In today’s fast-paced world of software-as-a-services (SaaS), picking the perfect cloud partner is crucial for businesses. Especially for enterprise-level software, sending out a Request for Proposal (RFP) is often seen as the best go-to strategy. With this approach, you received proposals from vendors, sift through their documentation, and pinpoint the best deal. However, discovering the real truth behind these RFP responses often remains hidden behind catchy slogans and half-told truths from the vendors. So, what’s the secret to piercing through the buzz and finding out what’s real when selecting the best SaaS vendor for your business? The answer lies in sharpening your information gathering skills, questioning the integrity of data sources, and possibly adopting an unconventional approach to vendor selection.

In this article, I’ll identify the barriers to effective information gathering using traditional RFP approaches. Also, I’ll detail the challenges with traditional RFP data sources. Most importantly, I’ll provide a business case with examples of leveraging a vendor-on-vendor assessment as part of your RFP process. As a result, this advice will place you in a better position for selecting the best SaaS vendor for your business.

1. Barriers to Effective Information Gathering During Saas Vendor Selection.

Navigating the complex world of Software as a Service (SaaS) vendor selection is akin to assembling a jigsaw puzzle without a guiding picture. Indeed, organizations face a daunting task of extracting accurate and relevant information from a sea of Request For Proposal (RFP) responses.

Along with this deluge of data, much of the information is biased. Without a doubt, RFP data will favor the vendor who has carefully curated each response to place themselves in the best possible light. In fact, the challenge becomes even more pronounced as vendors, eager to secure a deal, may over-promise capabilities or understate limitations.

a. Barriers To Effective Information Gathering For a SaaS RFP.

Especially for enterprise-level SaaS RFPs, there are many reasons that prevent the effective gathering of the information needed. Indeed when following traditional RFP procedures, the barriers to collecting relevant vendor information are many. See list below:

1) Inadequate Requirements Definition and Evaluation Criteria.

Companies often struggle to select the right SaaS vendor due to a lack of clearly defined requirements and measurable evaluation criteria. Thus, this leads to misaligned expectations and choices.

2) Insufficient Market Research to Identify Best Vendors.

Without thorough market research, businesses may miss out on discovering superior vendors.

3) Didn’t Ask the Right RFP Questions.

A common barrier in vendor selection is the failure to pose critical RFP questions. Thus, companies do not uncover essential insights into a vendor’s capabilities and fit.

4) Information Overload with Too Many RFP Questions.

Organizations can become overwhelmed by the sheer volume of responses when too many non-essential questions are included in the RFP.

5) Relying Solely on Vendor-Supplied Information.

Exclusive reliance on promotional materials and data provided by vendors can lead to biased and incomplete information. Hence, this hinders businesses from having a well-rounded assessment.

6) Not Requesting Customer References and Case Studies.

Neglecting to request customer references and case studies leaves businesses without a real-world understanding of a vendor’s performance and customer satisfaction.

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7) May Need Other Methods to Gather Information Such as a Proof Of Concept (POC).

A simple demo or collecting responses to a RFP are not usually enough for many enterprise-level SaaS evaluations. This is because this type of software is normally very complex and mission critical to the business. In this case, a business may need to conduct a Proof of Concept using their business’ data to reveal practical insights into the product’s functionality.

8) Selection Already Made: Just Going Through the Process.

In some cases, a vendor selection process is merely a formality because a decision has been pre-made. Thus, the information-gathering process becomes superficial and fails to scrutinize the chosen solution adequately.

b. References for Mitigate These Barriers to RFP Information Gathering.

Now, businesses can mitigate some of these information-gathering barriers by just improving their RFP processes using classical RFP procedures. Also, there is extensive literature on Business-To-Business (B2B) procurement best practices. In fact for B2B procurement, RFP best practices are similar no matter what the product or service. This includes more complex procurement processes where a RFP is warranted like for enterprise-level SaaS, 3rd Party Logistics Services, IT outsourcing, and consulting services. For more information on RFP best practices, see Sievo’s The RFP process explained | 8-steps to RFP, Responsive’s The RFP process: The ultimate step-by-step guide, Also, see my article on strategic sourcing, The Strategic Sourcing Process Using Data Analysis In 7 Steps: The Best Way For Unsurpassed Supplier Results.

