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Software development request for proposal: Introduction

In 2021, almost every company is connected to the world of technologies in some way. While some organizations rely on off-the-shelf software that doesn’t need additional experts to implement, others still need to engage with outside experts to achieve their business goals. This necessity has led to a massive popularity in outsourcing: The global IT outsourcing market will be worth $397.6 billion by 2025, according to Capital Counselor.

Outsourcing Statistics

We, at SPD Group, have created a series of materials that would allow CEOs and CTOs of companies as well as entrepreneurs to find a perfect match for a software development partner. We explained How to Leverage Offshore Software Development in 2021, How to hire a dedicated development team, and others, sharing with you insights based on our own experiences.

This time, we will dive deep into explaining how to find a technical outsourcing partner in an even more practical way: This article will guide you on how to prepare an RFP. Knowing how to write a proper Request for Proposal for software development will allow you to efficiently connect with IT vendors and create products that will bring tangible results to your organization.

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What is an RFP for software development?

An RFP (Request for Proposal) is the first document you need to write to connect with a software development partner. Why is developing an RFP so important? It allows you to set crucial specific details of the project as well as the expected timeline. Software development companies will submit their bids after you send them your RFP, and all further discussions and negotiations will be based on the information in this document. This is also a time-saving tool that will help you move from unfitting vendors fast and find the right one for you.

Ultimately, having a proposal for software development will help you find out as much information as possible from potential vendors and even reveal weak points in your document that you never noticed before. The better your document is, the more chances you will have to receive high-quality proposals from the start. Now that we have defined RFP, let’s take a look at its main components.

An example of software RFP

Example of Software RFP

Who should write software RFP?

There are several choices for the right person to take over this process. The deciding factors here are the complexion of the team and the side of the project. For example, the Product Manager can handle this task with help from particular experts. It is common that the same team that creates RFP later is involved in evaluating potential partners and shaping the future of the project.

As we can see, the creation of this document is actually teamwork. However, there is always one main writer. Aside from the product manager, it can be the product owner, project manager, or business analyst. The approach of writing an RFP can vary from company to company, but it will be a solid idea to assign one main specialist and provide him access to all technical advisory that may be required.

What sections does an RFP for software development consist of?

There is no standard on how to create an RFP among the organizations. However, there are some common bases that should be covered in order to get the results. The mastery is to strike a balance where just the right amount of information is presented to the vendors. The lack of information can hurt your selection of vendors and waste your time, while too much information can confuse vendors. The most important thing for RFP is to provide the accurate scope of the project and the number of required experts.

The description and executive summary of your company

Before a concise and specific overview of the project goals, requirements, limitations, and target audience, it will be a good plan to start with the executive summary. With regards to the information about the company, it is critical to familiarize the potential vendor with your organization. The chances are that your website is lacking the details on what your organization does, what values it shares, and what unique proposition to the market it offers.

Strive to be as specific as you can, relying on easily trackable metrics when possible, and your document may be among the best executive summary samples, hitting the target and providing vendors with a clear understanding of your company.

Question ideas for executive summary

Try to enlist here the goals and needs of your business, leaving technical details to another section for software developers.

The deliverables and the scope of the project

This part of the document is probably the most important, because vendors base their calculations according to the details placed here.

Product management

First and foremost, let’s talk about control. You need to decide to what extent you want to control the development process. You can either trust your development partner completely on managing the project and hiring talent or add additional system architects, tech leads, and engineering managers to your team to have a stronger hold on the technical side. So, it will be a good idea to clear out this aspect in your document.

Product requirements

Ultimately, these requirements would shape your final product. To define your product requirements, try to answer the following questions with as much detail as you can:

  • How will the software solution you want to develop help you achieve your business goals?
  • What specific processes will the planned software improve?
  • Does your existing solution have any drawbacks? If so, what are they?
  • Who are your target customers?
  • What would the user experience be like?
  • What will the product be capable of doing?
  • Which tasks will be automated and which will remain manual?
  • What are the details of each component of the product?
  • Are there any processes that you won’t compromise on?

Prepare some high-level user stories for your vendor to achieve a better understanding of this aspect. Usually, a big product during the development process would have thousands or dozens of thousands of user stories. However, as a part of the RFP, it will be enough to highlight only a few of them.

Functional requirements

This is the list of the specific functions your future project must have in order to be considered complete. You may choose between explaining them on the high-level requirements and going into detail with the low-level ones. Either way, here, you can ask the vendor how your functional requirements may affect the user experience of the project. Remember that functional design is the vision of what you need to achieve, not the details of building it.

