Templates & BLUF -- Improve your wheels, don't reinvent them! (9-04-2009)

During a recent Price to Win (PTW) capabilities presentation to a major U.S. Federal contractor, I was questioned as to how a small company like ours could possibly be credible across the myriad functional areas that we support. My explanation got into our use of WBS-driven functional templates that are routinely created, developed and pre-positioned for possible future improvement and re-use. These templates allow us to maintain and improve our grasp and appreciation of the state-of-the-art and price points related to functional areas that we are called upon to support.

Successful contracting firms excel at selling and improving their lines of business. Few, however, pursue new business using functional templates that describe and document their contemporary methods and predict how underlying technology roadmaps are likely to result in near-, mid- and far-term price and service level improvements.

To help explain what a functional template is, let us use a relatively easy-to-understand Service Desk opportunity as our example. Requirements of this type have been, are, and will continue to be the subject of numerous RFPs. Bidders for such opportunities are likely to be regular dealers in Service Desk work and, as a consequence, they will be familiar with leading edge Service Desk frameworks, products and product improvement roadmaps.

Capture teams, on the other hand, often approach new business opportunities: a) as if they don't really understand the subject matter; and b) as if the unique aspects of the situation are more significant price drivers than the basic ones. This amounts to what can best be described as a Cost Plus solutioning, costing and pricing mentality -- increasingly not a formula for success.

If "best practices" were applied, a Bottom Line Up Front (BLUF) approach would be used to establish a pro formacompetitive price target for the opportunity using a detailed functional template. This would include the prevailing view of where service levels and price points are going and when, based upon the major determinants of forward pricing: competition, technology and volume. The BLUF approach concentrates the capture team's solutioning on the price that they have to meet or beat. Moreover, the BLUF approach enables strategic pricing (by eliminating the lead times associated with the Cost Plus approach). As importantly, it also bakes target pricing into the solution rather than letting solution drive price.

For a regular dealer in Service Desk work, how hard would it be to come up with a target price using a functional template and a variant of the following formula?:

# of opportunity users * (your most competitive, time-dependent periodic unit price per supported Service Desk user at the required level of complexity + an environmental premium, if any)

As the acquisition world moves from detailed RFPs and SOWs toward Statements of Objectives (SOOs), contractors should be even more motivated to proactively create and constantly improve detailed functional templates to support the rapid development of line of business target pricing. Not doing so perpetuates a costly and under-performing wheel reinvention culture.

Good luck and happy hunting!