RARAP

Definition:

RARAP is an acronym for Recommend, Approve, Review, Allocate, and Purchase. RARAP represents the process for decision-making for large capital purchases and other large expenses.

Uses:

• How is it used: RARAP was developed to help map the decision-making process for capital projects and large-expense projects. These projects almost never have a single-person decision-making process. While there are five topics or steps involved in each purchase decision; each topic or step may have one or more people involved, and in some cases, a single individual can be involved in multiple steps. Below are each of the key decision steps and how you can identify the influencers involved.

• Recommend—For each piece of equipment, technology implementation, or new manufacturing facility, for each IT software purchase, IT hardware, or other large ticket items, there must be someone who recommends that the purchase is made. The recommender is often the person who will be using the equipment, technology, software, etc. as part of their job or the area they supervise. The recommender will be very knowledgeable about the details of the purchase and will have researched the decision extensively. The sales organization of the selling company will have probably had significant exposure to the recommended purchase and will have likely provided much of the information they used to make their decision. When the recommender decides to recommend your product or service, that is not the end; it is only the beginning of the sales process.

• Approve—Approval is most often provided by the direct manager or supervisor of the recommender. This approver is intimately involved in the processes of their employees and often trusts their judgment. In addition, since the recommender works closely with the approver, they know how to convince them, and the relationship of trust between them makes the approval a relatively simple step. If the approval is not immediately granted, the salesperson and the recommender can work together to convince the approver of the appropriateness of the approval.

• Review—The reviewer can be the most difficult person to identify and to influence. The reviewer may be someone in a central administrative or research position, or, on the other hand, may not even be an employee of the company. The reviewer is someone respected by the management of the company and is considered knowledgeable on the technology, processes, operations, or other factors that could influence the success of the recommended purchase. If the recommended product is the industry standard, the reviewer may not even be contacted, or if they are, they will likely rubber-stamp the recommendation. If the technology or equipment or software is new or cutting-edge, the reviewer will be asked to place their credibility on the line. The reviewer has no reason to say yes to the new product or technology. If the recommendation is successful, the recommender will receive the credit; if the product or technology fails, the reviewer will be held accountable for not catching the potential problem. Since they have no reason to say yes, it is common for them to say no. This is why it is so critical to get influential people in the industry to provide testimonials, papers at conferences, interviews, articles, etc. to support the new technology. You have to reduce the risk of the reviewer approving a bad technology. If you get key influencers to publicly support your products, then other reviewers can point to the respected influencer as also supporting the technology. That reduces the risk to the reviewer to approve the purchase.

• Allocate—The allocator is normally a vice president, president, or member of the board of directors depending on the signature authority of the allocator or the available funds in the budget. This is another situation where the salesperson will not likely have access to influence. Much of the influence at this point will be through marketing, journals, publicity, referrals, etc. to make the allocator comfortable with the expenditure. If the product is well known in the industry, the allocator will be more comfortable with the decision. If it is newer, the sales and marketing people will need to provide support to the recommended purchase and the reviewer to further influence the allocator.

• Purchasing—In the purchase of a new technology, manufacturing equipment, or software, the decision is normally made by the recommender. But at some point, the purchasers have to become involved in the decision. If you have left the purchasers out of the process until the end, they will be unhappy. The purchasers need to justify their existence and their jobs, so they will potentially delay or sabotage the sale as retribution for leaving them out of the negotiation. Another approach is for the purchasers to try and negotiate with you after the sale has been approved to reduce the price, find a competitor to demand multiple bid packages, or use other mechanisms to prove their value. The way to avoid these situations is to involve the purchasers as early in the process as possible. This will make them feel involved and avoid all of the last-minute problems that may arise because they were left out.

• Where: Any time the purchase is for a capital expense (something that will be depreciated over 3–10 years) or has a large price tag, there is the likelihood that some or all of the five RARAP influences will come to bear. Some examples include the following:

• New plant equipment or a new manufacturing facility or technology

• New software that will support the company or be used by a large number of employees; this could be a one-time purchase or a large monthly subscription.

• New technology that will have startup costs involved in the implementation

• A large acquisition or merger

• A terminal or other supply chain facilities or processes

• Why: If you do not try and manage the RARAP process, it is very unlikely that your recommender will be able to figure out the process by themselves. The recommender will delay or terminate the sale if they cannot navigate the RARAP process.

Limitations:

• Where it shouldn't be used: If you are working with a company president (or another executive), who has the authority to make the decision all by themselves, you may not need RARAP (but you can even be surprised then). If the purchase price is within the budget or signature authority of the recommender or approver, you may not need RARAP. If your product is the industry standard, and everyone agrees it is the standard other products are measured against, you may not need RARAP.

• Any restrictions: If the company is small and all the employees talk to each other, the communications may not justify the RARAP process.

• Warnings: While you would love to communicate directly with each influencer in the RARAP process, it is unlikely you will successfully talk with the reviewer or the allocator. But you should work closely with the recommender and the purchasing people. Marketing and public relations are your best hope to communicate with reviewers and allocators.

Demonstrations:

No current videos exist for this process  

Step-by-Step Process:

• Identify the person in the company who will most benefit from your product. That will probably be your recommender. Work with them to gain interest and the​ commitment to buy.

• Bring the purchaser into the discussion to avoid problems with them later. They may also have some information to manage the other parts of the RARAP process. Having involved them early, just keep them informed and they will think they are contributing to the process and later claim part of the credit for any success from the purchase.

• Once the recommender has decided on your product, service, or technology, help them build a presentation and proposal for their manager (the approver). Either meet with them with the approver or set them up with a convincing proposal they can take to the approver.

• Once approved, the proposal will be sent to the reviewer for their approval. Try and find out who the reviewer or reviewers are so you can try and further influence them. Be sure your marketing or technology people have worked to make your product known and respected in the industry.

• Once approved by the reviewer, make sure the financial analysis for the value of your product is properly represented in the package that will be forwarded to the allocator.

• Circle back around to the purchasers that you have been keeping involved in for the closing of the purchasing process.

Template for Capturing Data:

No template for this process 

Output Representation and Recommendations:

Hopefully, the final sale is the key output of this process.

Examples:

TBD

Additional Resources:

The process was created, developed, and implemented many times by Roger McCarty in his 30 years at The Dow Chemical Company.