In software selection processes, certain terms keep coming up that even experienced buyers and vendors do not always use precisely. A brief overview of the most important terms relating to procurement procedures and tenders.
Procurement procedure
The formal, often legally regulated process by which a public or semi-public body puts a contract out to tender and awards it — including fixed deadlines, conditions of participation and evaluation criteria. In Austria and Germany, this is governed by each country's own procurement laws, which prescribe different types of procedure depending on the contract value.
Tender
In everyday language often used as a synonym for procurement procedure — more precisely, the term describes the actual publication of a contract for the submission of offers, regardless of whether it was initiated by the public or the private sector. Every procurement procedure therefore includes a tender, but not every tender follows the strict rules of a formal procurement procedure.
Requirements specification
Describes from the buyer's point of view WHAT is needed — the requirements for the solution, regardless of how they will be implemented technically. It is drawn up before the vendor is selected and is usually part of the tender documents. You will find a detailed practical checklist in our article What a requirements specification for ERP software really needs.
Functional specification
Describes from the vendor's point of view HOW the requirements from the requirements specification will be implemented in concrete terms — including technical details that are refined together with the buyer during the offer phase or right after the contract is awarded. So while the requirements specification defines the requirement, the functional specification defines the solution.
RFP (Request for Proposal)
The internationally common term for a structured request for offers — comparable in content to a requirements specification plus a formal request process, and frequently used in international or cross-border procurement. An RFP is usually less strictly regulated than a formal public procurement procedure, but follows a similar logic: define requirements, approach several vendors in parallel, compare offers.
Request to participate
In multi-stage procurement procedures, vendors often first have to submit a formal request to participate before they are even admitted to the actual submission of offers. This stage usually checks basic suitability criteria such as references, certifications or financial key figures.
Mandatory criterion vs. optional criterion
Failing to meet a mandatory criterion leads to exclusion from the procedure, regardless of the otherwise high quality of the offer. An optional criterion, on the other hand, only feeds into the points-based evaluation. This distinction is crucial for vendors to realistically assess before submitting an offer whether taking part makes sense at all.
Why the distinction matters in practice
A vendor who confuses a requirements specification with a functional specification often delivers a technical description of the solution where only confirmation of the requirement was expected — and vice versa. In tender procedures, this costs both sides unnecessary time and, in the worst case, can even lead to formal exclusion if required information is missing.
Frequently asked questions
Is an RFP the same as a public tender?
Not necessarily — an RFP can also be used by private companies without the strict formal requirements of a public procurement procedure.
Who usually draws up the functional specification?
As a rule, the vendor, often in close coordination with the buyer after the contract is awarded or in the final offer phase.
What happens if a mandatory criterion is not met?
The offer is usually formally excluded, regardless of its professional quality — even if the solution would be a good fit in terms of content.
Are you preparing a requirements specification, functional specification or RFP for a CRM/ERP selection? We are happy to help you structure your requirements in a vendor-friendly way right from the start.
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