Service Transition and Exit: 4 Lessons when Transitioning to a new Service Provider

By Allan Watton on December 4, 2015

4 Lessons: When transitioning to a new service provider

When looking to transition from one service provider to another, one of the key issues we find is that all too often organisations try to ‘fill in the gaps’ from previous service provisioning, rather than ‘rethink’ what business outcomes they are really trying to achieve. So, in other words, most organisations understand what they don’t want, but are usually less specific in quantifying and articulating what business outcomes they do want to achieve.

When a service delivery partnership is either coming to its natural or even a premature end, this is often a great opportunity to rethink the real business outcomes and objectives your organisation needs to move to and enable. In this context, it makes sense to reassess both the needs of the services/relationship and how the outcomes could and should be delivered.

As stated earlier, we regularly come across the situation where organisations look to maintain a status quo – when agreements are simply renewed with existing service providers, suppliers or vendors, or when old agreements and service requirements (perhaps with a refresh) are overlaid on new provider relationships.

In certain situations, you may be under such time and/or resourcing pressure that you have no alternative but to do this. However, if there is any way you can avoid simply ‘churning’ the old into new, you can drive much better outcomes and maximum value.

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There aren’t any simple ways to do this, however. These are just ‘hard miles’ that you have to tread. Better, faster and cheaper do not exist – if you invest upfront, in the right manner, you can achieve faster and better, or cheaper and faster, but you can never achieve all three. Investment is the prerequisite.

Use this end-of-service opportunity to economise, improve and, through learning from the lessons of the past, enter into a far more productive relationship. This is an opportunity not to be missed.

Why change in the first place?

There are a number of reasons why you may now be looking to change service providers:

  1. You have decided to bring responsibility for service provision back in-house

  2. You wish to outsource a service currently being provided by an in-house team

  3. More frugal options are now available

  4. Your agreement is nearing its natural end

  5. Your current relationship is experiencing challenges

  6. Service recipient demands have changed since your current agreement was signed

  7. Environmental, political or technological changes necessitate a new approach.

Service provision transition can occur in both directions – when outsourcing for the first time, all relevant knowledge and processes need to be transferred from a client’s dedicated team to the outsourced provider. When bringing that responsibility back in-house, knowledge and appreciation of best practice processes must travel in the other direction.

Agree the terms of your exit with your vendor

Many agreements form long-term relationships and over time a number of things can happen that could significantly affect the ability of your outsourced provider to satisfy the needs of the recipients of the services provided. These include advances in technology and political change that create an environment where previously considered boundaries that shaped solutions are no longer appropriate and, therefore, either more efficient and cost-effective solutions become available or an entire rethink is required.

Just think about how rapidly mobile technology has advanced and become a part of everyday working environment efficiencies, or what would happen if a change of government meant more or less funding for particular public services. There are many such examples that you could think of which would mean agreements and solutions drawn up one, five or even ten years ago are no longer suited to needs.

Service recipient needs and demands change over time as do their expectations. Service provision often must adapt to this, and inflexible agreements and relationships will become increasingly out of step with real-world demands.

There are of course likely to be more reasons, but these are the most common in our experience.

For the purposes of this article, let’s assume that the background to your desire to change providers is the natural expiration of your current agreement or a transition from in-house to outsourced provision (or the other way around). For what to do if you are looking to transition away from a troubled relationship you can find more information within this recent article.

How to ensure your agreement keeps pace

When you decide to move providers or bring service provision back in-house, it is important to ensure that your new agreement is fit for purpose to deliver the business outcomes everyone expects from it.

Recover your IT Implementation

This does mean a thorough analysis of the skills, knowledge and processes employed by those who are currently providing the service. It also means involving all key stakeholders in a knowledge gathering stage, and giving yourself enough time to check and double-check that, going forward, lessons from the past have been learned, adequate resources have been allocated, and the right management talent is in place to get the best from those responsible to them. But it also means that your new agreement should be designed from the outset to align with ongoing business change.

Experience tells us that change is happening all the time. And whether it’s external forces such as competition and technological advances, or internal forces such as gaining a greater appreciation for a service provider’s capabilities, the reality of change necessitates that adaptability needs to be built into your relationship and the contract that binds you.

