Monday, August 01, 2016
Harsh realities in a tender world, buying decisions gone awry
Vision of the company had received high visibility with an audacious plan and well-articulated fast track execution; everyone wanted to be associated with this new star which demonstrated some pioneering traits. Global consultants and local talent flocked to provide inputs to the team flooding them with goodwill and empowering them to create the hereto unknown foundations for similar future projects in the industry. The company had done well to define boundaries in which they needed to procure services and products.
Soliciting interest they were flooded with requests to partner leaving them spoilt for choices. They fell in the ambit of tender based selection which was run fair and square despite a few pushes and pulls from vested interests. As the project progressed, they also realized that success begets many leeches and catches attention of the unscrupulous; pressure from highly placed sources put the management in a spot freezing decision making. The grandiose plans which had brought them into the limelight now began to appear out of reach.
Rifts began to show between the well-meaning Advisors and the internal decision makers, who were finding it difficult to stay unaffected by the pressures. The goals had not shifted, path to achieving them now needed to traverse and overcome boulders and potholes that had suddenly appeared to slow them down. Each step required careful analysis of impact, outcomes and how to keep decisions fair with the highest levels of integrity. The friction started slowing decision making, bickering started and soured relationships within the team.
There are many types of enterprise buying behaviors; these are institutionalized based on past experience or driven by industry, geography and status of the company –private, public sector or government enterprise. Public and Government enterprise typically use tendering as a vehicle to evaluate potential vendors and solutions. They have fairly rigorous processes, documentation and compliance requirements which need to withstand pressures, regulatory scrutiny as well as challenges from sore losers.
Tenders were created as a process to bring in transparency and independence from biased buyers who may be influenced by various means – ethical or otherwise. Tenders require capture of detailed requirements, terms of reference and engagement, qualification criteria, timelines, definition of success and failure, and what have you. These voluminous and comprehensive documents also clearly define the process that will be used to select the final bidder thereby ensuring that no aspersions can be cast on the process or people.
Over a period of time the tendering scene became a vehicle to source the lowest cost services or merchandise for defined requirements or specifications. Technology led reverse auctions became a price discovery mechanism for the lowest cost after tender based selection for minimum viable product or service meeting specific requirements. Celebrations were short-lived with compromises associated with lowest price leading to even more rigor in the pre-selection stages with resultant delays in decision making.
To overcome the challenge, another stream evolved with Quality and Cost Based Selection or QCBS improving the decision making. Weightages could now be attached to quality and cost based on which mattered more. Typical scenarios ranged from 70-80% focus on quality to the advantage of the buyer to get better quality at a good price. The perceived highest quality provider needed to be competitive too to get the benefit of QCBS; similarly the lowest price did not guarantee business if comparative quality was low even if it met MVP.
The company had adopted QCBS with independent marquee advisors and evaluators providing their experience in the creation of the tender documents and subsequent assessment of MVP leaving the final decision to fate determined by price. Bidders big and small attempted no holds barred efforts to create high and low watermarks for their participation and leave out others citing highest value at one end to the lowest price at the other. Push, entice, threaten, cajole, plead, they tried everything and anything they could.
External advisors refused to put their credibility on the line, unwilling to bend or change their scores or dilute specifications; the dialogue broke down frequently, the outcomes now uncertain. Inaction was not an option; market reputation began to show signs of withering jolting into action some of the people who wielded power and influence over the direction the company could take. Mediating and helping the impacted stakeholders, they were able to fend off the undesirable elements paving way for an objective decision.
Myth or reality ? The story repeats itself every day in almost every organization attempting to stay above board, more so when there is a perception of incorrigible nature of the buyers created over a period of time.