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Managing Transitions between Outsourcing Vendors

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With apologies to Sir Walter Scott: Oh, what a tangled contract we write, when first we practice to outsource. Having managed outsourcing projects on behalf of both the customer and the third-party administrator, and managed transitions from one outsourcing firm to another on behalf of several clients, I have a lot of anecdotal evidence that outsourcing generally works best on a spreadsheet—in practice, results tend to be rather variable. But because most business decisions are driven by spreadsheets, businesses keep outsourcing.

That’s not to say that a stable outsourcing relationship isn’t a net positive—only that changing who does what across organizational boundaries is stressful for all concerned, and that increased stress level and instability tends to last longer than most decision-makers expect. And when transitioning from one third party to another, you get something like a long, drawn-out divorce where the spurned spouse is required to help tailor her wardrobe to the mistress, who arrives with an extensive list of demands.

Transition Projects and VUCA

VUCA is an acronym originally coined by the US Army War College to describe a state of increased volatility, uncertainty, complexity, and ambiguity. Transition projects have it in spades:

  • Volatility: Disrupting the current state produces lots of change points, and most are not under the control of the client.
  • Uncertainty: There are a lot of opportunities for all parties to be surprised, from the customer decision-makers to the employees of the departing administrator. Do not underestimate the emotional impact of being asked to help a stranger take over your job—some folks resign the same day they get the news.
  • Complexity: Since the only contracts are between the customer and each of the two rival firms, the customer must act as intermediary in all things. Issue management quickly becomes a significant challenge, since each party wants to avoid blame. Cause and effect can become blurred, and even disconnected.
  • Ambiguity: There is so much potential for miscommunication and differences in terminology that even simple discussions require extreme care. Insist on a common set of terms and acronyms and what they mean, or you’ll be discovering gaps nearly every day.

Over the years, I’ve adopted a few techniques for facilitating projects built on a team of rivals, and I’ll share a few of them here.

The Central Clearing House

While every firm has a preferred collaboration and file sharing tool, it is vital for the common client to provide the tools for secure file sharing and provide equal access to both incumbent and replacement. The client must manage the content and organization, no matter how eloquently the replacement firm pitches their approach. All fingers should point to the client, or the potential for blamestorming becomes unmanageable.

The Cheshire Cat

Since the rivals have no contractual relationship, the client (or their representative) must chair every joint meeting. Over time, the individuals on each side develop relationships with their counterparts, and collaboration becomes natural. As this happens, the potential for emotional conflict gradually diminishes, and the client can gradually be less visible, although still present and ready to step in.

The Captain’s Table

Once the transition is under way, the project leaders for all three organizations need to collaborate on resolving issues, following up on requests, and otherwise executing on their joint plan. This joint meeting should be scheduled as often as necessary, whether weekly or daily, and chaired by the client’s project manager. Avoid having more than one person from each organization, so internal politics don’t bleed over into the project.

An experienced project manager is used to leveraging influence in the absence of direct authority. What most of us are not used to is influencing people who are about to lose their jobs, when we want them to work with their replacements. It isn’t just about the need for emotional intelligence, but the need to preserve the dignity of the employees of the departing incumbent. I’ve seen some folks take the opportunity to move on to much better circumstances, and I’ve seen some fall into deep depression. You might not get the chance to influence that outcome, but be sensitive to the fact that these people are not just numbers on a spreadsheet.

 

Dave’s new book, The Data Conversion Cycle: A guide to migrating transactions and other records for system implementation teams, tackles the subject with a generalized methodology, presented in a decidedly non-technical fashion. “As I read “The Data Conversion Cycle,” I kept thinking–I wished I had this book earlier in my career. Mr. Gordon does a splendid job of giving project teams and stakeholders the essential concepts and vocabulary for managing critical data conversion projects.” –Harry Hall. Now available on Amazon, in both Kindle and Paperback formats.

For more brilliant insights, check out Dave’s blog: The Practicing IT Project Manager

About Dave Gordon

Dave Gordon is a project manager with over twenty years of experience in implementing human capital management and payroll systems, including premises-based ERP solutions, like PeopleSoft and ADP Enterprise, and SaaS solutions, like Workday. He has an MS in IT with a concentration in project management, and a BS in Business. He also holds the project management professional (PMP) designation, as well as professional designations in human resources (GPHR and SPHR) and in benefits administration (CEBS). In addition to his articles and blog posts, he curates a weekly roundup of articles on project management, and he has authored or contributed to several books on project management. You can view his blog at The Practicing IT Project Manager by clicking the button below.

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