Moving to the new contract: Transition and Transform


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.

Overview

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.

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Activities

Business case

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.

Process

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.

People

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.

Vendor management

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.

Operating model

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.

Project management

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.