Category Archives: Guest Author

The 8 Laws of Successful Supplier Transitions: Part II


Today’s guest post is from Brian Seipel, an information technology and marketing project analyst at Source One Management Services, a leading procurement services provider with over two decades of experience delivering procurement success.

In our last post we noted that there are plenty of reasons your organization may choose to switch suppliers. Perhaps your incumbent’s quality is slipping, or their prices aren’t as competitive as they once were. As you’ve grown, perhaps your incumbent supplier isn’t able to scale with your organization or keep up in emerging areas of your business.

However, switching isn’t always easy because transitioning to a new supplier is a scary thing, especially as there are plenty of risks. In our last post we noted that the first step managing risk is identifying risk, which we covered, and the next step is developing a strategy to manage the transition, which is the subject of this post.

Managing the Transition

Here are 8 basic commandments to follow if you want to avoid running into the risks above:

  • Before Committing, make sure your prenup is up to par.
    Nobody thinks about ending a relationship before it begins, but foresight here is crucial. Exiting incumbents can make life very hard if agreements don’t have favorable termination, survivability, and exclusivity clauses or if they fail to specify transition support owed to you in case of a breakup. Bake these items into your new agreement and all future contracts.
  • At all times, stay in the driver’s seat.
    Too often, organizations are happy to let suppliers control the implementation process. Don’t let this happen: Losing this control removes much of the supplier’s accountability, and is a leading cause for transition timelines dragging or derailing.
  • Start strong by bringing the team back to the table.
    Every new project we start with a client begins with a kickoff meeting, where all key stakeholders on both sides of the table meet. This meeting helps ensure roles are clearly defined and sets expectations for the level and frequency of communication moving forward.
  • … There is a “team,” right?
    The key corollary to the point above is — there needs to be a dedicated team. Part time committee members will always place more importance on their own day-to-day tasks, leaving implementation in the hands of the supplier (refer back to commandment #2). Put a dedicated team together, and make sure it includes members of upper management.
  • Consider the timing and scale of the transition.
    Identify the best time to make the switch based on your team’s workloads, inventory cut-in or service termination dates, and major events on your company’s horizon. Also consider whether a phased implementation may be appropriate — this will stretch your time line, but would allow more flexibility among resources.
  • Don’t jump immediately to transformation.
    Focusing first on transitioning to a familiar model and incrementally adding additional services of a new supplier can help keep a transition on track.
  • Establish an implementation calendar.
    This calendar should be accessible by all stakeholders and act as checklist of important events and timelines. Develop the calendar with suppliers to ensure they understand and can meet deadlines. For less business-critical elements of the implementation, allowing for greater stretches of time can avoid mistakes and start off a better relationship
  • Continue Communicating throughout the process.
    Remind internal stakeholders that the relationship will be most tested during implementation, and that focus needs to remain on the transition. Communicate externally to ensure the supplier keeps the full scope of work and related SLAs in mind throughout implementation and adheres to each milestone as it approaches.

Adhere to these commandments and your transition will be much smoother. Ignore them and you may find yourself dealing with some major headaches.

And If A Transition is Still Set to Fail

If you find your transition going off the rails, several speedy and decisive actions can bring it back on track:

  • Reevaluate the project plan and timelines for the transition
    At what point did the process go south, what can be done to correct, and how will the timeline need to be revamped to accommodate for a fix?
  • Changing out key players on both sides of the table managing the transition
    this may add to short term delays, but long term success. Hurt feelings always get trumped by botched implementations.
  • Reengage senior managers who quietly slipped away
    after the contract was signed and get them involved again.

Supplier transitions can be painful — but they don’t have to be.

The key takeaway is to never lose focus on a new deal just because a new contract was signed — all hands need to be on deck to ensure your transition to a new supplier lives up to the potential promised during the sourcing and contracting phases. This can seem painful, but strategizing the transition can take care of headaches before they crop up. Taking the right steps early on lessens the risks and moves the process into an opportunity to improve supplier performance and quality, streamline processes, and ultimately save money.

Thanks, Brian.

The 8 Laws of Successful Supplier Transitions: Part I


Today’s guest post is from Brian Seipel, an information technology and marketing project analyst at Source One Management Services, a leading procurement services provider with over two decades of experience delivering procurement success.

