Top reasons why offboarding is critical to vendor relationship management

Paying attention to the details when onboarding a new supplier is important. What gets less attention — but should command just as much — is what happens when you part ways with one.

A smooth offboarding process is an important part of SaaS vendor relationship management. While this may be lower priority than negotiation and onboarding, an offboarding policy has value. It can save money and frustration at the end of a contract and ensure a smooth transition for users.

For small contracts (i.e. single-license app) the process might be quick and easy. A few clicks or an email within the renewal window and off you go. But what about large contracts with many users, software dependencies, or data concerns?

If you're building a new policy or adjusting your current one, here are some areas worth looking into.

Understand the true cost of offboarding a supplier contract

Before you make a move, it helps to look at the decision from every angle. Moving suppliers is rarely only about the bottom line. With large and complex contracts, you may have costs associated with changing suppliers. These may include (but are not limited to:

• New supplier setup: There may be fees involved with migration or equipment changes. Consider the cost of coming online with your new supplier. Consider the cost of integration with other dependent systems currently in use.
  
  
• Downtime: Migrating data and setting up systems may mean going dark for a short period of time. Depending on how mission-critical the system is, consider the cost of disruption (internal and external). Consider how downtime will affect other integrated systems or processes. Understand how downtime will impact any service-level agreements (SLAs) you have in place. Make a plan to reduce the impact of your system downtime on end users.
  
  
• Training: Learning a new software takes time and energy. Consider how training and change management will affect internal productivity. For instance, implementing a new CRM may slow your customer response time while reps learn the new platform. If the new platform is complex, you may need consultants to provide training. Consider the investment in consulting and training as a cost of changing suppliers.

Start the SaaS vendor management and offboarding process early

Unless the contract is ending as a result of a breach of contract, you'll have some time to get things in order. There will be activity across departments, so give yourself ample time. Your contract may have a built-in period for performance. 

A 90-day window is optimal for contract termination talks. This leaves time to examine the business case, and (if applicable) vet the replacement. IT, Security, Finance, and Legal will all have a part to play in the decision. Creating a runway for the SaaS vendor management process makes it easier for everyone.

If the contract is ending as a result of a breach or issue, having a policy in place can make the transition smoother. You'll have questions and requirements prepared and your team will have a game plan to run with. It can prevent disruption in service or issues with data. It can also leave the supplier relationship on better terms (never a bad thing.)

Review your supplier contract: Rights and responsibilities

At the beginning of a contract, each party makes commitments. Some of those commitments may kick in as the contract period draws to a close.

Consider your data

Data preservation and disposal is an important part of offboarding. If your contract was well-negotiated, there will likely be language within it to guide you. If you don't have a data clause in your contract, here are points to consider when offboarding a supplier. These are also important points for future contracts:

• How much data do you need?

Consider what data is necessary to take from the supplier before the end of term. Think about how departments could use the data to guide their internal roadmaps.

You may find that a big migration isn't necessary, or that a partial data recovery may be suitable. Take the time to understand how departments use the system (directly or indirectly.)

• Data transfer

If you've determined you'll need the data after cancellation, refer to your contract. A well-negotiated contract will lay out the transfer timeline, requirements, and responsibilities. Get on the same page with your supplier and make arrangements for a data transfer.

• Deletion requirements

In the event that you don't need the data (or have downloaded what you do need) check for deletion requirements. Your contract may stipulate the timeline for deletion. It may also outline the proof of deletion requirements your supplier must follow. Understanding how the supplier can use data post-contract is an important security consideration.

Involve the right parties in the supplier offboarding process

Just as with your SaaS buying process, offboarding suppliers is a team sport. A strong policy will include a workflow for all departments to get their needs met before separating from a vendor.

Finance

Closing out the books on a supplier contract is an important exercise for the Finance team. First, they are likely responsible for providing written notice for the cancellation. Providing ample time ensures a smooth separation.

They will also need to make final payments, create documents, update supplier profiles, or sew up insurance details. There may be tax implications for the changes. Finance may also want to adjust budgets or forecasting based on the change in vendor.

Finance may also have post-contract analysis to conduct. Evaluating the contract, its efficacy, and any issues or deviations can help drive future supplier decisions.

Security

For your security team, vendor relationship management often outlives contracts. They will need to ensure that appropriate safeguards are in place post-contract. They may also have a security offboarding process to document issues during the contract that need review or remedy, including:

• Revoking physical or file access to supplier contact.
• Monitoring post-close systems use.
• After-action analysis of supplier activities and third-party risk issues.

In the case of a security breach, their documentation may be necessary to show cause for remedy.

Legal

Your legal stakeholder will likely be a key point of contact for your contract terms. They can interpret compliance language and iron out issues arising out of separation. Your legal team may also have an internal vendor management process to conduct. In cases where the contract ends prematurely or due to breach, you'll want your legal team on hand to assist.

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By using the same diligence in onboarding or offboarding a supplier, you can support your supplier lifecycle at every stage.