Demystifying the Software Deal with Banks in Indonesia

Banks and Telcos are the biggest buyers of software products and services in Indonesia.

Selling software to a bank in Indonesia has many intricacies and many software companies find it quite a mystery to sell and deliver software in Indonesia.

Having sold plenty of software and services to banks in Indonesia, I felt I should demystify the deal process a little bit for (especially Indian) software companies to enter this market with a sense of understanding.

Here then, is a brief (not exhaustive) description of the proposal process starting from prospecting to culminating in a software vendor being awarded the project.

Stages of a proposal to Banks in Indonesia

Vendor Initial Presentation

Your sales person will contact an officer at the relevant division of the bank and arrange for a presentation to the division.

Vendor Demo of the Product

Your sales and presales team will present your product, either through slides or through an actual demo of the product to the relevant bank division.

Anwijizing

Banks will invite multiple vendors formally called "Anwijzing" - or also typically with an RFI document or a PoC script. The invitation may be of the open or closed type. Banks (especially government banks) will not invite a single vendor only for any product proposal unless the vendor has some unique patents or features that is unavailable with any other vendor. This however typically does not apply to an existing vendor in case of a change request.

RFI Response

Vendors will respond to the RFI in an excel sheet or the PoC script with an actual product demo conforming to the PoC script.

Since multiple vendors are invited to demonstrate their capabilities against the RFI or PoC script, the banks do not pay the vendors for the PoC as they cannot pay all the vendors to do the PoC at the same time. Some vendors having the experience of selling software in Europe or USA will find this a bit odd.

Bank allocates budget for the project

The bank, if interested in your solution will allocate a budget for this. Based on the RFI response, the bank will come up with an amount that will be approved by the board. This budget of the bank is called the bank’s Own Estimate for the project.

This budgeting may happen beforehand also between July and September, in case the bank has been scouting for similar solutions. Bank may also decide to use the under utilized budget of the current year in specific cases.

RFP Process

Bank will shortlist 2-4 vendors based on the Proof of Concept. Banks may additionally issue an RFP to the shortlisted vendors to make more presentations or demos for final scoring. This may take a lot of software and human resources from the vendor to execute properly.

Scoring

The scoring criteria will be a mix of technical and commercial factors, so it is possible to win if technically a vendor is T1 but (L2 or L3) priced much higher than the next vendor. Similarly, it is possible to have a poor technical score but win based on price.

RFP Shortlist

Bank will formally one or two selected vendors for a commercial discussion (or hold an e-auction for shortlisted vendors).

Commercial Negotiation

A prospective winner is selected post Auction, and the procurement division of the bank will further negotiate based on whether the price matches the bank's Own Estimate. In case the top vendor does not match the bank's budget, the bank will start negotiations with the second winner of the auction.

Winner Announcement and Letter of Award

Once the commercial negotiation is successful with an agreeable vendor, the final winner will be announced and a letter of award will be issued.

This description is by no means exhaustive and is a typical process.

Indonesia Seems Different

While the process above will seem similar to other countries elsewhere, the trick is in the small print. Requirements may keep getting changed, budget will vary repeatedly, many iterations of PoCs will happen, lots of retendering, sudden requests for site visits, rigid stances of contract clauses etc etc.. this will leave the software company feeling that the bank is not committed to buying, or not interested in your product, while that may not be the case. These situations are not entirely unique, but for some reasons companies find it difficult to understand and respond properly when it happens in Indonesia.

Effective Sales Methods for Winning

So within the process above, there is plenty of scope for a sales person to carry out innovative and creative activities in order to present your product/service effectively, understand customer product and pricing needs, build thriving relationship with the bank, increase the chances of impressing the customer and thereby winning the deal.

At PT. Trilloc Consulting Group, we provide the means for you to enter the market in Indonesia and build a successful software business. Reach out to me at [email protected] for any thoughts/questions and further conversations!