There are plenty of reasons your organization may choose to switch suppliers. Perhaps your incumbent’s quality is slipping, or their prices aren’t as competitive as they once were. As you’ve grown, perhaps your incumbent supplier isn’t able to scale with your organization or keep up in emerging areas of your business.

Compelling signs to switch, however, aren’t always enough convince the top brass to move. Why not? Because transitioning to a new supplier is a scary thing, especially if the incumbent is a key supplier.

Finding potentially huge savings and better capabilities during an RFP is all peaches and cream — until you get to the home stretch. The process of transitioning away from your comfortable, “known-quantity” incumbent becomes real and, if not managed properly, could end up costing you time and money.

Transition Risks

Plus, there are plenty of risks. We’ll start by putting a name and face to the organization’s fears. Any number of things can go wrong during a transition, with the major pitfalls being:

  • Business Disruptions
    Poorly managing transition resources takes time away from daily business activities. This can bleed into other departments if IT, finance, or legal personnel are brought in.
  • Poor Knowledge Transfer
    Dropping the ball here could set implementation back if the new supplier has to reinvent the wheel.
  • Resistance to Change
    End users are accustomed to your current supplier — they don’t know (and won’t automatically trust) that they’ll get better service or support somewhere else. The only certainty they see is that their workflow will be disrupted.
  • Missing Production or Implementation Milestone Targets
    Understaffed new suppliers growing into your business, misunderstandings about transfer roles and responsibilities, poor understanding of scopes, and other miscommunications can delay transitions or cause poor performance.
  • Waning Interest
    Upper management may be highly involved on both sides while hammering out a deal. This often changes once the ink dries, leading to stretched timelines and missed milestones.

Now, we’re not saying that any of these things are going to wrong, because every organization’s mileage may vary, and the threats your organization may face could be entirely different. But outlining the risks is the first step in managing them — building a strategy to mitigate them comes next. That’s the subject of our next post.

Thanks, Brian.

Data Breach Response Planning Part II


Today’s guest post is from Torey Guingrich, a Project Manager at Source One Management Services, LLC who specializes in helping global companies drive greater value from their IT and Telecommunications investments.

In our last post, we indicated that no industry or company can escape the potential of a data breach, including yours. Given that large retailers, health insurance companies, financial services firms, and the U.S. federal government have had to deal with reporting and responding to large-scale data breaches in the last few years, it’s becoming more and more of a certainty that if your organization is of a significant size and has a fair amount of valuable (or secret) data, at some point it will be desirable enough for a third party to try and obtain it illegally through a hack or systems breach. And bolstering prevention alone might not be enough, any weakness at all in any system used by your organization, or a supplier, could be enough to let a black-hat in. Thus, the best preparation, and prevention, is often that which assumes a breach will occur and has plans, and relationships (as per our last post), to identify, patch, and deal with the breach as fast as possible. A quick response can be the difference between a breach that is only able to capture a few dozen credit card numbers at one point of sale and a breach that continues to infiltrate the system until thousands of credit card numbers across dozens of points of sale are compromised.

In order to insure a quick identification and response to a data breach, along with choosing partners to work with for a breach, the key to quick action is to have the internal processes and systems in place to respond accordingly. As part of preparation, companies are beginning to define data breach response teams to develop response plans and define clear roles for the key departments that would need to spring into action. Typical roles/areas that companies would need to include are:

