Index Insider: The Surprising Role of Culture and Governance in Sourcing Transactions

Hello. This is Alex Bakker stepping in for Stanton Jones with your weekly briefing on what’s important in IT and business services.
In this edition: Culture and governance do not win deals, but they keep providers in the competition. Comcast acquires Masergy to expand SDN footprint.
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At ISG, we use a structured process called FutureSource to guide clients through sourcing transactions. The process is highly adaptable to different enterprise situations and flexible enough to work with a wide gamut of deals, from sole source to competitive, and across network, ITO and BPO transactions.
One of the core components of that process is a series of collaboration and alignment sessions (CAS). These sessions leverage a staged approach to help clients evaluate providers as they progress through the competitive transaction process. Over the years, we have taken many clients through this process, resulting in more than 2,000 individual evaluations. One of the most surprising and powerful trends in the data is the apparent mismatch in how clients rank and perceive culture and governance.
Initially, clients tend to rank “solution approach” and “delivery capability” as very important, while they rank “culture” and “governance” less so. By doing this, clients imply that, for them to award a deal to a service provider, the provider needs to have a great solution but doesn’t have to be completely aligned to the client’s culture or governance. However, our analysis shows that culture and governance do have a significant impact at the beginning of the deal process.
The data below highlights some areas of culture and governance that clients rated as providers’ strengths, both in the Provider Scan (the first CAS) and Solution Preview (the second CAS, conducted after the first round of elimination). While it looks like scores are improving, what is actually happening is that providers that demonstrate the poorest performance on culture and governance are eliminated at the first stage of the deal, leaving the higher-performing providers to compete on the quality of their solutions.
Ultimately, deals are not won on a provider’s ability to demonstrate their culture or governance capabilities early on, but deals can be lost when a provider fails to do so.


Chart showing clients initially rate culture and governance as less important


  • HCL and Munich Re. German insurer signs contract to transform digital workplace services in 40 countries (link).
  • UCAS and Infosys. U.K. college admission service announces major technology contract to drive automation (link).


  • Telecommunications giant Comcast acquiring Masergy for SDN and cloud platforms (link).

About the author

Alex Bakker

Alex Bakker

Alex leads the Primary Research Team where he focuses on study design, panel research, and interview based research for ISG. In addition to leading the Primary Research practice at ISG, Alex also serves as the lead analyst on provider pursuit effectiveness, and helps IT service providers understand how they can improve performance in the competitive process. 
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