% of every dollar donated, they won’t get money from me.

I believe that my friends, colleagues, and family would say that I am generous.   I hope so.

Throughout my adult life I had treated my employer’s money as if it were my own. I’ve had an expense account since I was 20 and for a significant part of my career, the amount was not budget-limited per se although there were probably some unstated limits. Still, I would not consider spending an employer’s money any differently than my own. Just as I might take my family out to Ruth’s Chris for a really special occasion, I would do the same for a customer. But for the most part, I would treat a customer to a more typical Olive Garden or Longhorn experience. It’s a step up from Denny’s and it’s a place I would go personally perhaps once a month.

I have been a co-owner of two companies and each time I have viewed the company money the same as I did when working for someone else or when balancing my personal checkbook. Just because you own the Company doesn’t mean you can be extravagant. My business partner and I strive to ensure equity in time and money, so that we each pull our equal weight, each earn the same, and each spend equally.

While my behavior is second nature, I suspect my actions are meant to serve as an example to others.

Now what troubles me is how some employees in some organizations treat assets or money. We all probably know of someone that treats an expense account as though it were limitless. I had a friend when in the broadcast business that never spent less than $500.00 on a business dinner. That’s like $1,000.00 in 2009 dollars. He was VERY successful but then so was I. No doubt my net profit was higher and I had just as good a time. Weekly, I see examples in my business and at other businesses and libraries where money is not spent as if it were personal.

In a discussion with a friend today we talked about the difference between personal bill payment and company or institution payment.  I assume that most people do what’s necessary to pay their bills on time.  Most people value their personal reputation (credit worthiness) and they do what’s necessary to pay their bills on time.

A company or institutional analog is a rarity.   Organizations often become introspective and they consider their internal approval and review processes to the exclusion of their vendor’s payment terms.  It’s as though Company or organizational funds can be paid out according to an internally defined convenience plan that is based on a variety of internal processes.  But isn’t it important to value your organization or company’s reputation for paying promptly?

What I don’t know is which of the following applies or whether it varies from person to person or instance to instance –

• The individual is foolish with personal funds and therefore with organization funds
• The individual isn’t correlating the value as REAL money but sees it more like Monopoly money
• The individual assumes that it doesn’t matter
• The individual didn’t even consider the cost

If a friend called you to say he or she did not receive the $150 gift you sent, would you just mail another check or replace and ship another item —- or would you try to find out where the original item went, whether lost by the carrier or lost upon receipt?

The question at hand is this, if you wrote the check out of your account would your actions be any different than if the money did not pass your hands because it came from the Company or Library checkbook?

Would you dine at the same restaurant whether you were paying the bill or the organization were funding the expense?

Would you allow a bill to be late whether personal or corporate/public?

I suppose that in the public sector there is considerable control and accountability such that a lapse is not easy. In the corporate sector, particularly in organizations like EnvisionWare that place high trust in individuals, there are minimal controls and expenditures are generally decided at an individual level. There is no ‘reward’ in a library other than perhaps recognition for good stewardship. Depending on the company, the rewards for managing money as your own can come in many forms, from promotions to profit sharing, from more freedom to an ability to hire more people to make a job easier, or from more responsibility to personal choice in computers or equipment.

At EnvisionWare, the rewards come in many flavors which also include more benefits to customers, more grants to institutions, and profits and raises to employees, and more opportunity through an enhanced ability to invest in more creation.

It’s not like Monopoly in any case. Nobody gets $200 just for passing “Go”.

A significant shift to a blend of operating and capital funds appears to be driven by the economy.  Libraries are, after all, the ultimate in service organizations, committed to serving a diverse population, many of whom may have no access to resources other than via the local library.  How does a library continue to offer the level of service required by its users who are demanding more now than ever before, when budgets are being cut by 5-50%?  For many, part of the answer is technology and specifically, RFID and/or AMH.  I have yet to hear one library director tell me that he or she is cutting staff.  Many have said that they must give up positions through attrition and others indicate that new facilities must be operated with current staff.  In these cases, the decision is quite simply…

…given a certain level of investment can I continue to provide the same services with fewer people over time -or- expand services with the same staffing level?

