Exit and Exit Management

  • Published on: 6 March 2018
  • By: Lesley Michaelis

The Dreaded Exit Plan Review!

You can hear it now – “We need to review the Exit Plan” and everyone suddenly has a more pressing meeting to go too.  Perhaps the reason for this reluctance to review the plan is that it is immature and lacks credibility yet isn’t seen as a problem.  Exit is one of the key risk areas around outsourcing and it is important to spend time and effort to understand and manage the risk. When you have actually been involved in a number of exits, have learned lessons and seen the difficulties that organisations face from a commercial and service perspective, you will appreciate that this is not an area to be ignored. Proactively understanding the risks and putting in place risk mitigation strategies bring enormous business benefits to organisations. This allows a well understood, smooth, commercially sound exit to be managed successfully with no “surprises”.

“It’s not me, it’s you…”

The end of an outsourcing relationship can be a difficult time. Typically, there may have been a lengthy re-tendering process with the incumbent vendor going through many months of uncertainty. Equally, there may be legal issues and contract breach discussions which may even be the reason for the exit. Whatever the reasons or triggers for the exit, it is never an easy time for Supplier or Customer. Too often, the underlying triggers underpin the behaviour of both parties at a time where continuity of service, a smooth exit and successful transition need to be the focus area.

This “emotion driven” exit could easily be mitigated by proactively reviewing and testing the Exit Plan on a regular basis.

The IT Outsourcing market is fairly mature. Long gone are the large outsourcing awards of everything to one party that were once in place. The market has moved to smaller value contracts; multi-source models with a comparative short-term average duration. This is why organisations are having to exit more frequently and often performing this exit with many suppliers simultaneously and dealing with offshore service transfer, thus increasing the complexity and risk.

More and more customers are also now looking at in-sourcing some of the services they had previously offshored, adding further complexity and issues for exit. How can you mitigate the risks of getting knowledge back from an offshore location, bearing in mind issues such as culture alignment, different ways of working, logistics etc? It is too late to start thinking about these issues as you enter the exit phase of a contract – you need to understand this before embarking on a new sourcing process.

I find this interesting: the fact that many organisations have been through complex exits, suffering as a consequence but this does not seem to have prevented the same issues happening again with no proactive, preventative measures put in place.

Industry Trends and the Growing Problem

No matter the industry, companies are no longer able to survive without technology. Big Data, Analytics, Cloud, Mobility, Globalisation, Social Media, Gamification, Consumerisation, Smartphones and tablets are all trends that are moving at an incredible pace. These trends are driving companies to innovate and be different in order to maintain their competitive edge. Underpinning all of these trends is technology and a vast array of outsourcing relationships of all different shapes and sizes. Having flexibility, agility and service continuity in IT service provision is the key to moving forward and gaining the competitive edge. Termination clauses, exit provisions, IPR ownership, asset ownership, key skills, knowledge transfer and inadequate documentation are all risk areas impacting the ability to embrace the change. Understanding and mitigating the risks can enable you to not only compete but stay ahead of the game.

Getting Ahead of the Competition

So, why not make it an item on your agenda and get ahead of your competitors.  Quantum Plus have recently been working with a number of customer’s in this area and provided a clear way forward for them to minimise the potential impacts and develop a strategy to enable a smooth exit together with achieving their objectives of providing a more flexible and agile service for the future. In today’s changing marketplace and fast-moving changes in technology, with the necessity for strong alignment between IT and the business – don’t be the one who impacts the ability of your organisation to move forward due to not having an appreciation and risk mitigation strategy aligned to your supplier relationships.

If you would like to discuss exit in more detail and how we can help, please contact Quantum Plus at enquiries@quantumplus.co.uk or 01789 201630