  • IT
    Companies look to their IT departments to immediately identify and rectify the point of entry for any breach. IT will need to work with forensic IT partners to get as much information as possible in terms of scope and scale of the breach, as well as ensure systems are up and running to keep regular operations functional.
  • Communications
    The Communications team needs to take a lead role in responding to a breach and developing key materials (e.g. for the call centre scripts, press releases) within a data breach response plan. Appoint a role or individual as the spokesperson for the company and ensure that all employees, and even BOD members, know to reference back to this person when contacted regarding a breach.
  • Operations
    The call centres are one of the first areas that are overloaded when a breach occurs. Work with Communications to prepare scripts and materials to provide to the call centre (both in-house and outsourced) to ensure a consistent message and avoid unwanted confusion. Your Operations team also needs to ensure that internal operations are adjusted as necessary and continue to run given that a breach has occurred.
  • Legal
    Your Legal department (and likely outside counsel) will need to look at the compliance and regulatory implications of a breach. Depending on what industry your company is in, data breaches can carry hefty fines. To report a breach accurately, key individuals will need to work with IT to understand scope and scale and report to the necessary governing bodies. As this landscape evolves, ensure that the Legal department is aware of any new regulation that your industry may become subject to, e.g., proposed cybersecurity regulations for banks and insurers. The Legal team will likely need to engage with law enforcement, either local or federal, and manage the company’s duties along with direction received from law enforcement.
  • Suppliers
    A supplier may in fact be the point of entry for a breach in your system, as has been the case with many of the breaches in recent years. It is important to understand that your customers will still be looking to your company to respond and correct that breach. Because you will need to work with your suppliers to correct and adjust operations as necessary, Procurement should consider including language in contracts or RFXs that obligates suppliers to comply with your response plan in the event of a breach.
  • CEO/C-Suite
    Within each of these groups, it is vital to have individuals within the response team that can make decisions. Typical delegation and “chain of command” decision making will only delay the process and response that your company is able to provide. Executives and team members also need to understand that they may need to make decisions with incomplete information; this can be difficult for organizations who are accustomed to making decisions only when all variables are identified. Due to the scrutiny and reputational risk at stake, it should be made clear to customers that decisions are being made given the information available at the time.
  • Procurement
    Procurement will need to support supplier selection, contracting, engagement, and performance management of all necessary outsourced response services. Procurement will be managing different priorities and requirements from various stakeholders involved in a breach, i.e. all of the departments above, and will be expected to act as a cornerstone in ensuring that different requirements are met and balanced when and where they need to be.

As indicated at the start of this post, in today’s atmosphere, the possibility of a breach cannot be ignored and relying too heavily on breach prevention without a focus on response preparation can be a costly mistake. To avoid this, make sure your organization has a validated response plan and key materials primed in advance of a breach to be able to promptly respond to customers and return to normal operations as quickly as possible. Given the department’s experience in supporting process improvement and collaboration, Procurement is in a unique position to champion a proactive approach to response planning by bringing together stakeholders and identifying strategic partners that can enable the entire organization to respond to the dreaded data breach.

Thanks, Torey.

The Island of IT, Part II


Today’s guest post is from Torey Guingrich, a Project Manager at Source One Management Services, LLC who focuses on helping global companies drive greater value from their indirect expenditures, such as IT and Telecommunications investments.

In our last post we noted that even some of the most mature Strategic Sourcing departments tend to struggle with IT because IT spend is off limits or out of reach for traditional sourcing and procurement efforts. We then examined the three most common excuses, or hurdles, and provided some guidance on how to overcome them. Once you convince IT to give Procurement a chance, the next step is to …

DELIVER THE VALUE

Once you have overcome these hurdles with IT stakeholders, it is critical to follow through with the value that Procurement has promised in the sourcing and contracting process. Looking at a need identified by IT through a sourcing lens will likely lead to better defined requirements and a better relationship between the IT department and the supplier with whom they ultimately work.

  • Sourcing: Competitive bids and the RFx process can, and should, be used for IT and telecommunications initiatives. Because IT departments tend to partner more closely with their supply base as compared to other indirect categories, it can be easy to accept a proposal or pricing from a supplier who knows the company’s systems and basic requirements quite well. While this may be a faster route, Procurement needs to help IT ensure that the supplier’s proposal is the best fit for the organization’s needs and is competitive in the market. Work with IT to develop an RFP that allows suppliers who may not be as intimately connected with the department to propose innovative solutions and competitive pricing.
  • Scope and Deliverables: Once Procurement and IT have worked together to award an initiative to a supplier, Procurement’s value will be further demonstrated while going through the contracting process. Press your IT stakeholders to clearly define their expectations, the scope of the project, and the deliverables that the supplier will provide. Many business owners tend to think in “end state” deliverables, but be sure to inquire whether there are processes or defined stages that the supplier is expected to go through to get that end state, e.g., system, integration, and/or user acceptance testing. While there may be assumed expectations, work with IT to ensure those assumptions and expectations are defined.
  • Timelines and Acceptance: While working with IT to define the agreement deliverables, tie in timelines and dates for the company’s acceptance of mid-stream deliverables. Ensure there are key checkpoints prior to the final acceptance testing window to minimize rework or changes that need to be made. Also, be sure to use a critical eye when defining acceptance procedure and timing; often suppliers will insert language that assumes acceptance if no formal communication is received by a certain number of days. While this is intended to keep projects moving forward, you can change this language to require an affirmative acceptance by the company or at the very least, ensure the timing for default acceptance is ample enough to allow for any internal reviews that may take place.