Project management requirements

This section describes all aspects related to the management of the project. How should the vendor manage it?

You need to set your requirements for communication methods, development platforms, testing methods, tools for project management, methodologies, and your team structure. While you can do it by yourself, you can also ask for vendor suggestions if you don’t have enough expertise to cover all of those areas. You should also mention the engagement model you want to implement: a dedicated team or team extension, for example. It will be reasonable to ask the vendor to have a project coordinator on their side.

As for team structure, you should determine what domain experts, UI/UX designers, developers, managers, security experts, system analysts, and other team members you require to achieve your project goals. You may have some of them working in your company that might collaborate with the vendor’s team. Else, the vendor’s team may be lacking some required experts, and additional time may be required to hire them.

A sample of a functional requirement might look like this:

An E-commerce website should be able to operate with 5 payment systems seamlessly.

Infrastructure and security requirements

Your IT vendor might have some infrastructure constraints that could lead to failing deadlines or exceeding budget expectations. To prevent that, make sure to have clear and detailed infrastructure-related requirements. Here are some questions that might help you:

  • What is the hardware and software infrastructure of the vendor?
  • How does the vendor protect intellectual property rights and data security?

These are some examples of the infrastructure requirements you may start with:

  • Regular infrastructure monitoring
  • The usage of the latest anti-malware software
  • Safe data security systems with the occasional penetration tests and updates
  • A thought out NDA
  • Adhering to the latest security practices and revising approaches periodically

Approaches to communication during the software development

You should be aware of how you will be informed about reaching each milestone during the development process. Jira, Slack, and Trello are examples of the most popular software to reach that goal. Don’t forget to ask your team whether they are comfortable communicating using the selected tool. Additionally, you may determine the sync call schedule with the vendor beforehand to keep your finger on the pulse.

Quality Assurance

It is one of the main functions of the software delivery process that maximizes the chances to get a properly working final product. In order to achieve great results in Quality Assurance, you need to clarify the testing approach used by the vendor and find out whether it will be possible to adjust that process according to your needs if required. Once again, you can ask the vendor for help here, so more effective QA approaches could be offered by your partner.

Bid submission timeline

It is common practice for companies to send RFPs to a handful of IT vendors and discuss. The list of vendors can be recommended by other companies or previous projects or be based on reviews. Sometimes, you can go with the RFP to one particular software vendor and start working on a solution without any actual selection process.

However, for some large enterprises with a big budget and project, it makes sense to start a tender. You need to have strict selection criteria that would allow you to pick the best candidate. Sometimes, the experience and the proven track record can become the deciding factor. In other instances, a reasonable price and a few good references might play a key role.

Depending on the complexity of the project, these steps may vary, and you can miss some of them. However, it is critical to set timelines for different RFP stages in order to improve your chances to get correct estimates from vendors.

Bid submission timeline

Vendor bids format

To help you make your decisions faster, you need to have a proposal format. While the exact structure may differ, the main point should include:

  • The name of the vendor and the list of proven completed projects
  • The vendor’s full location
  • The qualifications of each team member proposed for your project
  • A detailed breakdown of costs and rates
  • A post-development plan that includes maintenance and additional staff training
  • The vendor’s vision and the opinion on the final product
  • The development process and a set of KPIs for progress analysis that the vendor wishes to follow
  • Any possible references by the companies you might know

Provide vendors with a ready-to-fill format and allow them to add additional documentation and information when needed. Covering all aforementioned aspects will be enough for the RFP response template for software development.

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Tips and best practices on how to write an RFP

Avoid abstraction as much as you can

Try to be on to the point in every section of the RFP structure. Always remember that the essence of this document is to provide clarity, context, and transparency to the vendors.

Add in some visuals

To enhance clarity, add as many mock-ups and screenshots of a potential product if it is possible.

Seek help when you need it

As mentioned earlier, creating an RFP is often a team effort, with a single expert responsible for the result. But if you feel that you require additional expertise in the technical aspects of the development process or the domain, feel free to ask for consultation with a more experienced organization.

Decide what’s important

Before issuing the document, decide for yourself the must-have features and those that will be nice to have at some point in the future. What do you need for the Minimal Viable Product (MVP)? What features will be necessary for the full product, and what could be added after the release?

Leverage common practice

Yes, there is no standard RFP format for software projects, and every document is unique. However, there are some questions and the sections in the format that are the same. The details about customer success, evaluation, and terms and conditions might be similar, so feel free to follow the existing examples.

