Xperience

The Why, How & When to Switch Business Partners

Establishing a relationship with any business partner takes time, effort and money. While such an investment can often convince management to resist switching, it is vital to ignore any sunk costs and recognise that if the relationship has failed, nothing will salvage it.

The maths is simple — preserving a partnership that no longer delivers value is a costly mistake. The most effective approach is to be objective, considered and, above all else, decisive, recognising when a change is necessary and finding the most effective process in following through.

Why Would You Change?

Businesses must remain competitive, which can call for tough decisions to be made as requirements change. Management might leave, a competitor might pivot, an unexpected cost might impact your budget. Rainy-day funds can’t cover everything. There must be stringent criteria against which the performance of partners is measured, which in turn should be updated regularly to reflect the day’s key challenges.

Our Strategy’s Not Working

Working A new CEO has arrived with a fresh mandate. We’ve missed earnings. New opportunities are on the horizon. Whatever the reasons for a rethink, a strategic shift puts the onus on reviewing your Business Partners. Even large-scale enterprises shift their focus from time to time and the likelihood is that current problems will evolve into new challenges, requiring new skillset and a fresh outlook.

The question – where next?

While a current IT Partner may be able to adapt their course, if the idea is not already ingrained within their organisation, then management needs to be mindful of the partner’s ability to support directional growth.

Conversely, any strategic update stemming from the Business Partner themselves should be closely observed, as this could impact the viability of your relationship. We’ve all been on the receiving end of surprising decisions. If we don’t like them, then would we really want to put up with them?

It’s Not You, It’s Me

We happily make decisions when we’re young that we eventually outgrow. There is no ill-feeling, it’s just time to move on. The same can be said of an IT Partner. We choose the one who best meets our immediate – or, at best, medium-term concerns – but there is every chance that you will eventually become too large, need to upscale, diversify your business or step into a new market.

No matter what precedes the change, it will always hurt to leave the past behind, but it’s exciting to see what lies ahead. While every support resource will do their best to manage a client’s expectations, should an organisation reach a size where requests become more abundant and more bespoke, there is the risk that such volume can no longer be handled in a time-efficient manner.

Whoops, We Missed our Target

Any commercial partnership should have specific KPI’s or SLA’s so that each side can measure performance objectively. From simple sales increases or improved customer retention to more bespoke indicators such as optimised internal efficiencies or expected client response times, it doesn’t matter what you choose. Just be sure it is reflective of what you want to achieve.
The aim of such metrics is to hold parties accountable to agreed terms, setting expectations with regards to the ongoing relationship. While missing targets early in the process can be more common – slow employee adoption or growing pains happen – frequent underperformance is an immediate red flag to be treated with focused re-evaluation.

Takeaways

  • If cracks appear or your own position needs review, it is time to re-evaluate.
  • As soon as misalignment becomes apparent, the question of switching should be brought to the fore.
  • Be up-front and make it clear you require a better-skilled associate

How to initiate change

Changing Business Partners is a delicate process. You have invested time and energy into the relationship. There is a lot of shared knowledge on the table. You have a reputation to preserve.
Plus, no one likes getting hurt.

Managing the process professionally can have a very positive outcome; however, mismanagement can be quite the opposite.

Be Clear in Communications

We’re big on communication. I think you can tell that by now. Trust us: the simplest way forward in any situation is a clear communication strategy.

Concerns should be flagged at the earliest possible stage to allow adequate time for reconciliation. This could not only save the hours invested in both due diligence and integration, but it could also improve the working relationship or clarify expectations.

By having a clear trail of communications to back up ongoing grievances, if the time arrives to switch, you can succinctly demonstrate the reasons for your decision. This not only expedites the process but also mitigates the potential for conflict.

If you are switching for internal reasons – strategic motivations, for example – then an in-person meeting works wonders. Most organisations have lost the personal touch in today’s digital economy, but nothing beats a friendly smile and a firm handshake. Plus, eye contact, of course.

Shortlist Replacement

Things have obviously gone wrong. So, you need to work out why. But you also need to plan the next steps.

First, carry out a review of the previous procurement strategy and make necessary adjustments. Whether this means updating your checklist, reviewing specific selection criteria, or refining a specific process – something needs to change.

However, once the business is realigned, now is the time to source a new partner.

If the partnership finished on mutual terms, there is no reason not to ask for recommendations for alternative suppliers. If your Business Partner can no longer fulfill your requirements of scale, or their area of focus is misaligned, they may well be able to support a transition. If they scratch your back, there is no reason you won’t return the favour over the years.

Make the Switch

Once a new Business Partner is decided upon, make the change.

Request the necessary documentation from your previous contract – be it process flows, integration documentation or custom developments – and do your best to reduce complexity.
Then move forward as quickly as possible to minimise both internal and external disruption. The plaster coming off might hurt, but it hurts a lot less when done in one swift movement.

Is There a Best Time to Switch?

There are better times. But no best time. Business never stops, after all.

The primary issue is that most businesses will not have the luxury of choosing the point at which they can switch, so taking decisive action is often the only action.
But with a strong contractual agreement in place, business owners have more control over how to mitigate the risks and timing of switching.

Termination Clauses

Having a termination clause in your agreement can give flexibility over when you choose to move on, allowing managers to earmark periods of the year that have the lowest business impact.
Understanding that there will be a minimum of a few months’ disruptions can help plan the least impactful time to make the switch. With the right agreement in place, you then have the flexibility to make the call at your own discretion.

After all, it is unlikely that you’ll be back…

Sooner is Better

Most of us know when the vibe is off, so listen to your gut.

The initial stages of the partnership can be tempestuous as partners uncover each other’s dirty secrets (read: incomprehensible business processes) so it pays to have patience as the dust settles.

There are times, however, when misjudgments are clear and if this is the case, then making a quick assessment and moving on can be the cleanest way of avoiding a costlier shift.
The longer a relationship lingers, the more entrenched either side becomes – both in terms of information, as well as technical reliance – so, by avoiding the pitfalls of completely giving oneself over to the other side, there is always the opportunity to make a quick break.

Employing a rigorous selection process should avoid such instances, however on the rare occasion that ‘The One’ doesn’t match their profile, be honest in your evaluation and state your intentions to move on at your earliest convenience.

Committing to an IT Business Partner is a major decision that will have a long-term impact on the success of your organisation. As soon as things cease to be of value, recognise any failings, make them known and, if there is no acceptable solution, move on.

Sunk costs have little relevance in this context and the most prudent action is to find another support resource to drive your business to the next level.

Time for action?

  • Review agreed on performance metrics and understand if the change is imminent.
  • Schedule a face-to-face meeting. Be open and honest. Show your human side.
  • When it’s time to leave, it’s time to leave. Get out when it makes the most sense to your business.