There are some libraries that place a high value on the security aspect of RFID and consider it a major part of the motivation for moving to RFID.  Several well respected librarians have written great articles on the value of theft detection, the return on investment, and the reality of RFID control.  Neither EM nor RFID are “security systems”; they are “theft deterrent” solutions.  A real library security system that would guarantee protection is called a closed stack.  During a trip to Norway during my initial RFID market research, a library director told me that he implemented a technology (not RFID) several years ago and then found patrons throwing materials out the windows.  I’m not going to describe the ways to circumvent security in a public article but the point here is that the goal of RFID security is deterrence and it’s not the primary motivating factor that can prove a worthwhile return in and of itself.

In order to justify an investment in theft protection we must know the current shrinkage and project the decrease by the investment which means that we have to take inventory.  We can’t use inventory statistics of five years ago because times and materials have changed.  So the first step in the analysis is a stock take.  There is no need to assess the entire collection.  We can choose a segment of print and media that can be used to model shrinkage for things like popular items, DVDs, and perhaps a sampling of non-fiction.  Measure it, then re-measure it 3 months later.  Now we know our loss numbers for a location and we can apply the percentages to the average cost of a processed item to determine the cost of the losses.

Next we need to determine the cost of tagging the collection and investing in the hardware for protection.  With a priority on theft deterrence, there is no substitute for quality. (Is there ever a valid reason to sactifice quality in a technology that runs the library’s core business?) You need the best tags and the best gates on the market if part of the mission is protection.  Most of the RFID gate systems on the market are 2D which means they will not detect an item in all positions through the gates.  That’s a 33% performance sacrifice just for the gates.  If protection is a metric of your investment, then 3D gates are essential.   I also recommend the tag size standard adopted widely throughout Europe which is what our Company adopted as a standard.  The larger rectangular tags can provide 20% greater detection range and from the right supplier there need be no signficant cost penalty.  While more distance may not seem that relevant, distance translates into better detection of items that do not read well such as print items with metallic covers.  If part of your focus is maximum self service, then you will probably opt for media/case tagging as opposed to locking cases.  In this situation, a large rectangular tag inside the media case and hub tags or the new Advanced Media Tag(tm) is the solution.  Aside from greater detection, you gain the benefit of assuring a complete set is checked out / in, provided your RFID supplier supports the concept of sets.  The goal is to ensure that media is detected by the gates.  To obtain that you need 18″ detection for all items.   We know that certain items may not be detected and that’s a reality of today’s RFID technology.

We can also expect that detection may be foiled by those that are bent on stealing because those that want to take things from you will find a way around any protective measure you install.

So what then are we accomplishing with RFID security?

• We are demonstrating responsible stewardship by implementing a measure of deterrence.
• We are keeping honest people honest by alerting honest patrons that items are not properly checked out.
• We are making thieves aware that we have an investment in technology as a deterrent.
• We are stopping a portion of the thefts.

If you selected the highest quality tags and equipment, you’ve done all you can do to deter theft with technology although there may be added measures like the corral and perimeter approach to stack layout.

The irony here is that the patrons that set off alarms, perhaps because they failed to check out items, were attempting to check out items which means they will bring them back.  Some of your items will be protected against theft for the less than clever thieves.  And some of your items will still be lost because that’s going to happen no matter what you do.

If you spend $0.40 to $1.50 per item on tags and $15,000 per entrance, what is the amount of improvement required in total shrinkage to prove that RFID was a good investment for the sake of security?

Theft deterrence is a BENEFIT, but it’s not the primary factor that determines your ROI.

In a future article I will explore the aspects of RFID that expand service and provide demonstrable returns in short order.