Buyers Log On For Standard Agent RFP

Indicating just how hungry buyers are for a simplified, low-cost agency request for proposals process, 159 companies this year have signed up for EBuyerSolutions, an online, standardized RFP service.

Companies with travel budgets ranging in size from $1 million to just over $40 million in annual U.S. booked air spending bought access to the online RFP service, including Lockheed Martin and General Motors and such smaller companies as Gates Rubber Co. in Denver and Oak Brook, Ill.-based Great Lakes Dredge & Dock.

EBuyerSolutions, developed by veteran consultant Ralph Brown, opened in March. It promises to streamline the RFP process by offering Internet access to an RFP template and vendor databases of all the largest players in the agency business, as well as an extensive selection of suppliers in the self-booking, ground transportation, hotel, payment system and corporate card markets.

For an initial $495 fee, for up to a year buyers can access model RFPs for any of EBuyerSolutions' supplier categories and distribute it via the Internet to as many vendors as they wish. There is a $125 annual fee for each additional year the service is used.

Travel buyers and suppliers have agreed for years that the agency request for proposals process is too unwieldy and expensive. A heavily attended session at the National Business Travel Association revealed that the association has yet to update its agency RFP, but that many buyers going out to bid for agency services need some sort of road map for their RFPs.

"We're finding that companies often use RFPs that are inappropriate for their needs," said Sheri Carlsen, director of global travel services for EMC Corp. and co-chair of NBTA's Agency RFP taskforce. "Small companies that do about $5 million in air use the same RFP form Hewlett-Packard used, so we're trying to create a model RFP that is going to be customizable."

The updated NBTA agency RFP form will be finished and available on the association's Web site (www.nbta.org) by next summer.

Despite the clamoring at NBTA and the substantial number of companies that have signed on for EBuyerSolutions, standard RFPs are not yet ubiquitous. "We're marketing to buyers and it's been pretty good," said EBuyerSolutions creator Ralph Brown, "but they're not exactly rushing to it," partly because the word has yet to get out.

Roger Degroot, director of business services at Chicago-based manufacturing company Grainger Inc., used Ebuyersolutions' online RFP service to select an agency this summer. Grainger is a publicly traded company, with more than 600 domestic locations.

"It was very simple and it saved me a lot of time," Degroot said. "I sent the RFP to our incumbent and five other agencies. The RFP covered onsite and offsite services in a fill-in-the-blanks format. Some things were fixed, like commissions, which made it possible to make it an apples to apples comparison on a cost basis. Also, the agencies could add service information."

Despite the positives of saving time and being able to make a clearer comparison between agencies, Degroot said the process did have a few negatives when it came to the agencies' responses. "Despite me telling the agencies to limit their responses to the pro formas, some still gave me a ton of information that I didn't need. One agency even had their response to my RFP hardbound at considerable expense to them, and it just contained a lot of fluff information and sales literature," Degroot said. "It's an unnecessary cost they're incurring, and that doesn't make their services any cheaper."

Though travel buyers identify agencies as culprits in the RFP process that muddy the waters of decision making with sales literature-laden proposals and unclear pricing schemes, agencies also decry the cost and complication of the bidding process.

"We figure that it costs us on average $40,000 to produce all the documents we need for an RFP," said Danny Hood, president of the Atlanta-based mega travel agency WorldTravel BTI. "Between the effort put in the RFP process by the buyer and the agency, it can easily go to $100,000, and I've heard of some people saying it can cost as much as $500,000," to cover agency selection expenses, such as holding various meetings in multiple destinations and hiring outside consultants.

Any reduction in those costs would lower the total cost of travel management, Hood said. "It's a benefit to all parties if we can use a standard RFP," he said, "because it's a savings of time and money for everyone."

Still, Hood recognized that standardized request for proposals aren't appropriate for every company. "Midsize companies with $2 million to $10 million in air spending are most likely to get a lot out of standardized RFPs," he said. "Larger, international programs will need more customized RFPs. In each country, people do business differently. They have different laws, terminology and types of transportation, such as rail and ferry, so global RFPs require a lot of tailoring."

Indeed, despite the cost agencies incur in the RFP process, suppliers seem split as to whether model RFPs are appropriate for agency bidding. "We've had a couple of RFPs from EBuyerSolutions, and in some ways it makes sense to have standardized RFPs," said Navigant International president and COO Thom Nulty, "but no two customers are alike. It's an interesting approach, but it's not right for everybody."

Because of the complex services involved in travel management, some feel the model RFPs are better suited to other commodities.

"I think technology has a better chance of getting standardized RFPs rather than travel management, because in some ways there are fewer variables involved," said Steve Reynolds, executive vice president and general manager of Atlanta-based TRX Technology Services, whose ResAssist online booking product is featured on EBuyerSolutions.com.

"For example, if you want multiple GDS access or other features, etc., you can check off those features and take it from there. Standardized RFPs could be a good way of narrowing your choices down for an online booking system."

In many cases, buyers are finding success with standard RFPs.

"I'm in the middle of using EBuyerSolutions right now for the hotel portion and it makes it very easy," said Phoenix-based ON Semiconductor global travel manager Colleen Guhin. "Basically, I determine what hotels I want to include in my RFP, but once I do that, I click onto those hotels in the database, add a cover letter, label which fields I want to include and it sends it to them automatically.

"I'm not going out to bid for anything else, but if I were, I would absolutely consider doing another online RFP," Guhin continued. "This has been considerably less expensive than going through a traditional hotel RFP company."