After nearly a couple of decades working with hundreds of public and private sector clients on their major complex service delivery relationships, we know from our own hard-won experience that contracts should not be considered to be fixed points in time and space. They should be allowed to evolve, to reshape and change, in order that they can best guide all parties to work together to achieve the best outcomes.

Contracts should be reviewed against ‘current’ business outcomes at least twice a year to determine their suitability, and reshaped where necessary. This structured evolution of your working relationship based on a mutual understanding that ‘things change’ will allow you to define and realign what good looks like. It also maintains an open dialogue between all parties to encourage innovation and new working practices whilst minimising the chances of relationship strain and misunderstandings.

The four key steps to service provider transition success

When changing your service provider there are four key considerations to address, each of which are as important as the next to the success of your future service provision.

1. Thoroughly determine the requirements of the service

How good is your understanding of the business outcomes you want to achieve? Are they (within reason), fully articulated and quantified? In turn, do you have clarity about the operational aspects of the service you are looking to transfer to another provider to achieve those outcomes?

These may sound like fairly simple questions, but there are times when organisations have been known to outsource too much of their own technical expertise that should have been retained as part of an intelligent client function (ICF). Instead, they rely too heavily on their outsourced service providers to operate without critical-friend challenge. Whilst it isn’t the client’s (or service users) role to tell the provider ‘how’ to run its services, allowing their own in-house expertise to dwindle to a point where effective management of the outsourced service becomes highly diluted and less effective, does not provide good value.

Aside from the fact that we would always recommend a client maintains an appropriate level of knowledge and expertise in-house, in the form of an adequately resourced ICF team, to fully understand the intricate workings of all outsourced services, when that service is transferred to another provider, it is imperative that you undertake a thorough review of how it is currently provided, monitored and maintained. Then, document it in the form of process maps to aid clarity in interpretation and avoid internal or external misunderstandings.

It is essential to analyse both how effective the current process and procedures have been, and how they can be improved in any new agreement to increase standards and reduce costs. This can only be achieved through open dialogue between all relevant parties and the maintenance of the right talent, with adequate forethought and appreciation for the workings of the business, to know what’s best now and into the future of the service provision.

2. Strong governance wins the day

Management of all the pieces on your particular transition chessboard is paramount to the success of any handover. It is important to foster the right sort of relationships with outgoing providers so that they impart knowledge that may have taken them years to amass and processes that may have taken them much experimentation to perfect. If you can encourage a collaborative environment, then your new team can hit the ground running and keep disruption during the transition to a minimum. This requires the right client-side team, a clear hierarchy, and a strong commitment to open communication.

3. Assess the resourcing demands of the transition

Forward planning plays a large part in the success or failure of a service transfer to a new provider. Ensuring that assets, in the form of manpower, skills, knowledge and technology, that will likely be lost in the transition, are amply resourced, gathered and understood at the new provider’s end by the time the transition takes place is important. The knock-on effect of a lost resource can be unpredictable, therefore much analysis will be required as well as the time it will take to carry it out. Asset resourcing must start well in advance of the transfer date and appropriate client-side talent to appreciate the human resourcing and legal implications of such a move must be installed.

4. Monitor, review, repeat

Knowing and being able to quantify ‘what good looks like’, understanding both the likely strains of transition and the resources required to ensure the new team has the best chance of success, provides a template for everyone to follow. But it’s good management that ensures everyone knows what role they play in the success of the transfer and post-transfer service delivery, and creates an environment for encouraging the right behaviours that will see the transition through, and the relationship to new productivity heights.

This ‘right environment’ means the setting of clear KPIs, the creation of unambiguous contractual agreements with built-in mechanisms to ensure regular realignment to your business outcomes, and the monitoring of progress against set targets and goals. Your relationship with your new provider will require nurturing and your contractual agreement will need to be allowed to evolve in order for you to maximise opportunities and achieve the best value.

When considering changing service providers, take your time, do it right – this will be your opportunity to get to ‘what good looks like’; not just fix the mistakes of the past. You now have a key opportunity to either completely reshape, or just enhance and improve, to tweak and optimise, in order to get the most from your relationships and the service your new provider provides. Thoroughly analyse what has been done, learn from what you have done well – not just where challenges have existed. Then assess what could be done, implement what needs to be done, and involve everyone in the process. Good luck.

 

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