With 25 years' experience of operating in the legal technology supplier market, I can confidently say that one of the most regularly debated topics amongst vendors has always been whether to respond to Invitation to Tenders (ITTs) issued as part of a selection process.
Vendors regularly debate the cost-effectiveness of responding to tenders because the level of manpower required to jump through the hoops associated with a tender process would be better utilised going directly to market and attracting prospective customers through their tried and tested sales, discovery, contract and implementation processes.
Add to this that, in my experience, only around 5-10% of engagements involve a tender process, the case for avoiding them becomes even more compelling.
Given that I operate as a legal technology consultant, it might seem very strange for me to endorse this standpoint and say that an ITT process is not a positive step to take when selecting your next technology solution, so why would I be making such a suggestion?
Here are a few thoughts on the subject.
Vendors do not generally contract to tenders
Tender documents typically define functional requirements at an extremely high level, and as such, they are highly interpretive. Entirely reasonably, vendors will naturally interpret these requirement definitions in a way that allows for a positive, high scoring response.
Vendors also recognise that a loosely defined functional requirement question in a tender document does not constitute a comprehensive requirements specification and, as a result, will often refuse to contract to a tender response as part of a project deliverable.
For this reason alone, a completed tender has little ongoing value once a law firm has shortlisted vendors.
Unconscious bias
Taking UK practice management system selection as an example, there are less than half a dozen ITT templates in regular circulation, either issued direct by consultants or white labelled for use by law firms.
Vendors often notice a correlation between each ITT and the particular vendors who are regularly successful in securing the associated business. This is not to imply that there is any favouritism at work, but rather that each tender will naturally play better to one product over another.
Other vendors, conscious of only making up the numbers, will then either choose to no-bid or only invest minimum effort in responding in order to keep the consultant on-side.
ITT Documents are too generic
Once a vendor has completed a particular tender template for one selection process, the next time the same document is issued, it is generally a laborious cut and paste exercise to complete it, with some additional time invested to spot any small changes or additions that might have been made.
The biggest challenge comes in completing pricing sections given that there has been little or no customer engagement at this point and the generic nature of the tender gives little insight into the configuration effort that will be required.
As a result, not only are tenders often too generic to be of value to either party, they can result in wildly inaccurate pricing estimates that cause significant problems during the project when the true scope becomes apparent.
Different approaches to responding to tender questions
Some vendors will take a more “glass half full” approach to the responses given and therefore score better on evaluation, whereas more measured vendors, careful not to overstate their capabilities, will score more poorly.
In practice it will be the latter category who, I would suggest, are more likely to deliver a good project in the long run.
It should also be noted that although checks and balances exist, it is generally non-technical salespeople who complete tender responses, and not experienced technical staff who are usually too busy with paid customer engagements for speculative business development work.
As a result concerns over the accuracy of the responses are perhaps another reason why vendors will be reluctant to contract to tenders.
Favouring legacy products
Tenders are filled with exhaustive lists of every feature imaginable, whether they are needed or not, and as such, naturally tend to score well for established, or “legacy” products with high levels of evolved functionality.
This will always work against newer solutions or emerging technologies that are less functionally mature.
In a settled market that might be the correct approach but at a time when technology is going through a period of rapid change, this could easily result in the selection of a solution with a very limited shelf life and possible technical limitations against newer technology that could set a firm up for a successful long-term partnership.
Barriers between vendors and law firms
A tender process, often controlled by external consultants, frequently creates barriers between vendors and law firms preventing the development of the essential close working relationships that would come from a direct engagement.
Under some more tightly controlled approaches, it means that a law firm only really gets to know and understand the vendor they have contracted with once the project kicks off. This is not a recipe for success.
Tender budgets can detract from project budgets
I’ve frequently heard the argument that the consultant fee for a tender process can be cost neutral as the negotiating power of the consultant on behalf of the law firm will deliver significant discounts on the vendor quotation.
This is a false economy, as a good proportion of the negotiation in this regard is always around the number of implementation days associated with the project. Taking days out of a project serves only to compromise the quality of the solution delivery.
Ultimately your money is better spent investing in the project implementation effort as this will have a direct impact on the quality of the final solution i.e. "effort in = results out".
It should be noted that software suppliers are looking for repeatable software revenues and seeking to implement as many projects as possible with the finite implementation resources available to them.
As such they will only ever quote the optimal number of implementation days needed for a successful project. They are always aware that too much resource tied up on one project will affect their ability to deliver other projects.
No-bid vendors
An increasing number of vendors are taking a “no-bid” approach to tenders, confident that it is far better for their business to proactively seek out prospective clients and follow a standardised engagement process that is designed to consistently deliver successful projects.
As such there are a percentage of vendors who may be the best fit for a law firm that will never be included for evaluation in a tender process.
Do tenders improve the chances of success?
I would be highly doubtful whether there is any evidence to suggest that tendering increases the chance of a successful project, in fact for reasons already discussed they may limit the chances of success.
If we look to the example of government procurement where all IT projects must go through an exhaustive tender process, various studies suggest that more than half of IT projects in that space are considered failures by those responsible for initiating them.
So, what is the right approach to system selection?
One option is to take some advice and signposting from a business such as Hindsight Legal who have carefully researched the viable products in the market, and then engage fully with a couple of recommended suppliers to evaluate their solutions and build a relationship with them.
The key thing for me is that everything centres around engagement, software suppliers are not the enemy and to be kept at arm's length; although I do recognise that the “blunt force sales” approach of some vendors is something to be avoided.
Remember that it's not what you buy, but who you buy it from that is most important. Most systems are broadly comparable in functional terms, and this is likely to a be a long-term relationship so knowing and trusting the supplier and their future roadmap is critical.
Software vendors implement their solutions every day and have a tried and tested approach to understanding a customer's requirements and constructing their solution around this. Let them take you through their established discovery process, ensuring you define any specific requirements you have with them.
Like an interview for an employee, as much as you want to understand if a vendor is a good fit for you, they will want to ensure that you are a good fit for them and that they can deliver what you want.
Poor projects affect both suppliers and those being supplied and neither party wants to set themselves up to fail.
If you’d like advice, or to discuss system selection, contact Hindsight Legal at https://www.hindsightlegal.com/
