Learn more about what it's costing you to go manual route on your RFPs.
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Many companies still rely on manual methods to improve how they manage RFPs. While this may seem cost-effective from a short-term perspective, the actual cost of a manual RFP process is much higher than most organizations believe. Greater than immediate savings in software costs, manual handling of RFPs can lead to major inefficiencies and opportunities missed due to latent human errors building up over time.
Unknowingly, companies are hemorrhaging valuable time and money. In this blog, we explore the hidden costs of holding onto a manual RFP process and how automation can help them avoid these unseen losses.
On the surface, the apparent advantage of automating RFPs pertains to time savings. Using automation tools like Inventive.ai can make a significant gain in the overall productivity of teams. According to reports, companies can look forward to a productivity gain of 40–70% through automation of RFP processes. Responses are quicker, proposal throughput is higher, and cycle times are reduced. but the real costs of handling RFPs manually go much deeper than that.
1. Missed Opportunities: Manual RFP processes involve slow responses and further lead to missed business opportunities. The quicker any company can respond to an RFP, the better their chances of winning the contract. And in highly competitive markets, delays mean winning or losing that lucrative deal in most cases.
Real-World Example: Suppose a large, international company receives an RFP from the government, it has to be submitted on a very tight deadline. The process will engage multiple stakeholders across various levels of the organisation, which, for some, may lead to bottlenecks, redundant efforts, and missed deadlines. Delays of as many as 10 days due to such inefficiencies could lead to losing a $10 million contract.
According to research by McKinsey, 74% of B2B buyers prefer to choose a vendor that provides value throughout the proposal process. In such cases of companies that adopt complete manual systems, response times get slowed down greatly, which reduces the possibility of being the first mover—so the lost revenue opportunities keep piling up over time.
2. Human errors and data inaccuracy: Even the best of employees will still make an error, as would be expected when repeated tasks are done manually. Sometimes, it could be the wrong inputting of information, not being able to communicate the requirements well, or overlooking some key details in an RFP. Human errors will always occur with manual processes. Depending on how critical a mistake is, these may range from embarrassing corrections to legal liabilities.
Example of Hidden Costs: For example, an RFP may require vendors to provide very specific compliance documentation. If someone has overlooked a section or submitted a document that is out of date, that can immediately disqualify them from an RFP or lead them to various regulatory penalties. The amount of money required to redo the work or re-submit RFPs, or even the legal fees accrued, could run into thousands. Not to mention the reputational damage.
3. Inefficient Use of Resources: Manual RFP processes often involve coordination across multiple departments, not limited to sales, legal, procurement, and finance. Each of these departments spends significant amounts of time researching, validating data, and formatting responses. Such a resource-intensive RFP process is sure to invite inefficiency and deteriorate employees' productivity. Over time, the employees have promised to spend hours after hours in low-value activities rather than invest their energies in core responsibilities. The result is employee burnout and losses.
Data Point: In fact, according to an APQC report, 55% of all organizations believe that their RFP processes are either highly or somewhat ineffective, taking up valuable time from senior employees that could be spent more productively using the same amount of time. Automating these processes frees up resources to focus on business development and innovation.
4. Lack of Standardization and Inconsistency: A manual RFP process is seldom fully standardized across an organization. Such a lack of uniformity may also be reflected in the quality of different RFP responses, so some may be far more detailed or adhere more to the guidelines than others. Due to the absence of a centralized tracking and management system, meaningful information is mostly locked in separate divisions without much sign of finding improvement opportunities.
Case Study: Take a look at a diversified consulting firm with offices on each of the three continents. Every office handles the RFP process in their own way, manually. Without standardization, the proposals submitted from every other location are starkly contrasting in quality. Responses are good and properly structured, while others are weak and lack key detail. All this inconsistency costs the company contracts by creating confusion and requiring extra work to reformat the proposals according to customer expectations.
5. Compliance Risks and Legal Liabilities: In large-scale RFPs, mainly in governmental or regulated industries, the challenge is compliance. Manual procedures are especially prone to oversights or failures to include required documentation or adhere to specific legal conditions. These compliance errors could lead to costly litigation, fines, or exclusion from any future RFPs.
Hidden Cost Example: In 2017, a construction company lost a $500 million government contract due to a clerical error when it failed to submit one necessary form on time. That simple mistake was going to go on and result in a legal dispute, a loss of credibility for the company, and a huge revenue hit. A structured RFP process automatized would flag missing documentation, ensuring everything is submitted before the deadline.
