Cultural Fit – matchmaking for providers in IT outsourcing projects?
// by Matthias Rensing
IT & Management Consulting, IT Sourcing, IT Strategy
Searching for the right IT-provider, companies have to keep the Cultural Fit in mind
In the selection of their IT provider, customers must pay particular attention to quality and costs. Especially the question of cost is quite often the triggering factor to start tackling a sourcing project. Especially in the assigning of commodity services, a lot of companies then do not see significant differences between the numerous providers and consider additional decision criteria other than price and quality to be insignificant. What is forgotten in this quite often is that a well functioning cooperation also includes a good communication. In day-to-day business subsequent to the signing of the contract, a lot of different employees of the customer and of the provider also have to clarify controversial questions with each other. If this does not work, the strong focusing especially on the cost factor can quickly turn out to be a "bottomless pit". What initially appeared to be economically lucrative becomes very expensive mid-term. What is to be concluded? In the process for selecting a provider, one additional factor is gaining increasing importance as a decision criterion, the so-called "Cultural Fit".
Cultural Fit refers to the cultural congruence between customer and provider. The focus is on questions regarding the approach, business culture, and point of view, in short, "the chemistry" between customer and IT provider. The responsible manager of the company that is outsourcing should, for example, jointly with the service delivery manager of the IT provider, arrive at a mutually agreeable solution if a service is not being provided as contractually agreed upon.
But how can one find culturally congruent IT partners? How can one determine – before the contract signing – whether a potential provider is a good fit and whether the chances of a successful cooperation during the planned term of the contract thus would increase? Indeed, that is a difficult, albeit not impossible undertaking.
"Culture Profiling" helps in finding the right provider
In numerous sourcing projects (including a lot of projects for putting out to tender[sic]), the noventum IT sourcing experts have developed a methodology that, upon request, makes the selection of a culturally fitting IT provider a fixed component of the selection process (see graphical depiction). In this, the Cultural Fit is measured utilising various measures and instruments.
As a longstanding participant in the Great Place to Work® awards and three time winner of the competition "Germany's Best Employer", noventum has a lot of experience with instruments for the analysis of business culture. (Business culture consulting with noventum).
The four phases of the Cultural Fit analysis:
- Culture profiling of the customer & analysis of the requirements to be posed to the potential provider: In this phase, the overall business strategy of the customer is being shed light on in order to obtain an impression of the customer's strategic objectives, mission, and values. The intention in this phase is to generate a first culture profile of the customer in order to derive requirements posed to a provider therefrom that is culturally as congruent as possible.
- Rough selection of potential providers / creation of a long list: Based on the requirements identified in phase one, a first provider long list is created. In this, noventum can access its own provider database which makes available a multitude of information of the most diverse IT providers, from which a lot of cultural indicators can be derived.
- Fine selection / creation of a shortlist & culture profiling of partners on the shortlist: After the first rough pre-selection has taken place, this serves for focusing the "culture image" of the potential providers obtained by then. Also helpful in this phase is a media review that analyses the public behaviour of the potential provider. With this measure, it is being evaluated whether the behaviour of the provider (for example, socially engaged, innovation-friendly, down-to-earth) is a fit for the customer's "spirit".
- Behavioural analysis and final selection: In this phase, the first personal meetings between customer and provider start. During the provider presentation and the subsequent due diligence, there are numerous opportunities to targetedly put the cooperation and the "chemistry" between the two parties to the test. Through the planning of, for example, interdisciplinary workshops with the customer and the provider, important characteristics such as willingness to work, adaptability, ability to handle conflicts, and ability to solve challenges can be put to the test and compared to one's own business characteristics.
The methodology shows that the selection of a culturally fitting partner can be influenced positively by a structured selection process. The noventum sourcing consultants integrate this process into the provider finding and ensure that – in addition to the "hard" decision criteria quality and price – "soft" factors are also taken into consideration.