Exiting and replacement suppliers managing transition risk - clive davies
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Transcript of Exiting and replacement suppliers managing transition risk - clive davies
Exiting and Replacement Suppliers – Managing Transition Risk
Clive Davies
IFCLA June 2010
Copyright 2010 Fujitsu Services Limited
For Fujitsu Eyes Only 2
The Second and Third Generation
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Passing the Baton
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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
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Winner and Loser
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“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
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
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Apple II e
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iPad
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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 proportionately10
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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
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Data Room
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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
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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
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•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
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Transfer of Systems
Lift and shift
Swing kit – transfer from old to smaller version in same location
Transfer data from old to new
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Critical Success Factors
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