Reversibility plan: preparing to change suppliers

Reversibility clauses have entered the mindsets of IT departments, which make systematic provisions for them in contracts that they enter into with outsourcers, third-party maintenance, and other service centers. Yet, investment in a reversibility phase will not prevent the appearance of difficulties in the nominal phase.

So, who benefits from reversibility phases? Training the party taking over, verifying its ability to perform the services, transfers of knowledge, transformation of practices, initialization of new services? Quite often, they boil down to a handover or a simple transmission of assets.

Today, it is clear that reversibility is useful only when the means to exploit its potential and therefore prepare for it are available. To increase efficiency, it seems wise to plan to apply certain best practices and ask service providers for true guarantees. Here are three articles providing practical tips for reversibility.

Defining an exit strategy before even committing

Reversibility refers to the commitments made by a service provider to handle the transmission of information necessary for the takeover of services or its transmission to a third party, as well as the transfer of assets entrusted to the service provider or produced on behalf of the customer.

Preparing for reversibility also means ensuring the reversible nature of the supplier’s position throughout the contract, which must guarantee the transferability of the services that it offers by establishing, as much as possible, solutions up to market standards and by guaranteeing the interoperability of the processed data. Therefore, these points must be discussed and contractualized before any commitment is made.

Although less frequently discussed in the contractualization phase, the practical arrangements of the reversibility phase are no less important: Who is responsible for training the incoming supplier? Who is responsible for ensuring that the project runs properly? What are the criteria for the nominal phase switchover? What are the criteria justifying an early exit from the contract or involving a move to the negotiating table?

Reversibility : the crucial first months

Consequently, even if the general conditions of reversibility were imperatively set out in the call for bids and the contract stages, an initial version of the reversibility plan must be approved at the beginning of the nominal phase.

This principle is mainly explained by the need to ensure the quality of the plan and the transfer methods before the service provider is certain of its non-renewal. Although, from a legal point of view, it will be required to pass the torch, an “outgoing” supplier will be less inclined to accept the wishes of the incoming supplier or the customer with regard to the detailed organization of the reversibility phase.

In addition to these commercial considerations, validating an initial version of a reversibility plan, starting from the transition, makes it possible to initiate a dynamic of continued improvement of the document, and a concrete action plan to be carried out over time.

Preparation over time necessary for a risk-free transition

The efforts made by incoming service providers in the initialization phase and the motivation of the initial work provide the opportunity to establish:

• a list of topics to be addressed over time to improve the reversibility conditions of the services;
• a precise inventory of physical and intangible assets;
• a study on the completeness and the updating of the document repositories.

However, this approach is possible only if the service provider makes a commitment to mobilize its players over time to perform the biannual updates of the quality assurance plan and the reversibility plan.

Setting a goal of securing reversibility from the first days of the service does not call into question the budding partnership between two economic players. On the contrary, it is a way to secure the long-term relationship by addressing certain basic principles on a day-to-day basis, such as continued training of teams and maintaining skills.

For the same reasons, pressure should be kept on the configuration management activities throughout the contract: keeping documentation and databases up to date, clarifying the management of licenses if necessary, preparing training materials on an ongoing basis and a quality assurance plan describing the applicable processes, etc. The efforts made by outgoing service providers and customers make it possible to improve the service provided and its documentation and indirectly facilitate the transfer of responsibility.

In any case, the reversibility conditions of outgoing service providers must be controlled, and the constraints must be known before the decision to launch a new call for bids and the choice to launch a new service provider or put a new technology in place. To do that, audit clauses should be used to verify the right reversibility conditions before launching a call for bids. The establishment of an action plan following an audit is an opportunity for the service provider  to bring itself up to speed and prove its motivation to have its contract renewed by mutual agreement.

 

Good practices of a reversibility plan

From its initialization, at the start of delivery, only prioritize writing  the elements that will remain invariable, or will rarely evolve during the process: plans for training; knowledge required; practical arrangements for observing simulation or realization of activities, etc. Do not define the phase length in advance, just provide a bracket which suppliers have to adhere to.

In effect, a plan that is too detailed often becomes complex to negotiate after the notification of reversibility.  Everything which can remain flexible and be included in the price fixed between the parties, should be outlined in the final version of the plan; which takes into account the constraints of the party taking over.

On the other hand, make sure you anticipate and quantify in advance the impact of various scenarios in order to avoid any surprises: offshore externalization (cost of a transition in English, logistics linked to online training, translation of documents…), partial reversibility, internalization of services, etc.