Why RFPs Are A Waste Of Time

The simple truth is that 99% of all RFPs are market data gathering expeditions. What most buyers want are crazy low prices that they can take back to the incumbent provider, wave triumphantly in their face, and use to negotiate new, more favorable contracts. The new carrier kid on the block has no real chance of grabbing a slice of the pie. Or the RFP is simply a way to update their understanding of market pricing. Often an annual exercise done at the same time of every year. Vendors who participate in these annual rites are simply providing free consulting. It is a waste of their pricing department's time. 

RFPs are an excellent way of alienating smart vendors who realize their chances of winning business are low due to the horde of carriers bidding for the purported business. I say 'purported' because most of the time only a fraction of the RPF circuits requests are purchased. If an RFP is sent to 40 carriers, the vast majority of participants will be disappointed and inevitably no longer take the customer seriously or participate in future requests. Procurement departments do not want to pay for consultants or brokers like myself to give them market insight because to do so is to admit they don't know the market. So they try to get a free lunch by dangling bananas in front of the sales apes. Young salesmen are particularly vulnerable to the seductive allure of a huge RFP promising a payout big enough to cover a Lamborghini. 

You don't need RFPs to do good procurement. In fact, it is an almost total waste of resources. A buyer needs to educate themselves about the market and the market should be their focus, not internal meetings with other senior managers. That is the AT&T disease where their employees know more about AT&T than the industry in which they work. I saw it first hand as a AT&T forecasting analyst at the Bedminster, New Jersey office in the 90s. For international circuit requirements, education means studying the subsea cables because if a provider is not on them, then it is doing simple resale and should be avoided like the plague in most cases. A buyer must be engaged with vendors or if the soul sucking corporate bureaucracy simply consumes too much of his or her time, work with someone like myself who is regularly closing deals and has first hand knowledge of transactions as well as carrier strengths and weaknesses. While I do take care of my vendors, I am not tied exclusively to anyone of them. I can match make which a sales employee cannot. 

I have participated in RFPs. I actually introduced a Russian carrier to an American CDN and the result has been 4x 100G wave sales. But success overall is rare. If you are playing the odds, my advice is to abstain. Participating in RFPs is like going to the casinos. Long term the odds guarantee failure. One exception is where you or the carrier you represent is a new player or simply the buyer knows little about you. In that case bidding once might be a good way to establish a dialogue. But if you get nothing out of it and your pricing department spends days and days preparing the bid, be prepared to suffer Julius Cesar's fate in the Capitol.