Custom Software RFPs – When to Issue One (and When to Skip It)

Thinking about issuing a request for proposal (RFP)? Wondering if your project even needs one? Finding the right software partner might be one of the most consequential decisions your organization makes this year, and for many organizations, that choice runs through an RFP. Yet the RFP process itself is rarely taught. Most teams inherit a template and hope for the best.

At Atomic Object, we've spent 25 years on the receiving end of RFPs, so I'll walk you through what an RFP is and when to issue an one for custom software (and, just as important, when not to).

So, what's an RFP, anyway?

A request for proposal is a formal document you send to prospective vendors describing a business problem or project you need solved. In it, you invite vendors to propose how they'd approach the work, who they'd put on it, and what it would cost.

The magic of an RFP is in the structure. When every vendor answers the same questions, in the same format, on the same timeline, you can compare apples to apples. Your selection becomes grounded in evidence instead of gut feel, and when your CFO or CEO asks why you chose the partner you did, you'll have a documented, defensible answer.

RFP vs. RFI vs. RFQ

One important distinction before we go further: an RFP isn't the only request document in the procurement toolbox. It has two close cousins that often get confused with it.

An RFI (request for information) is for learning. You don't yet know what solutions exist or who the credible players are, so you cast a wide net and gather intelligence. At this stage, you're not asking for commitments or pricing. The goal is simply to discover what's feasible and with whom.

An RFQ (request for quotation) is for pricing. You know exactly what you want, the specification is locked down, and you're comparing vendors mostly on cost.

An RFP sits in the middle, and it's the right tool when the how matters. You know the problem you need solved, but the solution itself is part of what you're evaluating. You want vendors to bring their thinking, their methodology, their pricing details, and their team to the table.

For custom software (Atomic's world!), that's almost always the situation. There are a dozen ways to build any given product, and the approach a partner proposes tells you as much about them as their price does.

When to Issue an RFP

After years of reading these documents, we can tell you: the best RFPs come from organizations that took time to create a meaningful document and process because they understood the value of the project at hand.

An RFP is appropriate to issue when:

The project is strategic, high-value, or high-impact. If this project will shape how your organization operates for years (a new product platform, a system your whole team relies on, or a partnership you expect to last), the diligence of creating a structured process is worth the time.

The vendor's approach matters as much as the price. Complex projects have many valid solutions. An RFP lets you evaluate how a vendor thinks, not just what they charge. (Spoiler for a future post: the vendors worth hiring will gladly show you their thinking.)

Multiple qualified vendors exist and you don't know who's best. Competition sharpens proposals. When several credible partners could plausibly do the work, a structured comparison helps you find the true best fit rather than the most familiar name.

You need the decision to be fair and defensible. Government entities and many larger organizations require competitive bidding above a spending threshold. Even when it's not required, a documented process protects you from favoritism (real or perceived) and makes the decision easy to stand behind.

You're actually ready to buy. This one sounds obvious, but it's the most common miss we see. An RFP is a commitment to select a partner and move forward. If the budget isn't approved or the organization isn't aligned, you're not ready for an RFP yet. (An RFI, though? Ship it!)

When to Skip the RFP

Responding to an RFP is a serious investment for vendors. A thoughtful response takes 30–40+ hours of work from multiple team members, reading and interpreting your scope, building a tailored solution, assembling a team plan, gathering references, and packaging it all in your prescribed format. When 10 vendors respond and one wins, that's hundreds of hours of unrewarded effort floating around your vendor community.

That cost is why RFPs shouldn't be the default for every purchase.

Skip the RFP when:

The purchase is small or routine. The whole point of an RFP is to reduce risk and cost on decisions that matter. For a modest, one-time buy, the overhead of running the process outweighs the benefit. Most organizations set a cost threshold in their procurement policy for exactly this reason.

A current partner is performing well. If you have an approved vendor who knows your business and delivers, a straightforward renewal conversation will serve you better than restarting the courtship from scratch.

Only one vendor can realistically do the work. Highly specialized needs sometimes have exactly one credible answer. Running a competitive process for show helps no one.

You've already decided. This is the big one, and we say it with love: if you already know who you're going to hire, don't issue an RFP to validate the decision. Experienced vendors can smell a wired process from a mile away, and the good ones will remember. The next time you send them a request, one you really need them for, they may quietly decline. Your reputation in the vendor market is built over years and could be burned in a single process.

You don't know what you want yet. If you're still figuring out what's possible, what exists, or even how to frame the problem, an RFP will produce scattered, hard-to-compare responses. Start with an RFI (or honestly, a few good conversations), get smart on the landscape, and then issue an RFP to a focused shortlist.