Vendor Evaluation

## The funnel, not a single step Vendor selection for significant purchases follows a funnel, not a single step. An **RFI (Request for Information)** is the entry point: a short, structured questionnaire sent to a broad market scan of vendors (anywhere from 10 to 30+) asking about: - company size, years in business - product capabilities at a high level - target customer profile - integration options - rough pricing tier It's cheap to answer (a few hours of a vendor's sales-engineering time) and cheap to evaluate (a spreadsheet skim), by design. An **RFP (Request for Proposal)** is the next stage, sent only to the shortlist that survives RFI filtering (typically 3-6 vendors). It's a formal, detailed document: - specific functional and non-functional requirements - mandatory vs nice-to-have features - SLA expectations - security/compliance requirements - implementation timeline asks - a fixed response template so every vendor answers the same questions in the same structure, enabling line-by-line comparison Some organizations add an **RFQ (Request for Quote)** as a further narrowing step focused purely on pricing once functional fit is established. ## Why two stages The two-stage structure exists to **manage cost and risk on both sides of the table**. Writing a rigorous RFP — with weighted criteria, security questionnaires, reference requirements, and legal terms — is expensive: it can take a solution architect and a procurement lead days of work, and evaluating five or more full RFP responses in that depth is a multi-week effort. If that cost is spent against a wide field, most of it is wasted on vendors that were never going to win. The RFI acts as **a cheap filter**: it eliminates vendors that don't meet baseline criteria before anyone invests in the expensive comparison — - wrong company size - no relevant integrations - unsupported deployment model - obviously wrong price tier It also protects vendors' time and goodwill — a vendor who spends two weeks on a detailed proposal for a deal they had zero chance of winning is a vendor who deprioritizes the buyer next time. ## What the funnel costs The cost of the two-stage approach is **time and process overhead**: running an RFI adds calendar weeks to a project before RFP work even starts, which is a real problem under schedule pressure. Some organizations skip the RFI when the market is already well understood (e.g., there are obviously only three viable vendors for a given enterprise capability) and go straight to RFP — a legitimate shortcut, not a mistake, when the buyer already has strong market knowledge. The opposite failure is treating the RFI as a formality and inviting everyone who responds well into the RFP stage regardless of fit, which defeats the purpose of the filter and just moves the wasted effort one stage later. ## Where it goes wrong 1. **RFP fatigue driving lazy comparison** is the most common process failure: after weeks of vendor demos and hundreds of pages of proposals, evaluators default to gut feel or to whichever vendor's sales team built the best rapport, rather than to the criteria defined up front. 2. Another failure is an RFP whose **requirements were written generically** (copied from a template) rather than from the actual system's constraints, so every vendor scores similarly and the document produces no real signal. 3. A third, more expensive failure **surfaces only after signing**: the RFI/RFP process asked about current capabilities but never asked about roadmap, financial stability, or exit terms, so the org discovers post-contract that the product doesn't do something it assumed, or that the vendor is being acquired and the roadmap is about to change. ## A worked example A mid-size company needs a new customer data platform. They send an RFI to 15 vendors ranging from point-solution startups to full suite players, asking about deployment model (SaaS vs self-hosted), data residency options, and rough annual cost. Eight responses come back; five are eliminated immediately because they're SaaS-only and the company has a hard on-prem requirement for one region, and three more are eliminated for being priced far outside budget. The remaining seven go to a quick capability call, narrowing to four. Those four receive the full RFP: - a 40-requirement scored questionnaire - a security/compliance annex - a request for three reference customers of similar size and industry - a fixed-format pricing table Only at that point does the team invest in multi-week evaluation — because the funnel already removed vendors that would have failed on hard constraints, the RFP stage is spent comparing genuinely viable options rather than filtering out obviously wrong ones.