As a result, when the buyer was announced, there was a scramble to determine whether Trex would transfer the contract or find a new provider.
"We had to get out to their data center very quickly, hold meetings with their executives and people working on our account, check out their business plan and financials, check references -- all in a tight period of time," she says. "I would have rather had it spread out."
"It's terrible when you don't know who the acquirer will be," agrees Scheuble. "I'd be trying to figure out the likely buyer and creating contingency plans based on what I know."
Talk Early, Talk Often
An outsourcer acquisition brings FUD: fear, uncertainty and doubt. Customers may wonder whether to stick with the buyer or move to a new provider and just where they fit in the new provider's strategy.
"The level of fear and uncertainty is a huge issue," Roehrig says, "and a competitive differentiator is how the vendor manages that change."
To clarify the situation, the two parties need to talk early and often. Customers should expect open communication, visibility into strategy and financials, clear deliverables and a project plan to manage change, he says.
A common fear is that service levels won't continue to be satisfactory. But for the most part, Roehrig says, it's in the acquirer's best interest to maintain them in order to avoid breach of the contract. "The goal is to keep the customer and expand the delivery footprint," he says.
Scheuble agrees. When an acquisition occurs, "everybody's at risk," he says, "so it's important to get on the same page and identify the big issues early on. There's always a way to modify the contract so that everyone gets something they want."
The discussions should continue as the transition unfolds. At Trex, a big issue was getting a clear view of the new provider's policies and procedures, which were more formal than the previous ASP's. "They have a much more tightly defined and well-documented way of doing problem resolution and taking requests," Richards says. "There was a period of uncertainty where we had to get used to that."
As it turns out, the extra documentation is a benefit to Trex, because it helps smooth its auditing process -- a big concern, since Trex is subject to regulations such as the Sarbanes-Oxley Act.
Rein In the Staff
During an acquisition, another important issue is whether you'll be able to continue working with the staffers you've become familiar with and who have become knowledgeable about your company's needs. The good news is that in many cases, staff members get absorbed into the new entity. The bad news, however, is that the biggest changes often occur at the top of the organization, Roehrig points out. "If you're used to dealing with senior levels of the organization, you're going to have to meet new people," he says.
Smith had to get used to less-personal service when he moved from Fortrust to his new provider. With Fortrust, when there was a problem, he was accustomed to calling someone he knew by name, but with the new outsourcer, he was instructed to use an anonymous trouble-ticket system. "You ended up with a person whose capabilities you didn't know," he says. "It became more generic."
Trex was assigned a new customer manager to drive the transition, but its contract terms stated that it had to be notified in writing when there was a change in staff, which might give the outsourcer pause before making a staffing shift. "We wanted to make sure the people familiar with our environment stayed," Richards says.
Smith suggests building in a contract clause that specifies retention periods for staffers working with your application, with reduced contract payments if staffers leave sooner. "Service levels do change when people leave," he says. "Even if you end up with a better person, they still have to come up to speed."