Give enough time

Keep in mind that with a bigger project, it can take several weeks before you receive your first valid bids. While setting a bid submission timeline, provide vendors with enough time to prepare a realistic offer. So, make sure not to send your RFP at the last minute!

The inclusion of the budget is optional

Budget is not always included in the software request for proposal, and there are a few good reasons why. It is commonplace that the budget begins to be discussed after you have found your potential partners. The vendors make calculations on how much their services might cost for this particular project so that you are able to make an informed decision. Actually, you might not even imagine the final cost of the project if you don’t have technical expertise and experience in software development, so the vendors will help you with this.

For projects with strict budget limitations, it makes sense to include a budget section in your RFP. Knowing how much money you plan to spend on the project, vendors can make a positive decision on proposing their offer to you in a questionable situation. The inclusion of the estimated budget will add to further negotiations between both sides. The vendor will be able to calculate whether it is possible to achieve the set results.

Understand the real cost of going with the lowest price

Startups are especially vulnerable to falling into the trap of searching for the lowest price on the market. It might seem obvious, but vendors with the lowest rates might end up being the most expensive ones. With a low price, you can expect lower quality, less functionality, and most importantly, a slower development process. Time is critical for any product, and flaws in quality and execution might lead to rebuilding certain elements or an entire project.

What happens next: Selection criteria

If your organization needs to start a tender and no obvious vendors are available, then we should move on to the selection. Usually, vendor selection is divided into two stages: pre-qualification and selection.

Pre-qualification stage

The key idea behind this stage is to filter out the vendors who would not be able to help you with the project. You may ask for even more references and details on how the specific vendors dealt with similar projects or solved challenges in the particular industries. You may possibly need to sort out hundreds of vendor replies, so the selection criteria must be clear and straightforward.

To get the best results, you have an option to create a Pre-Qualification Questionnaire (PQQ) to help you to produce a shortlist of vendors. This is somewhat similar to the proposal format mentioned above but with the inclusion of more detailed and specific questions. Depending on the case, you might add questions that contain the following factors:

Pre-qualification stage factors

Selection stage

Now that you have your shortlist of vendors, it’s time to clear out some more things to make your final decision:

  • What will be the estimated cost for the development of the project?
  • Can the vendor share details on the technical vision of the project?
  • What will be the deadlines for each stage of the software development process?
  • What will be the terms of sharing intellectual property?

Here, don’t forget to include the things you won’t compromise on. It will help you save time and prevent possible problems that might arise in the future. Not signing NDAs before the start of the development process or weak security practices might be things that you should avoid in your potential partnership.

Hopefully, during the selection stage, you will find your perfect match for a software development partner that will help you to achieve your project goals.

Conclusion

The perfect request for proposal simply doesn’t exist, because there are so many variables that can make this document very complicated. Regardless, we have tried to give you the most detailed guidelines with parts of RFP examples for software development, mentioning the key sections you should be aware of. Hopefully, the points we talked about will help your organization to get the most out of custom software development.

When the document is done right, the vendors will know exactly what you want to build and whether they have the necessary expertise, specialists, and capacities to help you. Sometimes, it can be a real challenge to write an effective RFP that will get your point across and attract proper candidates. So, if your team lacks the experience to craft this document and you still have questions, feel free to contact SPD Group for consultation and any additional help in writing a request for proposal!

Summary

What is RFP?

RFP stands for request for proposal. In software development, it is a document created by the business that needs services for potential vendors that could take over the project. RFP contains all the important information about the project that the potential vendor should be aware of. In most cases, this document is created by a team of experts, with one specialist being responsible for the end result.

What are the key sections in the Request for Proposal?

RFP typically contains sections like the description and executive summary of your company, the deliverables, and the scope of the project. You also need to add the bid submission timeline and vendor bids format sections in case you decide to go with the tender option.

What happens after you present the RFP to vendors and start to recieve the first responses?

At this point, you will have the challenge of selecting the most fitting candidate for the project. Typically, you can solve this by going through the pre-qualification and selection stages. Each of them is aimed to narrow down the options and help you to create a shortlist of the most suitable vendors.

What are the best practices for writing this document as well as possible?

These are the most common:
- Try to avoid abstraction, describe everything clearly;
- Add in some visual content if you can;
- Ask for outside advice if you need any;
- Make a decision on having only the most critical features in the first version of the product;
- Use common ideas if they suit your case and industry;
- Provide vendors with enough time to respond;
- Be reasonable in your budgeting, and don’t make price the main criteria of selection;

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