Why Traditional Tendering Fails Digital Projects—and How We Can Improve

In the digital agency world, the Invitation to Tender (ITT) process is a common practice, especially among large corporations and government bodies. Intended to ensure fairness and competitiveness, this method often ends up being counterproductive for agencies, clients, and the projects themselves. Having experienced both sides—as an agency crafting proposals and as a client evaluating them—I've noticed that the traditional tendering system frequently hinders successful outcomes in the digital sphere.

The Agency's Dilemma: Investing Heavily with Uncertain Returns

For agencies, responding to an ITT is a resource-intensive endeavour. Teams may spend extensive hours—or even weeks—developing detailed proposals without any guaranteed return on investment. Often, agencies feel they're included merely to increase the number of bidders, making their efforts seem futile.

The lack of specific information in many ITTs forces agencies to make assumptions about project requirements. This guesswork can lead to inaccurate estimates: overpricing may render a proposal uncompetitive, while underpricing could result in financial strain if the project is won. Additionally, the time spent on these proposals diverts valuable resources from existing clients and billable work.

The Client's Challenge: Hidden Costs and Misaligned Partnerships

Clients might believe that a competitive tendering process secures them the best deal, but this isn't always the case. The expenses agencies incur preparing unsuccessful bids don't disappear; they're often integrated into the pricing of successful projects. This means clients inadvertently pay for the inefficiencies of the tendering system across the industry.

Moreover, selecting an agency based on a written proposal can favour those skilled in salesmanship over those best suited for the project's actual needs. This can lead to partnerships that aren't the optimal fit, resulting in projects that don't fully meet objectives or expectations.

The Project's Pitfall: Rigidity Stifles Innovation

Digital projects thrive on flexibility and the ability to adapt to new information and user feedback. However, the stringent specifications outlined in ITTs leave little room for agencies to apply their expertise or introduce innovative ideas. This rigidity can prevent the project from evolving in a way that best serves end-users.

Fixed scopes make it difficult to adjust to changing requirements, and disputes over what is included can strain the client-agency relationship. Additionally, when the primary focus is on cost rather than value, the project may suffer from reduced quality and lack of creativity.

Proposing Better Strategies for Success

To overcome these challenges, we need to consider alternative approaches that foster collaboration and emphasise value over mere cost competition.

1. Assess Agencies on Experience and Expertise: Instead of heavily relying on proposal documents, evaluate potential partners based on their track record, case studies, and the success of previous projects. This provides a clearer picture of what an agency can deliver.
2. Engage in a Paid Discovery Phase: Investing in an initial discovery period allows both the client and the agency to define the project more accurately. This collaborative effort can lead to more precise budgeting and a better understanding of the project's scope.
3. Implement a Phased Project Approach: Breaking the project into smaller, manageable stages enables adjustments based on insights gathered along the way. This flexibility can enhance the project's overall success and reduce risks associated with large, rigid scopes.
4. Prioritise Value Over Lowest Cost: While budget considerations are important, focusing on the overall value an agency brings can lead to better long-term results. Consider factors like innovation, quality of work, and potential return on investment.

Embracing a Collaborative Future

Shifting away from the traditional ITT process requires a change in mindset but offers significant benefits:

• For Agencies: Resources are allocated more effectively, allowing teams to focus on projects where they can make the most impact.
• For Clients: Better alignment with agencies that truly understand their needs leads to more successful outcomes.
• For Projects: Increased flexibility and the ability to adapt result in solutions that are more innovative and user-focused.

In the rapidly evolving digital landscape, clinging to outdated procurement methods can hinder progress. By adopting more collaborative and flexible approaches, we can create an environment where agencies and clients work together more effectively, leading to projects that not only meet but exceed expectations.