Most organizations invest a lot of time and resources when selecting and onboarding a new vendor. There's often a lot of excitement when implementing new products or services, but the truth is, vendor relationships don't last forever. Sometimes it's because of the vendor's declining performance. Other times, it's simply the result of the product or service no longer being needed.
When it comes time to go your separate ways, it’s essential to have an offboarding strategy. Unfortunately, this process can often come with challenges. This blog will highlight four common offboarding difficulties and some tips on preventing them.
4 Potential Vendor Offboarding Challenges
Breaking up with a vendor can sometimes be an uncomfortable experience, even more so when facing challenges that prevent a smooth transition.
Here are four common vendor offboarding difficulties that you may encounter unless you take the time to plan:
- High termination costs – Most people can probably relate to the frustration of trying to end a contract for a service they no longer want or need, only to be met with a high contract termination fee or other unforeseen expenses. When offboarding a vendor, it's important to carefully consider termination fees and any conversion or deconversion costs that may apply.
- Ownership disputes – If a vendor has been tasked with performing various operational processes and procedures, they may claim ownership of those processes, documented procedures or even intellectual property upon contract termination.
- Premature work stoppage – When notifying a vendor that you'll be terminating the relationship, it's wise to be prepared for the work to stop before the agreed-upon date. Products or services you may have relied upon for an extended time may be cut off prematurely.
- Unsuitable replacement options – Even though you may have decided to offboard the vendor because of performance issues, consider the possibility that replacing the vendor won't be easy. You might discover that available replacement vendors are unsuitable for your needs.
How to Prevent Vendor Offboarding Challenges
As the old saying goes, "an ounce of prevention is worth a pound of cure." The best strategy to address vendor offboarding challenges is to prevent them from occurring in the first place. This can be achieved by making sure you have the following elements in place:
- Solid contract language – Even before you officially welcome the vendor into your organization, ensure your contract includes clear and appropriate language so both parties understand and accept what will happen if there's a need to terminate the relationship.
- A specific and actionable exit strategy – Creating and testing an exit strategy is essential, especially for critical and high-risk vendors. An exit strategy will define the tasks, responsibilities, timing and budget related to offboarding a vendor and ensure that your organization continues operating.
- Constant communication – Keep the lines of communication open with your vendor to help keep the process smooth and professional. Ending a vendor contract can range from being a little awkward to feeling downright hostile. Nonetheless, a lack of clear communication between both parties will make the situation more challenging.
Although offboarding vendors can be challenging, you can avoid unnecessary friction and expense by planning beforehand. Anticipating and managing offboarding issues in advance allows you to make sure that, when it comes time to offboard a vendor, you've got a plan to make the process as smooth as possible.