How to Handle a Vendor Acquisition

Thursday, October 15, 2009 18:55
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How to Handle a Vendor Acquisition

In light of the age of Software as a Service (Saas) as a very viable option for outsourcing systems and applications (of which I am a proponent) - it is reasonable to determine that vendor failure or disruption should become a natural addition to your business continuity and disaster recovery plan. The sale of a vendor should not by default be considered a disaster (though emotionally it can feel like it) - but it does become a critical event in your business operations.

 

Nothing strikes fear in the heart of a team immersed in operations technology than the call or email announcing a core vendor has been sold. Andy Gluck recently wrote about the EBIX, Inc. acquisition of EZ-Data (makers of Smart Office) - and the subsequent layoff of nearly half the EZ-Data staff.

 

 

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We've discussed here the operations best practices of documenting processes, backup schemes, training staff and utilizing differing techniques for efficiency and accuracy. This is a good time to run through a checklist of activities your team can walk through to stay informed and keep a line of communication open with your service provider.

 

The Announcement of a Vendor Sale

When this occurs, take a deep breath, and then consider that the tremors from this are being felt acutely by the staff that support you from that provider. As you are considering the impact on your business, those employees are reeling at the possible onset of unemployment. Keep that perspective in mind as you react. (I have experienced this myself, twice.)

 

To establish the first tasks in your plan for this scenario - here are some initial steps:

  • Identify who the key contact is on your team relevant to this vendor's products
  • Include yourself or another decision-maker on your management team in this group
  • Select your most experienced end user in addition to your key contact

This will be your vendor committee for first contact. When you receive the announcement - if you have not been contacted by the vendor already (something that would be a slight red flag to me) - reach out to schedule time with the relationship manager for the provider. Don't tackle the issue on this first call - simply note that you are aware of the corporate action(s) occurring and would like to schedule a meeting to discuss with your committee within 5 business days. Don't take no for an answer - but also pledge to a short time frame (15-30 minutes) and that you have a short list agenda. Be willing to send this agenda in advance.

 

If your provider has a separate point of contact for customer support - reach out to that individual or group immediately and ask for confirmation that current business hours, contact information and service levels will remain intact for the immediate 30 day period.

 

The Committee Meeting with the Provider

Your key areas to cover in this meeting will be for short term. Any vendor acquisition was preceded by a period of strategic review and planning. Your provider may tell you they do not have a strategy or new business model in place as of yet (unlikely). Just roll with that and focus on issues that can impact your business today and tomorrow. This list can serve as a conversation starting point.

  1. Service Levels - will the current service levels pledged to you through a subscription agreement or contract change in any way within the next 90 days?
  2. Who are the key contacts for relationship management, customer service (including billing) and technical support?
  3. Will the currently publicized roadmap for products and services be changed for the forthcoming two quarters?
  4. Is there business model change planned within two quarters (ask anyway just in case you get an answer)?
  5. If your products and services integrate with other vendors - will that change within two quarters?
  6. If you have current customizations in their development pipeline - confirm the timeline for the delivery of those.

These topics will enable you to quickly delve into key areas that can affect your operations.

 

Future Planning

My suggestion is honesty is the best policy. Any business owner should consider assessing who the core competitors are for this particular vendor and invest time at some level in some due diligence. Your continuity plan is not complete without the Plan B option of a sudden and required change of vendor.

 

In a majority of cases, a vendor acquisition is a positive move, perhaps injecting new capital or a larger development team. Likewise, a new owner may also bring a new philosophy that modifies the roadmap to your liking.

 

 

 

 

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