While IT systems, products, and services may not be second nature, treat your business owners in a way that lets them know you are there to help ensure their requirements are met and their budget is maximized. IT — more than any other area — seems to consistently have budget on the chopping block, have projects pushed out year after year, and be asked to do “more with less”; by becoming a solid partner and delivering value to this group, you can not only help them make better buying decisions, but actually achieve their departmental goals.


Thanks, Torey.

The Island of IT, Part I


Today’s guest post is from Torey Guingrich, a Project Manager at Source One Management Services, LLC who focuses on helping global companies drive greater value from their indirect expenditures, such as IT and Telecommunications investments.

Even some of the most mature Strategic Sourcing departments tend to struggle with IT. IT spend is off limits or out of reach for traditional sourcing and procurement efforts. Let’s look at a few excuses that tend to pop over why IT can, and needs, to act independently, how to bridge that gap, and what value can ultimately be delivered by Procurement.

HURDLE #1: IT IS TOO COMPLEX

Often Procurement professionals can feel intimidated by the technical aspects of IT initiatives which results in IT departments tending to make decisions in a silo. Consider other “highly complex” categories that sourcing takes on (e.g., chemicals, raw materials, assemblies). While these may seem complex to those who have not worked with them in the past, with experience, training, and research these categories fit very well into the core competency of Procurement departments.

Overcome the “complexity” hurdle: It is vital to partner with stakeholders for sourcing and spend management within all categories. Devoting time and energy to gain a basic understanding of the IT software and services being purchased comes with the territory of working in Procurement. Begin reviewing past contracts, SOWs, and the structure of IT-related initiatives to become familiar with different components of these projects. By simply reviewing what has been done in the past, you can begin to see the patterns in the way these services are provisioned and priced. Also, utilize the knowledge of IT counterparts; more than likely they will be very open to explaining the purpose and goals of the services needed and impart critical knowledge to help you get up to speed within the category.

HURDLE #2: IT SPEND IS ALWAYS SOW AND/OR LICENSE DRIVEN.

While this may seem the case more often than not, SOWs and licensing agreements can be improved when reviewed from a sourcing perspective and should still be under Procurement’s scope.

Overcome the “SOW and license” hurdle: First, for those projects that are truly unique, by defining deliverables and tracking the details of an SOW within spend management tools, Procurement and IT will gain real visibility into the spend figures within the organization. Secondly, there are plenty of components of IT that tend to be more standard or follow a relatively simple pricing structure (equipment, telecommunications, etc.). You can use these inherently simpler areas as a starting point for review of categories within IT. Look at an IT need and try to breakdown the components for a better understanding. For example, software contracts typically have the same components (license fee, maintenance, support, and fees for any customization/unique support) and these can be looked at as separate components to gain a full understanding of the software and services being provided.

HURDLE #3: IT CAN’T BE STANDARDIZED.

While IT services and products are less likely to be standard, there are portions of spend and pricing methodologies that can be standardized within an agreement. It is Procurement’s role to seek out these standard components and get past the sales-speak that suppliers may present to end users.

Overcome the “non-standard” hurdle: Similar to the “SOW and license” hurdle, it is important to seek out the portions of project that are, or can be made, standard. Armed with the market intelligence and past contracting experience that Procurement brings to the table, suppliers are more likely to work on defining rates for specific roles, the number of trouble tickets/service calls included, license discount bands, and other components where Procurement can push for standardization. As we discussed above, you can work with IT suppliers to unravel the bundled components of spend to first understand the components and then determine what is actually standard. You will find that while a supplier may claim that an entire solution is custom, there are large portions of that solution that are very standard and should be treated as such.

Once Procurement has overcome the hurdles, the next step is to deliver the value. We’ll discuss this in Part II.


Thanks, Torey.