What is Transition? – Part 2: Major Activities

What is Transition? – Part 2: Major Activities


When we consider the amount of planning and analysis, as well as the number of activities which precede the initiation of Transition/Transformation, it is not surprising that the complexity, appearance and duration of this phase will vary greatly from engagement to engagement. Major factors influencing the Transition/Transformation phase include:

  • The reasons that you, the client have chosen to outsource,
  • The scope of the outsourcing engagement,
  • Your readiness as an organization to fully engage in the Transition and Transformation., and
  • The types and nature of the activities by which you will transfer service control to the Outsourcing supplier.

This post will focus on those activities which are most often included in the transition, regardless of other factors.

Governance – An Introduction

Possibly, the Governance Process and its supporting activities have the greatest impact on the success or failure of the entire outsourcing engagement. Governance establishes and maintains clear roles and responsibilities for both you, the outsourcing client, and the outsourcing service provider(s). In fact, this area deserves its own separate discussion, and I shall broach this subject in Part 4, “Managing Risk”, of this series of posts on the subject of Transition.

Communications – An Introduction

In any endeavour involving more than one person or organization, clear, concise, and effective communications is a critical factor in on-going relationship management. A practical and clear communications process along with its enabling activities and documents, will facilitate continued progress as you wend your way through the outsourcing engagement, through to continuing or ending the relationship between you and your service provider(s). As with Governance, this subject will be be discussed specifically and in greater detail in Part 6, “Communications”, of this series of posts on Transition.

Change Management

 The bedrock for environmental and operational control in an outsourcing engagement is Change Management, and the more complex the engagement, the more critical this process and its activities become.

A stark example of this would be a situation wherewe were engaged by an outsourcing service provider to assess their Transition for a major Europen grocery chain. The transition had been ongoing for over a year, and there had been very little progress to-date. One of our first requests was access to their Change Management Process, and the response astounded us. “We haven’t approached that yet. We’ll begin that effort once we have completed an accurate inventory”. The fatal flaw in that approach was that the chain swapped in and out hundreds of POS terminals every day of the week. The inevitable result was that they had undertaken a wall-to-wall inventory effort at least 4 separate times with absolutely no success, and nothing else whatsoever had been initiated.

The solution was, on the surface, relatively simple; establish and institutionalize a Change Management Process. When that was accomplished the Transition began to progress as originally planned.

That delay had cost the service provider several million dollars in penalties, and the frustration arose from the realization that everything had been avoidable.

Generally, there is an assumption that the client IT organization had a Change Management process in place prior to contract signing. Given the volume of change in any IT organization, as well as the additional changes required during Transition and Transformation, it is critical that some workable arrangement is established immediately. The longer the delay in having a workable change management process, the greater the risk for negative service impacts. In addition, functioning without Change Management inevitably results in a duplication of effort. A prime example of the negative results of no Change Management would center on the transfer of infrastructure assets from the client to the service provider.

As an informed client, it would be to your benefit to ensure, prior to the beginning of Transition, that there will be a functional Change Management process in place before any activities begin. Otherwise, it becomes almost impossible to track status throughout transition, and many activities will have to be repeated until the change process is functioning.  An outsourcing agreement which begins in this manner dramatically increases the risk of failure of the entire engagement.

It is relatively easy to access a “best-practices” Change Management process, and the examples are typically easy to adapt to specific organizations while retaining the core advantages of the standard. Likewise, there arre a myriad of templates and forms available which can also be adapted. In any case, your efforts, as well as those of the service provider, will be well-rewarded.

Financial Management

There are several different facets of Financial Management to be addressed as soon as is possible:

  1. Establishing the financial controls to be followed for the duration of the engagement,
  2. Agreeing on the billing and payment processes to be used by both the client and the service provider,
  3. Defining and instituting the financial processes to be used to manage the transfer of infrastructure components from the client to the service provider. A critical component of these processes is agreeing on the methods and forms to be used to track the transfer.

Human Resources Management

Typically, as close to the beginning of Transition as is possible, activities will begin to transfer staff to the service provider. It is a bi-directional set of activities, so coordination is absolutely essential. On the service provider side, there are the usual activities required for on-boarding personnel, including payroll, training, and standard operational policies and procedures. As for the client, the activities will include transferring or terminating the employees, as well as ensuring such things as benefit and pension transfer. It is worth noting that in many cases, moreso in recent years, service providers will not simply effect a direct transfer from the client organization to the service provider organization, preferring instead to receive he new personnel unemcumbered. In effect, what they do is terminate all the impacted employees one day, and then re-hiring them as new employees the next day. Although this approach my simplify the bookkeeping for the service provider, there are other activities which become necessary (e,g, pension disposition and healy care management), and the details of specific roles and responsibilities for the activities must be agreed-upon by both parties.

Another critical component here is the development and agreement of the Resource Plan, which defines the parameters for the resources required to deliver the in-scope services. The client must analyze this plan very carefully prior to any agreements. You can expect the service provider to attempt to ensure that they have maximum control over the resources devoted to this engagement, so as to ensure that they have the flexibility to juggle resources and increase profits. As a client, you must ensure that business objectives are paramount, and that resourcing is maintained at levels which ensure their achievement. In many cases, the client reserves the right of approval or rejection over resource changes, up to and including the actual personnel to be assigned to the account.


Even if the employees will continue to perform their same duties as before the agreement, there are going to be some immediate training requirements. The service provider will have general operational procedures which differ from the client, and personnel must be made aware of such issues immediately.

In addition, the service provider will have more strategic training policies and procedures, and although the immediate criticality of this will be lower than other activities, the sooner the new employees are made aware of those policies, the lower the risk of undergoing staff turnover greater than the norm.

For more information, see Part 1 of this 6 part series.

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