Exiting and replacement suppliers managing transition risk - clive davies


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Exiting and replacement suppliers managing transition risk - clive davies

  1. 1. Exiting and Replacement Suppliers – Managing Transition Risk Clive Davies IFCLA June 2010 Copyright 2010 Fujitsu Services Limited
  2. 2. The Second and Third Generation For Fujitsu Eyes Only 2
  3. 3. Passing the Baton For Fujitsu Eyes Only 3
  4. 4. Themes  Winner and Loser  Transition  Transformation  Exit Management  Due Diligence  Transfer of sub contracts and licences  Transfer of People  Transfer of Systems  Critical Success Factors For Fujitsu Eyes Only 4
  5. 5. Winner and Loser For Fujitsu Eyes Only 5
  6. 6. “If you can keep your head when all about you Are losing theirs and blaming it on you; If you can trust yourself when all men doubt you, But make allowance for their doubting too; . . . If you can meet with Triumph and Disaster And treat those two impostors just the same . . . Yours is the Earth and everything that's in it.” Rudyard Kipling For Fujitsu Eyes Only 6
  7. 7. Transition  Transition is the process by which an outsourcing service is moved from an incumbent supplier to a new service provider  The customer will wish this to happen as smoothly as possible with minimal interruption to its services  It will need to be planned carefully with all the critical activities captured in a transition plan included in the contract with the new supplier  The extent to which the new service provider inherits any commitments such as service levels will need to be negotiated  The new service provider’s lack of familiarity with the services suggest a grace period once it has taken over may be appropriate  The timing of the payment of the service charge to the new service provider should be agreed and linked to acceptance For Fujitsu Eyes Only 7
  8. 8. Apple II e For Fujitsu Eyes Only 8
  9. 9. iPad For Fujitsu Eyes Only 9
  10. 10. Transformation  Transformation is the process by which a new service provider not only takes on an old service but also improves it  It requires a clear understanding of what transformation activities will take place  The contract may contain commitments to savings which give a measurable return to the customer  This will again need to be timetabled and is likely to take place over a longer time frame  Agreeing new service levels and when they replace the inherited ones is a critical factor  An acceptance process coupled with a remedial plan in case of failure should be included in the agreement  One of the biggest challenges is roll out to a number of offices  The service charge will also need to increase proportionately For Fujitsu Eyes Only 10
  11. 11. For Fujitsu Eyes Only 11
  12. 12. Exit Management  The outgoing contract should contain an exit management plan which has been kept up to date  This will specify what the outgoing service provider has to do in order to effect a seamless transfer  It will also set out what charges may be paid for exit – which acts as an effective incentive For Fujitsu Eyes Only 12
  13. 13. Data Room For Fujitsu Eyes Only 13
  14. 14. Due Diligence  “The Contractor should be given the opportunity to carry out due diligence prior to the award of contract. Hence, the Authority should not provide any warranties as to the state of affairs at the commencement of the Agreement.”  So what does the Contractor need?  Access to previous contracts  Access to previous suppliers  Knowledge about what the current environment is  And how it can or cannot transfer  Electronic due diligence room provides the answers  But has to be properly populated  Cf. Corporate transactions For Fujitsu Eyes Only 14
  15. 15. Transfer of Subcontracts and Licences  Outgoing supplier must keep agreement register  Recognise there are different forms of software licences  Third party factor  Form of assignment or novation  Takes time – needs careful management and a joint approach For Fujitsu Eyes Only 15
  16. 16. •Transfer of People  Acquired Rights Directive  Common themes throughout Europe  Employee rights on transfer of an undertaking  Transfer of service in which employee is wholly or mainly engaged counts  Consultation  Identification and management of contract risk  Should address  entry  steady state  exit  Mutual indemnity regime For Fujitsu Eyes Only 16
  17. 17. Transfer of Systems  Lift and shift  Swing kit – transfer from old to smaller version in same location  Transfer data from old to new For Fujitsu Eyes Only 17
  18. 18. Critical Success Factors For Fujitsu Eyes Only 18
  19. 19. For Fujitsu Eyes Only 19