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2. SaaS Vendor Selection Data Sources: A Question of Garbage In, Garbage Out (GIGO).

Data integrity is the cornerstone of sound decision-making in SaaS vendor selection. Unfortunately, the principle of GIGO (Garbage In, Garbage Out) looms large. This is because in many cases RFP data sources are biased and incomplete. Hence, the quality of the selection process and final vendor selection will in many cases be flawed because ii is directly tied to the sub par quality of the input data. So, organizations must recognize that not all data sources are created equal. Indeed, relying solely on RFP responses and vendor-provided information can lead to skewed perceptions and ill-informed choices.

To combat bad vendor selection information, businesses need to diversify their data sources, incorporating third-party reviews, customer testimonials, and independent analyses to construct a more accurate and comprehensive picture of each vendor’s true capabilities and performance. Even then, you still may not have the best information to select the right SaaS vendor that match your business requirements. To detail, below is a description of different data sources used in most RFP vendor selections

Traditional RFP Vendor Selection Data Sources

• Vendor-Supplied Information. It is a given that this information is biased and overly optimistic.
• Existing SaaS Customer. This information is valuable when it comes directly from current users of the SaaS. In this case, you can gain insights into actual performance and customer satisfaction.
• 3rd Party Consultant. Engaging a third-party consultant can be advantageous; however, caution is necessary. Often, consultants are presupposed in favoring a specific SaaS solution. Yet, if such biases can be managed, their expertise and technical acumen can facilitate a thorough and professional analysis.
• Financial Sources. Especially for long-term viability, it is benefitial to review financial statements, market reports, and credit ratings to understand the fiscal health and stability of SaaS vendors.
• Independent Organizations. This can include trade magazines, industry organizations, and government agencies. Again, due diligence is necessary in that many of these trade and industry organizations are sponsored by the same vendors that you may be evaluating. At the same time, independent and government agencies are invaluable for information such as business ratings as well as health, safety, and environmental compliance.
• Employee-Supplied Information. Your own employees are a great source of information for RFP analysis. In many cases, you may have employees within your company who have direct experience with some of the software vendors. Get them involved in the RFP process.  Also, direct research is very helpful such as site visits, demos, and participation in pilot projects.

For more information of the process and pitfalls of collecting RFP information, see Nanonets’ The Vendor Selection & Evaluation Process + Criteria Checklist, SelectHub’s ERP Software Selection Process and Criteria, and Lokad’s Adversarial market research for enterprise software.

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3. The Case for a SaaS Vendor-on-Vendor Assessment: Leveraging Opposition Research.

So, when gathering RFP information to select a SaaS vendor there is a good chance you are going to get a lot of biased information from each prospective software vendor. Indeed, this is a fact of life. To combat this, there is another source of information that most companies do not gather as part of their SaaS RFP process; and that is a vendor-on-vendor assessment. Yes, a vendor opposition assessment from another SaaS competitor will undoubtedly have a negative bias, but in many cases it is well researched information.

Just think about it – almost all competitive businesses will do thorough opposition research of their top competitors. Especially in the software industry, they will not only research their competitors, but will also attempt to reverse engineer their competitors’ products. So, by gleaming this opposition research from competing software vendors, there is a good chance that in aggregate you will get a much better assessment of each vendor. Ultimately, this will lead you to picking the best SaaS vendor that meets your needs. Below, I’ll highlight the advantages of a SaaS vendor-on-vendor assessment and provide an example of how you can incorporate this type of assessment in your next RFP.

a. Advantages of a SaaS Vendor-On-Vendor RFP Assessment.

There are many advantages to conducting a vendor-on-vendor RFP assessment. Indeed, this method not only can streamline the decision-making process but also uncovers a wealth of information. As a result, this efficient information gathering approach offers a business a superior method of selecting the best SaaS vendor. From tapping into expert insights to gaining better bargaining power, let’s explore the distinct advantages of a SaaS vendor-on-vendor RFP assessment.

