Why Traditional Procurement Processes Fail for Software Tools

For most companies across industries, Requests for Proposals (RFPs) (or Requests for Information (RFIs), Requests for Qualification (RFQs), etc.) are commonplace. This is especially the case in real estate project delivery, where project teams are accustomed to issuing RFPs and running bid processes for relatively known and well-understood scopes of work.

With momentum building in both CRETech and PropTech, real estate professionals find themselves surrounded by more and more modern technology options that are changing the way they do business. However, these teams continue to rely on an outdated method of information gathering and analysis for procurement - the ridgid, one-dimensional, box-checking exercise that is an RFP process.

The RFP and proposal leveling process can be highly effective when procuring commoditized or well-understood tools and scopes of work in mature industries that evolve slowly - like masonry, windows, or architectural consulting services. Given decades of experience and detailed study, the key questions and requirements can be effectively enumerated by project leaders to guide decision-making. 

However, this process fails in fast-changing industries where the key questions and requirements are constantly evolving, like with technology and software. In these cases, the correct questions and requirements from 5 years ago might be completely off-base for today’s needs. 

Instead of adjusting the lens in which project delivery teams review and assess the latest technology, the status quo remains for procurement. This methodology is not all dissimilar to how bricklayers are procured; RFP > response/bid > leveling > decision to buy. This doesn’t take into account the nuances of new technologies and leads to suboptimal outcomes. Real estate teams are basing their technology assessments on irrelevant, outdated requirements that are tailored to older, traditional applications. 

You wouldn’t hold the latest MacBook Pro to the same standards of the original Apple Macintosh personal computer from 1984, so why do the same with your project delivery software? 

New technology is just that - new. It is tackling age-old challenges in a more efficient manner and leveraging technologies that may not have been on your checklist 5 years ago - think real-time data-analytics, machine learning, proactive intelligence and automation. 

This means that it won't have the same features you once believed to be necessary with your legacy applications. Instead, it will deliver tangible value, including: truly measurable ROI; high user adoption; seamless engagement across your team without exhaustive training from internal IT teams or external consultants; and immediate results within days (not months or years).

Also, by adhering to box-checking criteria, companies big and small are committing themselves to committee-driven decision-making. This has been proven to only complicate an evaluation process since it becomes nearly impossible to please everyone involved -- real estate project managers, accounting teams, leadership, asset managers, etc. 

Instead, each participant ends up making major compromises, leading to difficult adoption of a mediocre product that doesn’t truly move the needle for any part of the organization. Often, all of this procurement effort and consensus building across different functional roles leads to a drawn out process that doesn’t result in a solution. Instead, it often complicates existing workflows and processes - while adding even more tedious administrative tasks - for teams that fail to ever benefit from any upside.  

In the best case scenario, a subset of team members end up using a small portion of the ill-fitting technology’s features. Worst case scenario, no one properly onboards or sees the value in the technology and it is never adopted, leading to expensive “sunk costs” that make it challenging to course correct in the future.  

Once a company is burned by a failed, incomplete, or a generally unsuccessful technology onboarding, they tend to double-down on the traditional procurement process to fix the problem, even if it is years later. This is counterintuitive. Teams need to recognize that the flawed RFP process is what brought in the failed technology. If you’ve been using the same RFP review and assessment process for the duration of your company’s history, it’s likely time to consider a new approach.

How Modern Real Estate Teams Should Choose Software Tools

As more real estate project teams prioritize the need for modern technology and rethink their technology stack, they are also going to need to rethink their software procurement selection process. The rapid evolution of technology means that the way we benchmark and assess technology must change as well to keep current. 

Instead of moving through the same static, outdated box-checking list that was created to evaluate traditional, legacy products, teams need to be more dynamic in their approach. This includes:

CRE Project Management

Running pilots: You wouldn’t buy a car without giving it a test drive, so why commit to new software without experiencing it firsthand? By running a pilot, users are able to see for themselves the different - and sometimes unexpected - functions, features and capabilities that would drive value. More modern offerings have the flexibility, interest and inclination to offer test runs to ensure teams are happy with the product before fully committing; not many traditional technology providers are willing to match this approach.   

Focusing on the usability and deployment: Software and technology will only benefit your business if your employees are able to take full advantage of its offerings with very little friction. Learning new platforms or processes can take time, which can lead to frustration, especially for real estate project teams that already have a lot on their plate. Instead of committing to new technologies that mandate lengthy, time-intensive training (or require external experts to derive value), take usability into account. The more intuitive a platform, the more likely all team members will be able to swiftly and easily migrate to a new way of working. Make sure you understand exactly how your technology provider onboards teams and supports the full adoption across users. 

Thinking outside the box: Technology is fueled by rapid innovation. Which means new, never-before-seen products and features will come to market addressing challenges in a way you didn’t think possible (so how would you know to go looking for it?). As solutions evolve, users need to challenge their own assumptions. Many new technologies leverage capabilities like machine learning, data analytics and automation that “box-checking” requirements for older, legacy applications just wouldn’t cover. Teams should enter any technology assessment with the belief that they’ll learn something new about what’s available to them or uncover a new - and likely more productive and efficient - way of working. Any questions and requirements should come after seeing and understanding demos of new technologies, not before.

Honing in on ROI: Teams should expect technology to do more than just replace a former workflow or digitize certain processes. They should be demanding to see how implementing certain software will generate a meaningful return on investment. A simple box-checking exercise will not reveal these critical - and strategic - details. Teams should ask hard questions about the savings, efficiencies and general value a new software or technology will bring to a business. This is an important business decision and should be treated as such. Don’t let a checklist define how you take your operations to the next level.     

Other high-skilled, knowledge-based industries like finance and manufacturing have been faster to adopt and incorporate effective new technologies, like automation and machine learning. This is because they have not been saddled with traditional procurement philosophies that are so ingrained in the way real estate firms operate.

In fact, a McKinsey study sums it up all too well: “In the United States since 1945, productivity in manufacturing, retail, and agriculture has grown by as much as 1,500 percent; productivity in real estate and construction has barely increased at all.” Much of this unfortunate reality has to do with the sector’s resistance to change and innovation. But this doesn't have to be your reality. 

Consider how you and your company approach a technology review. Are you relying on the same RFP methods from a decade ago? Have those methods previously failed you when bringing in a new solution? Can you clearly articulate the ROI of technology you’ve implemented in the past or are considering today? There is nothing stagnant about technology and there should be nothing status quo about your business processes. Standards have and should change in order to ensure you are finding the perfect, modern day solution for your business.

Ready to take a new approach to software procurement? How about learning more about a modern solution tailor-made for CRE project delivery teams? Find time with our team today to see how you could leverage automation, data analytics and proactive intelligence to deliver projects on-time and on-budget. Think outside the box. Upgrade with Northspyre.