Jul 31 2013

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When an RFP is a Risky Business

rfp_risky_businessYou’ve heard the buzz terms loud and clear: Cloud computing; virtualization; big data; mobile platforms; business analytics; manufacturing intelligence. What these words mean to you, the manufacturing IT manager, however, may still be a bit fuzzy.

But, the fact of the matter is that your organization is changing as a result of these and other technological innovations. If you’re a manufacturer an investment in the latest and greatest acronym, be it MOM (manufacturing operations management) or MES (Manufacturing Execution System), is inevitable if you plan to remain competitive with your global business and produce quality products on a global scale. Get ready to figure out what you need, because the CIO is about to come knocking.

You know the drill: Make a shortlist of vendors; put out the RFP; collect the vendors’ responses (they will say they do everything you want—and to be fair, perhaps they do); get a product demo; and pick your solution provider. But, honestly, if you’re investing in a next-generation technological innovation to do something the organization has never really done before, this process really doesn’t make sense. Are you clear on the problem you’re trying to solve? Do you know what you want? What you need? What your business, your users, and your customers need? Let’s face it: Maybe you don’t know what you don’t know. Do you?

There is an element of risk associated with purchasing technology to address a new problem, support a new product line, and/or enable a new business model. What that means is that your traditional “model” used to evaluate and perform your decision process (often an RFP) may not effectively account for all factors, nor may it be the best strategy to use as part of your evaluation process. No one can possibly foresee all the consequences of an innovation, no matter how obvious they may seem in hindsight.

In my role working at Apriso, a manufacturing software provider, I have personally observed this process first hand – several times. Manufacturers seeking to expand their operations management “footprint” across locations are often challenged with this RFP dilemma. A multi-site deployment is simply applying a plant-based solution x the # of locations where coverage is required, right? Wrong. Other factors become important that might not have been the case with a single-site deployment. For example, if it takes 12 months to install software at just a single plant, is it reasonable to expect a 30-site deployment can simply be completed over a 30 year cycle? Obviously not. So, the next challenge becomes what sort of overlap can you reasonable accomplish … what I have observed is that this obstacle can literally derail entire projects 18-24 months into the timeline – a challenge that is seldom truly understood at the outset of the project.

We have a bit of “good news – bad news” at play here. The “good” news is that everyone must address these obstacles, so we are all in the same boat. The “bad” news is that it is still difficult to “know what you don’t know” when evaluating a new technology or approach to solving a traditional concept, such as how to best manage manufacturing operations across a globally distributed network.

Fortunately, there is research that has been conducted on this topic which can help simplify this process, which I will explore in greater detail in my next post.

Gordon can be found on Google+.

Permanent link to this article: http://www.apriso.com/blog/2013/07/when-an-rfp-is-a-risky-business/


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