Vendor-On-Vendor RFP Assessment Advantages

• Assures That You Evaluate The Top Vendors. Engaging in a vendor-on-vendor RFP assessment ensures that you identify the most highly-regarded SaaS vendors. Who knows better than the vendor themselves on who are their top competitors?
• In Aggregate, Get More Balanced View of Each Vendor. This assessment method combines multiple perspectives to form a comprehensive and candid appraisal of each vendor’s strengths and weaknesses.
• Access the Best Industry Research and Expertise. Through a vendor-on-vendor assessment, you gain access to best experts in the SaaS industry, the SaaS vendors themselves. Who else has the latest industry research and the seasoned expertise?
• Enhanced Comparison of Features and Offerings. Leveraging SaaS vendors’ opposition research will undoubtedly identify and compare the most important software features that best meet your needs. In fact, some of these features you may not have identified or clearly specified in your RFP’s original requirements.
• Streamlined Vendor Comparison. By soliciting vendor-on-vendor assessments, you can minimize the number of RFP questions that vendors need to respond to. Thus, this saves time for both you and the SaaS vendors in responding to the RFP. Also, this can significantly reduce resources and labor needed for the RFP.
• Improved Negotiation Leverage with Potential Vendors. With much improved information from SaaS vendors, you will are armed with better information to gain favorable terms and pricing.

b. How to Go About A SaaS Vendor-On-Vendor Assessment?

Over the years I have participated in hundreds of RFPs as a vendor, a 3rd party consultant, and within a customer organization. This has included enterprise SaaS software, 3rd party logistics (3PL) services, IT outsourcing, consulting services, and technology procurement. What strikes me is that in very few cases did the RFP process include a vendor-on-vendor assessment. In retrospect, I think in most cases these RFP processes would have gone much better if a vendor-on-vendor assessment had been included due to all the advantages listed previously. So, how best to incorporate a SaaS vendor-on-vendor assessment in an RFP process? 

1) The “Silver Bullet” Question.

Each business and every RFP is unique as well as the vendors responding to the RFP. However, every RFP can incorporate a vendor-on-vendor assessment by asking each prospective vendor a question like this:

 “If you had a silver bullet and you could shoot it to get rid of one of your competitors, who would it be?” 

This type of question will begin the process of prospective vendors giving you a candid assessment of their top competitors. Thus, providing a wealth of information about all your prospective vendors from expert sources. 

This question has its origins in Andy Grove’s discussions on strategic inflection points. Also, this question has come up in discussions with Warren Buffett in regard to how he conducts market research for his investments. Indeed as highlighted previously, there are many advantages to asking this type of question within an RFP process. Also, there are many ways that you can incorporate this type of questioning in your RFP process. For example, Joannes Vermorel, CEO of Lokad, recommends that you ask two questions to prospective software vendors: See below.

2) The Two Requests to Ask in a Vendor-On-Vendor Assessment

• Present yourself.
• Present your peers.

That’s it. These questions keep it simple and open-ended. In this case, you let the vendor representatives who have the industry experience to compare their SaaS offering against their top competitors.

Also to add to these questions, you can ask each vendor to rank each of their competitors. At the same time, it is probably not best to use a detailed criteria list where they rank each other’s attributes. Indeed, it is best to keep it simple and not just create a “laundry list” that elongates the process for all parties. Further by keeping your questions simple, you are relying on the vendors’ expertise to provide the key attributes that distinguish themselves from each of their competitors. This will assure that you leverage their industry expertise and experience and not just get bogged down in non-essential information.

 For a much more detailed discussion on vendor-on-vendor assessments, see Joannes Vermorel’s article on Adversarial market research for enterprise software. In this piece and accompanying lecture, he makes a strong case for businesses to use “adversarial market research” to help assess enterprise SasS vendors. Indeed, he offers an exemplary case of opposition research of Supply Chain Optimization Vendors that are competitors of his company, Lokad. Specifically, in his opposition research, he presents a detailed analysis of his competitors, contrasting their services with his company’s Supply Chain Optimization as a Service offering.

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