It is rather obvious that the hidden costs of a manual RFP process seem pretty high. What does that look like in dollar terms, these inefficiencies and errors?
1. Lost revenue from missed opportunities: The lack of automation of your RFP process means lost revenue opportunity. According to Loopio, organizations that automate their RFP processes realize 43% higher win rates compared to relying on a manual process. Multiply that across dozens of RFPs annually, and the revenue differential is staggering.
2. Increased operational costs: It is extremely expensive to have employees devote their time to manually responding to RFPs. In fact, Forrester estimates that automating the response to RFPs cuts up to 50% of the time used on each proposal. Taking this into an operational cost calculation, assuming a company processes 100 RFPs per year at an average salary of $100,000 for involved personnel would translate to savings of over $500,000 annually.
3. Legal Fees and Compliance Fines: While using manual processes, there is indeed a greater risk of non-compliance with laws and regulations, which includes costly fines or lawsuits. According to Deloitte, depending on the severity of the oversight, fines can be in the range of $10,000 to $1 million. Automation will protect against such risks by ensuring all steps required for compliance are realized.
4. Employee Turnover and Low Morale: Where employees have to use up most of their time with repetitive and manual tasks, this leads to very low morale and higher attrition rates. Inefficient processes imply that turnover rates are 20% higher; with an average of $15,000, it costs to replace one employee. Automation within the RFP processes decreases cases of burnout, hence increasing job satisfaction and reducing turnover costs at the same time.
Now that we've gone through the unseen costs of staying manual, it's time to see how RFP Automation can soften the blow that these issues bring along.
1. Speed and Efficiency: Automation tools streamline the process for pulling in pre-approved content, instituting instantaneous collaboration across teams, and reducing collection and submission times. This, in turn, lets organizations answer RFPs much faster and expand their winning possibilities multiple times.
2. Error Reduction: Automation reduces the possibility of human error, as data is presented from centralized databases, making responses accurate and consistent. This will minimize the chances of disqualification on error grounds and hence improve the quality and timeliness of submissions.
3. Optimal Resources: Automation frees up vital employees from such manual tasks to focus more on strategic initiatives, hence boosting overall productivity and keeping the employees busy with high-impact work.
4. Improved Compliance: Automating RFPs provides the assurance of inbuilt checks to ensure all regulatory requirements and documentation are matched, hence reducing compliance errors and legal liabilities greatly.
5. Data analytics and insights: Most modern RFP automation platforms include analytics capabilities that make it easy for organizations to track win rates, spotlight inefficiencies, and continually fine-tune the process over time. This level of insight is almost impossible to achieve with the manual handling of RFPs.
The manual RFP process might save some, but all those hidden costs soon come out one way or the other. The missed opportunities, inefficiencies, human errors, compliance risks, and low morale among staff all lead to massive losses over a certain period of time. By investing in RFP automation, organizations can not only receive as much as a 70% increase in efficiency but also unlock better revenue potential, improve compliance, and optimize resource utilization.
In the competitive business environment, organizations just cannot afford hidden costs to get by their awareness. The remaining manual is a real cost. Protecting your business from unseen losses by automating your RFP process is more than saving time; it actually helps in positioning for long-term success.
Conventional RFP processes will surely become outdated and generate inefficiency and missed opportunities in today's fast-paced and competitive business world. Inventive.ai is revolutionizing the way businesses approach RFP responses with a future-proof approach backed by advanced AI. This new approach automates the most time-consuming and error-ridden tasks of RFPs for your team to output accurate and high-quality proposals at lightning speed. No more chasing down the content, fighting with version control, or making costly compliance errors; in one place, Inventive.ai stitches all your RFP data together into a unified platform to ensure consistency and precision within every response.
Equipped with intuitive AI at its core, not only does Inventive.ai speed up the response times but also analyzes past RFPs to optimize future submissions for smarter decisions and higher win rates, meaning more opportunities with less effort and better results. Are you ready to get rid of inefficiency, cut the waste of money, and finally equip your team for more business wins? Well, welcome to the future of RFP management with Inventive.ai. It is about time to take your RFP process from a prisoner of mediocrity to an unbeaten competitor with Inventive.ai and leave your competitors far behind.
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