Preparing an Effective Technology RFP

Treasurers have recently been making the business case for system investment, driving increased responsiveness to treasury change and meeting the need for improved risk management, according to the ‘PwC Treasury Survey 2012’. There is also currently more treasury systems development activity, including integration with other business systems, and investment in new systems in the corporate treasury market, than there was four years ago, pre-crash. The PwC survey revealed almost 80% of corporate treasurers place new or improved technology systems as either high or medium priority on their agenda.

Typically, in a project for system implementation or enhancement, a RFP conveys a corporate treasury’s requirements to the solution providers or vendors, and is the starting point for external conversations and meetings. A technology RFP provides a structured approach to the selection process – ultimately contributing to the success of the project. It is therefore essential for treasury departments to place sufficient focus on preparing an effective RFP document to distribute amongst solution providers.

A well-prepared RFP provides:

• Context to the treasury project, by giving the vision and strategy of the function.
• Clarity in the requirements of the corporate treasury.
• Communication of a corporate treasury’s expectations from vendors.
• Encouragement for suitable vendors to respond.

Outlined below are best practice guidelines for creating an effective RFP for corporate treasury systems and solutions.

What’s Your Vision and Strategy?

A technologye RFP needs to help identify suitable ‘business partners’ rather than vendors for a system, so that the solution provider has a better understanding of treasury’s long-term goals for the implementation and can help towards achieving them effectively. It should start with the corporate treasury vision, broader objectives of the treasury team and their alignment to the corporate’s overall strategy. It should also specify the expectations for the project from key stakeholders. Sharing this information provides a strong foundation for success throughout the implementation process.

Figure 1: From Treasury Vision to Implementation

Source: PwC

Phase Your Approach

Experience suggests that corporate organisations break the scope of a tech overhaul project into multiple phases, enhancing the automation of processes over a period of time. This approach helps to stagger the overall investment required. It also provides a more inclusive learning curve for all parties and provides the opportunity to make any necessary adjustments to the approach before embarking on the next phases. Specifying key details of what you want to achieve in each project phase in the RFP means that all stakeholders are clear about the long-term objectives of the treasury team and expectations are set sooner rather than later.

Figure 2: Phasing Your Treasury Project: An Example

Source:PwC

Set Timelines: Given the complexity involved in treasury projects and management expectations to deliver on goals, setting timelines for various stages of the project – such as requirement gathering, RFP preparation, vendor selection and implementation – in addition to the overall timeframe for the project within the RFP, helps solution providers plan their required resources and work schedules to effectively deliver each phase.  It also helps the treasurer to monitor the progress and take necessary steps where there are delays.

Have the Right Resources: Preparation of a RFP requires specific focus and significant time to co-ordinate with various stakeholders. Most often, project deadlines are tight. Experience has shown that assigning responsibility for the RFP to the treasury team, in addition to their daily roles, leads to time pressure on the team. In most cases, it also compromises the quality of the RFP, so it is recommended that you assemble a dedicated team when preparing for an effective RFP.

It is also important to plan the involvement of the RFP team during the selection and implementation stages of the project to maintain continuity. Backfilling jobs with temporary resources and seeking external help are available to corporate treasurers. Involvement of external consultants’ may help capture different perspectives and best practice from outside the organisation.

As an example, the project manager for a treasury system implementation project at one FTSE company remarked: “A well-structured and objectively-prepared RFP after thorough work understanding stakeholders’ needs, helps in scoring and reviewing the responses received. This process requires dedicated resources.”

Identify Who You Need Involved: You will need to be aware of the wide range of stakeholders (both internal and external to your organisation) involved in the RFP process. This might include accounting and finance departments, IT, business units and external service providers such as banks and payment processing teams. Their involvement from the outset of the project will help define the requirements and responsibility during the RFP. This results in collective ownership for a successful implementation.

Detail the Requirements: Implementation projects often fail due to inadequately defined requirements. A clear and comprehensive RFP significantly increases the chances of obtaining high quality responses that lead to a successful outcome.

“You need to be very specific about your requirements. A detailed and thorough process of finding out what we needed at the outset of the project and captured in the RFP saved a lot of time during implementation phase and set the right expectations for the vendor,” said the project manager at another FTSE 100 company that recently underwent a successful treasury system implementation.

You may wish to consider:

• Long-term approach: A substantial amount of investment, in terms of time and resources, is involved in a treasury systems implementation project. In order for treasury to generate maximum value from the project, the objectives need to be developed from a long-term perspective.
• Consider all users: Requirements from a system could differ from one user to another. A successful RFP collates the needs of every user articulated in a way that enables a third party to interpret them accurately. The more detailed the system specifications of the users, the better the chances that the proposal provided by the vendor will be accurate.
• Integration with Corporate IT systems: For effective integration with the overall corporate IT platforms, it is essential to understand the group-wide system landscape and developments taking place in the wider business. This enables the interface and technology platform requirements to be factored into the RFP for the treasury system.
• Do not take things for granted: A sophisticated system might lack a basic functionality. Articulating all the fundamental requirements from the new system will avoid gaps in understanding, which are sometimes only discovered at an advanced stage of the project.

Be Clear on Your Priorities: Be clear about the functionalities that are mandatory and those that are desirable; allocate them into ‘must’ and ‘nice to have’ respectively, with suitable weights assigned to each. Ranking them by importance helps both the treasury and solution providers in setting expectations up-front. The likelihood of obtaining a meaningful and focussed proposal often depends on the accuracy and completeness of the requirements captured in the RFP document.

Specify Evaluation Criteria: The selection criteria for a solution provider should be clearly articulated in the RFP. Considering what you want to achieve, along with the rankings for the various priorities of functionality, cost and vendor credentials  is essential. It is also useful to provide appropriate templates to the vendors so that the responses received are structured and comparable with one another.

Experience shows that requesting references, from the provider’s other clients, within the evaluation criteria is very effective when validating the experiences and capabilities of the vendor.  This also provides an opportunity to request to speak with the providers’ existing clients to understand their experience. However, caution must be exercised as the references are selected by the vendor.

Communicate with the Right Vendors: Although it is important to reach out to the right solution providers, do your homework.  Most treasuries rely on their past experience, systems used by companies in peer group, consultant recommendations and personal referrals. While all good reference points, consider the latest developments in the market place; treasury technology is continually evolving and vendors are upgrading their solutions. Treasury forums and system vendor websites will often help you in this assessment.

To enhance efficiency of the evaluation process, the RFP could be preceded by a request for information (RFI).  An RFI is sent out with highlights of the requirements in order to gauge vendor capabilities and systems available in the market. A high level demonstration of the systems is also helpful at this stage. Based on the vendor response and demonstrations, an extensive list of vendors can be filtered down to a handful of prospective solution providers to whom a detailed RFP is sent for a fuller response.

Conclusion

The adage ‘well begun is half done’ precisely captures the importance of a RFP in a system implementation journey. A well-structured and comprehensive RFP, prepared by a dedicated team with contributions from all stakeholders with an open mind for changes, which can then be circulated to the right vendors, significantly contributes to a successful technology implementation project. Investing adequate thought, time and resources in preparing an RFP will pay off multiple times over the life of the treasury system.