Moving to the new contract
Transition and Transform
Aims and objectives
The objective of this phase is to transition the work and resources (infrastructure and responsibility) to the selected vendor(s).
This is the phase where the ‘rubber hits the road’. The value realisation of the program is initiated during this phase and emphasis is put on process implementation, project/programme management and knowledge transfer.
Teething problems are expected to be resolved during this phase. The programme should have a strong, streamlined escalation mechanism to resolve them quickly and keep the ball rolling. Another key pre- requisite is stakeholder commitment to the programme.
This phase has key tasks around transition and transformation in every work-stream:
- Implementing a robust transition plan in collaboration with the vendor
- Planning and implementing a retained organisation re-design so that the key staff are retained and they know their future role in the organisation
- Developing and implementing an integrated playbook/standard operating procedures that clearly identify the operating model, governance framework, service levels, decision rights matrix, and roles and responsibilities
- Practical and open communications and change management to ensure that the organisation understands the plan and the impact
- Implementing the measurement and reporting mechanism to track value consistently to understand variations from the business case and take necessary action.
A value delivery roadmap will document how and when value will be delivered and demonstrate how the total value of the business case will be achieved. This plan will clearly identify the initial investments required and the value that will be delivered over the term of the contract. Based on the deal the value model will be updated to input year-on-year improvements that the vendor(s) have agreed to.
Implementation of the value delivery model essentially includes getting approval of the value roadmap with the senior management, vendor management team and finance, creating a reporting mechanism to measure and track the value being generated and identifying roles and responsibilities of the various teams going forward.
Once the delivery model is implemented, key performance measures as identified in the model would need to be tracked and reported in a consistent manner. This will include creating reports in a timely manner. During the transform phase issues and exceptions are expected in this process and it is important to resolve them to stabilise the data gathering, reporting and exception handling process. Any customisations to the process or the reports should be identified in this phase. At the end of the transform phase, it is expected that the process of measuring, reporting and tracking of value is stabilised.
The leadership teams on the client and vendor side jointly develop the transition plan to provide a guide through the different steps involved in the transition. The plan will typically identify the following steps:
- Pre transition activities such as ensuring any IT, HR, Logistics issues are resolved
- Knowledge transfer activities such as conducting meetings with all SMEs to understand the operational details in delivering in-scope services to the business
- Ramping up and training activities for onshore and offshore resources
- Stabilisation activities of running test scenarios
- Parallel run to ensure that transition is complete and successful
The contract, approved and signed in the Commit phase now enters the operational phase. The outsourcing contract management is transitioned to the Vendor Management Office (VMO) for operational management. A steering committee consisting of business leadership is formed to oversee the VMO activities. The VMO is responsible for ongoing monitoring and reporting of risks/issues and status and governance reports on a regular basis to the steering committee. Various roles are identified within the VMO to effectively manage the contract. These roles include a transition manager, work stream leads and work stream SMEs.
In this phase the interaction between the client operational team and the vendor(s)’ team is initialised. This interaction will be the basis of a long term successful partnership. It is important that leads from the client and vendors’ are clearly identified to create a strong framework of collaboration. The vendors typically tend to deploy transition experts to manage this phase and then replace them with operational leads at the end of transition.
Transition of knowledge and work is very important to the project’s success. It is important to plan for the transition process to ensure the transfer of knowledge is exhaustive. The transition plan is created jointly between the client and the vendor leads. The workshop provides a collaborative mechanism to discuss specific needs, identify areas that need additional focus and risks that need to be mitigated.
As part of this transformation of the organisation, the leaders of the client organisation need to renew their support to the cause and communicate the change to the organisation. Along with regular communication and change management, it is also important to conduct leadership coaching sessions to educate the leaders about the new structure, dynamics of vendor management, governance of the new model and provide tips on extracting the maximum benefit from the model.
This step begins once the transition of contract management to the Vendor Management Office (VMO) has started and continues throughout the transition phase. The VMO monitors the knowledge transfer processes, documentation during the knowledge transfer, training and shadowing sessions.
The vendor reports the transition performance through regular transition performance reports to the VMO.
The VMO monitors vendor staffing plans and implementation to ensure the level and experience of the resources being staffed are as agreed upon.
In addition, the VMO will monitor to ensure that the staffing ramp up is able to meet the service delivery goals. The VMO will continue to monitor the vendor staffing throughout the service delivery.
Additionally the VMO provides an escalation mechanism for dispute resolution. The issue resolution governance will typically span from the project managers, on both client and vendor side, to the steering committee.
The areas of vendor management are defined during this stage and can consist of various departments including Demand Management, IT, Service Management and Supply Management. Each of these departments work with the vendor in their respective areas to ensure the service delivery is smooth. For example in a typical IT service delivery organisation these departments would perform the following roles:
- Demand Management manages all interactions with business (corporate and regional); owns requirement analysis, budget approvals and user acceptance;
- Service Management manages day-to-day vendor interactions for both steady state operations and projects and is accountable for service delivery
- Supply Management leads sourcing and procurement to create new/change vendor contracts; manages contractual disputes; interfaces with legal
- IT manages vendor relationships; provides vendor governance; operationalises vendor contracts; tracks vendor financials; manages vendor performance, adherence to agreed service levels; and facilitates resolution of vendor related issues
- During the Transition phase service management and IT will be the most active in order to reach a steady state.
As part of any outsourcing deal, it is expected that a large portion of the responsibilities will be shifted to the vendor’s organisation. The client organisation will reduce to a smaller team who are responsible for management, leadership and governance. To accommodate the new set of responsibilities in the client organisation, a revised team structure will need to be implemented. This new structure will
include client team members in critical leadership and management roles and could include vendor personnel in more operational roles. It is important to structure the team that facilitates collaboration and innovation while ensuring commitment to performance measures.
Depending on the size and complexity of the outsourcing agreement, managing the transition could be extremely challenging. In addition to standard project management tasks the Project Management Office has the critical role of facilitating communication and aligning the work streams.
A dedicated team is required to manage multiple vendors, multiple client teams, client leadership, stakeholders and functional leads so that they work in a cohesive and collaborative way.