Why RFPs May be Killing Innovation in the Airline Industry

We all know that there’s nothing more certain than Death and Taxes, but lately I’m thinking we need to add Airline Industry RFPs to that list. While we can’t do much about the first two, it’s time to take a hard look at the several decades old procurement process known as a Request for Proposal (RFP). I hear increasingly often from fast-paced technology companies that today’s airline RFP processes limit, if not kill, the ability to deliver innovative technology solutions.

While I am not saying there is no place for RFPs, in my opinion only commodity, pr­ice-based products and services are still well suited to standard RFP process. In fact, if you’re an airline looking for a traditional PSS, then the “lowest price wins” RFP process may serve you well. This is because there are only a few players with very similar functional offerings. However, modern, highly adaptive, and innovative solutions call for an interactive, solution-oriented relationship with technology providers.

This is especially true in the newer fields of airline Offer Management (shopping and pricing, availability, inventory, merchandising, schedule building), NDC, AI-driven Revenue Management, and New Gen PSS. Here’s why:

1. Airline commerce technology is new. Real-world implementation continues to inform and refine its very definition. There hasn’t been enough experimentation, trials, and experience to compartmentalize this technology into a list of checkboxes. We see questions such as, ”Does your solution use Artificial Intelligence?” and “Do you support NDC?”. But these are very broad statements that can mean different things depending on your airline’s needs. This is especially the case as most airlines are only beginning to understand their usefulness and implications.
2. A traditional RFP doesn’t outline the specific requirements an airline needs to implement now and into the future. It simply identifies many of the functional capabilities that the airline, or the consultant, thinks the airline may need. To get to the bottom of actual necessity, technology partners should work together with the airline business teams to explore the commercial imperatives and design the right solution for that airline
3. A traditional RFP process is not about collaboration. It constrains collaboration. This is due to the ‘50-page, 400+ functionality question’ spreadsheet that technology partners are required to complete. At this point, innovation can die on the vine as there is no room for a fresh approach.

It’s also no secret that if a technology provider responds with a ‘NO’ to any compliance question, or the truth requires the question to be posed in another way, the RFP score drops (as do the vendor’s chances of making it to through to the next round). So, all providers answer ‘YES’ to everything. They hope to make the cut and deal with the consequences later.

Our discussions with the airline almost always show that an RFP list doesn’t reflect the airline need. So much time is lost on detailing items that are “nice to haves” at some point in the future. As a result, by the time material needs are discussed, the potential solution has been unduly delayed. This can negatively impact both the airline and the technology provider. In the new era of dynamic offers and NDC, the faster an airline can implement, the more profitable the airline will be. And the happier the airline’s customers will be. The well-known phrase “Time is Money” is a reality.

What’s the alternative? Use cases not spreadsheets. Airlines need to work with technology providers around use cases that reflect the airline’s strategy, priorities, and requirements. It can make the difference between a successful, timely technology choice and a fail cycle with the wrong provider that takes years to unwind.

Here are a few suggestions for an effective ‘Use Case Iterative Collaboration & Relationship’ process. Or as I like to call it, the U CIC R (You Kicker) process:

• Test the waters (and the provider) with ‘simple’ requests that quickly distinguish between ‘those who can’ from ‘those who promise’. Don’t waste your time. Ask your prospective tech provider if they are willing to demo ‘simple’ use cases in action – no PowerPoints! You may find a few tech providers balk at the prospect and drop out at this early stage. Remember, fail fast. Find a provider who can ‘do simple’ out-of-the-box and is ready to go onto more interesting scenarios.
• Engage with the folks doing the actual work. Executives and sales people may be polished and smooth, but they won’t be next to you for long. You need to meet the subject matter experts and tech team who you will be working with. Remember, this is the beginning of your airline’s relationship with the technology and organization. It’s a time to break bread. For me, it’s the most critical part of the modern procurement process. At Farelogix, we call it ‘meeting – and collaborating – at our ‘kitchen table’. The more an airline knows the inner workings of their technology provider, the better the choice they will make.
• Agree internally on the appropriate use case scenario(s). Involve key stakeholders at the airline who will ultimately define how the new technology is used. Use their input to define one or more use cases that reflects their vision.
• Timebox the project. Once use cases are agreed upon, document and realistically timebox the Use Case project. Remember, this process could be the start of a long and fruitful relationship. And like any good relationship, it should be founded on mutual respect. In this regard, it is useful to understand the providers’ business imperatives as well as your own. Remember, technology providers must schedule in this activity with their other work. The longer the process drags out, the harder it is for the technology provider to schedule it within the desired timeline.
• See your use case(s) in action. If this phase is successful, it means your key stakeholders have been able to see their top strategic use case(s) brought to life using the prospective technology. Isn’t that better than a high score on a spreadsheet?
• Chart the next steps, including mutually defining how the relationship will work. Assuming you decide to move forward with the vendor, it’s now time to get back around the ‘kitchen table’ and define how your organizations will work together. Will the airline be in full control and host the solution? How can the companies work together as the airline’s strategy evolves and changes? Is the solution and the relationship designed to be futureproof? Failing to carefully chart your future together can lead to ineffective implementations, and in the worst case, having to repeat the entire process.

The traditional RFP process is getting in the way of meeting an airline’s real needs. I’m going to keep pushing for newer, better ways to address this problem, perhaps even by not engaging in those that I believe are doomed to failure.