When to terminate a BPM deal?

As far as engaging the service of business process management is considered research show that more than half of the BPM relationships have been unsuccessful. In most of the cases, either the relationship between the client and the service provider ends in non-renewal of an expiring deal or early termination of the deal and in worst case through some court and legal proceedings.

Terminating contract. Image source mynewyorkcitylawyer.com

And it is seen that any effort to recover the situation either by transferring the process to an alternative provider or bringing back the existing provider in-house results in significant cost and risk for both parties. As such it is necessary that the buyer of business process management services consider all available reconciliation option and walk out from the deal only as a last resort.

Before deciding to end a BPM deal, clients should look into the following to decide as to when to terminate the same:

  1. Thorough diagnosis of the situationThe clients should make a thorough diagnosis of the situation that led to the poor performance of the service provider. A detailed study of the situation will help the clients to identify and address the real issue. In many of the cases, it is seen that it’s the attitude of the buyer that lead to the failure of the contract. Poor communication, changing priorities, lack of support to the service provider and poor governance practice will only result in experiencing suboptimal performance by the service provider.

    Even if the issues are caused by the service provider, they should be given sufficient time to solve the issue as walking out from the contract is more risky and costly than a giving a opportunity to service provider to find a remedy to the issue.

  2. Learn the termination clauseA client before deciding to terminate a BPM deal should study the termination related clauses to get an idea of the risk, cost and options available. This will help them to understand if there is any condition associated with the clause and its implication on both the parties if exercised. Moreover, knowing the termination clause inside and outside the contract will help them unwind any reconciliation option to solve the issue and continue the relationship.
  3. Evaluate cost and riskWhatever be the reason, dissatisfaction of services or convenience, the clients should evaluate the cost and risk of transferring the process back to in-house or to an alternative service provider. The buyer should also look into the cost associated with termination which includes termination fees, third party services, processing cost, and cost in allocating resources for internal operations. The business risks such as interruption risks, change management and technical challenge should also be evaluated. If the costs and risks evaluated outweigh the benefits of terminating the deal then it’s advisable not to end the deal and give space to the service provider to improve.
  4. Plan the terminationBPM transitions are very complex and cumbersome and so every contingencies should be considered and the transfer of service be planned accordingly. Craft the termination message carefully considering the time required for transition. Preparing a detailed migration plan will help the transfer process from the incumbent provider without interrupting the operations.

Proper diagnosis of the issue, understanding termination clause, assessing the cost and risk and planning the transition process will help the clients to make informed decision as when to end the BPM deal and enable a smoother transition of the process without affecting the business performance.



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