Cultural fit – A critical piece to digital transformation RFPs
Maintaining a good relationship with vendors or service providers is often overlooked despite them being critical extensions of the organization responsible for carrying out some of the business processes.
While the capabilities and skills of a vendor are extremely important aspects to consider during the vendor selection process, choosing one based solely on these areas decreases the likelihood of a long-term and sustainable relationship that eventually brings an inevitable need for a vendor switch.
Philosophical differences in operations and decision-making, or the lack of cultural fit with the organization, ultimately become frustrating hurdles that yield no results but also waste time and money. Compatibility, in this case, is the hallmark between the success and failure of core business operations. Realizing that co-dependency plays a significant role when partnering with other businesses is crucial.
Outcomes of a good cultural fit with a vendor
Attitude and values build the foundation of an organization’s culture. Cultural compatibility between a client and a vendor leads to a positive co-dependent working environment that carries numerous benefits. As both parties in a partnership must work in conjunction to create value for the end customer, a good cultural fit will ensure:
- A vendor going above and beyond to satisfy clients with their delivery
- Responsiveness to any last-minute changes
- Positive collaboration and a superior product at a reduced cost
- Sharing of best practices and efficiencies in the supply chain
A poor cultural fit, on the other hand, will have the opposite effect with additional cost to the business, which is why cultural fit is of the utmost importance when outsourcing.
Ensuring a healthy buyer-supplier understanding
Establishing great relationships and solidifying the possibility of smooth-sailing operations, timely delivery of quality products and services, and cost savings may seem nearly impossible when there are other priorities that take precedence. However, it can be done by implementing these four pillars:
Consistent and effective communication is the foundation of any healthy relationship. Creating channels for two-way communication is essential for establishing mutual understanding. Any relevant information that can drive decision-making should be shared openly and on a timely basis.
Organizations that do not treat their vendors like partners are likely to have a difficult time working together as the vendors do not feel like they’re a part of the business working toward a mutual goal. Vendors or suppliers should always be updated on what’s going on in the company, whether it is a change in strategy, the launch of a new product or service, changes in key personnel, and other notable organizational changes and effects.
Additionally, making the vendors feel heard and addressing immediate concerns establishes a tight partnership. Considering each other’s perspectives promotes a more collaborative environment with less opportunism.
Evaluating risks and building trust
A key compatibility indicator to consider is the risk involved in the partnership. Examining the risks beforehand allows a client to prepare for the unexpected and significantly minimize any damage. A business should be aware of the vendor’s capabilities and history, including:
- Years in business
- Crisis management mechanisms
- Previous work
These vendor characteristics determine if the vendor is a good fit for the project with the right kind of experience, skills, and credibility. Investing in each other’s capabilities through trust, built solely on performance that reaffirms the commitments, allows both parties to enjoy risks and rewards and achieve common goals.
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Being a good client
Being a good client means much more than being nice – it’s about making timely payments, providing and appreciating feedback, and being loyal. A good client also takes the time to understand the vendor’s business—its vision, investors, objectives, and operations. When working with a global vendor, being mindful of that company’s culture builds a good rapport.
Cultural fit indicators
Most new vendor-client relationships start off well after the contract is signed with both parties on the same page until they are not. The moment the team dynamics emerge, they find themselves in a tight spot.
To determine whether a service provider is a good cultural fit, their observable behaviors during the RFP bid, selection, and contracting stages can act as true indicators.
Typically, the soliciting company prepares an extensive set of questions as a part of their RFP invitation, in response to which there could be eight to ten bidders. It’s not an easy task to go through these responses at length when there are several bidders involved. The key is to assess the flexibility, innovation, and responsiveness bidders display at this phase. Even some of the obvious indicators can give a clear picture during the assessment:
- Intelligence and insightfulness
- Good understanding of strategy and expectations
- Timely delivery
- Learning and continuous improvement
- Evidence of commitment in the contract
- Valuable metrics
- Proposals for cost-saving, automation, and process improvements
More often than not, certain ideas and innovations are fabrications of the marketing department, and beta-testing these proposed ideas with them is a sure way of finding out whether they are actually feasible.
Some of the less obvious indicators to look out for are:
- The bidder’s response to why they want to work with the business
- Regular interactions
- Access to the top executives, post contract
- Long-term commitment of key resources to the business
- Transition efforts
- Transparency about costs and cost recovery in the contract
The contracting process can be accelerated by introducing a best practice that includes a draft of the Master Services Agreement, proposed performance metrics, important schedules, and reporting and billing requirements in the RFP package. The acid test here is to see how many red lines and changes are made by the vendor themselves and whether they are agreeable to the organization.
Sometimes, businesses find themselves in situations where the bidder attempts to sidestep the process or sway the key decision-makers by employing brazen tactics like:
- Attempts to reduce cost by bundling with existing services or other bids
- Attractive time-limited offers
- Organizing spectacular entertainment and events during the bidding period in an attempt to influence the key decision-makers
- Craftily hinting at troubles within the competitor’s organizations
Flagrant behavior like this speaks volumes about the vendor’s conduct and the level of respect they have for the organization’s processes and protocol.
Selection and contracting
Face-to-face interaction is a great opportunity to gauge the team dynamics and validate the first impressions from the RFP process. Other things to examine during the selection and contracting stage:
- Team dynamics
- The number of people present
- The role of each team member at the table and within their company
- Involvement of the sales team or operational leaders and SMEs
- One-person interaction or a high-performing team
When negotiation starts, it is at a stage where both parties are potentially looking at a potential long-term relationship. Behavior during this phase is often a good indicator of what to expect going ahead. Businesses should be aware of:
- The number of times the vendor switches their players during the process
- Tactical, operational, or strategic conversations
- Ability to meet expectations
- Attention to detail in the right amount
Additionally, during the selection stage, site visits are recommended and considered a worthwhile initiative.
Gauging one’s ability to place trust in a partnership right from the start is an important component of cultural fit. It is possible to solidify the foundation of a good partnership even before signing a contract. Regardless of the duration of the contract, the objective remains the same; only a good cultural fit can lead to a rewarding and effective business relationship.
Looking to bring on a vendor to help with your digital CX strategy? We can help – contact us to learn more!
Prakash Hariharasubramanian, Director & Practice Lead, Intelligent Process Automation (IPA), HGS
Prakash has led various IPA implementations across multiple industry verticals in his tenure of 7 years with HGS. In his role, Prakash develops IPA practice frameworks, creates IPA solutions, and serves as a key automation evangelist for HGS.
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