Exit Management, Cloud and sovereign IT sourcing

 

Exit management is indispensable in IT sourcing - not just for emergencies, but as an integral part of the IT sourcing lifecycle. Early planning, clear processes and regulatory guidance help to minimise risks and maintain control. Our sourcing data shows time and again that a lack of exit management can lead to significant costs and delays, especially in complex multi-vendor environments. An effective exit strategy is therefore crucial to ensure a company's business viability and strategic independence.

However, many CIOs and buyers are still focussing on current market prices, signing of contracts and subsequent monitoring of service levels. The course for success is set many years before the transition from an existing to a new provider: with professional regulation of exit management in the previous sourcing contract. This is because the subsequent separation and the new onboarding must dovetail smoothly. New sourcing partners can only take over services that can be handed over as comprehensively as possible.

Hyperscalers make new exit strategies necessary

And times have changed: In the past, a CIO could assume that they would sign an outsourcing contract for a certain term and then negotiate a similar follow-up contract with the existing or a new provider. After all, providers accepted many conditions back then. However, the dominance of hyperscalers has turned the market upside down, as the three corporations Google, Amazon and Microsoft now dictate the terms.

Repatriation to a private cloud or on-premises

There is rarely any traditional exit management via standard contracts of hyperscalers. Companies are therefore forced to organise their exit internally and only manage the cloud contract in a way that they can get out of - like a train that can be lifted onto a new track outside a station if necessary without losing passengers or cargo. The return of data and applications from hyperscaler clouds, for example as part of a cloud repatriation, shows how difficult an exit is without preparation. Proprietary formats, a lack of export functions and unclear SLAs make migration difficult, and the costs of (re)transferring the data are often high.

Cloud first or sovereign cloud?

The topic becomes particularly relevant in the context of sovereign cloud initiatives and data protection requirements: "Cloud First" may be a well-meaning demand from management, but it requires a precise strategy for getting started in order to avoid any surprises. This means more effort for the organisation and a high degree of discipline. If exit contract clauses do not take into account the actual organisational, technical and legal challenges of a service provider change, this quickly leads to dependence on the previous provider or to an expensive separation. Both can be avoided efficiently and equal terms.

 

What belongs in exit management

For exit management, IT landscapes, processes and interfaces must be documented in a complete, up-to-date and standardised manner. In addition, clear definitions of the services and knowledge to be transferred, a timetable, the definition of responsibilities and regulations on the handling of intellectual property are required. It is important that prices and delivery deadlines are agreed for information, project proposals and project offers. This shortens discussions that will almost certainly come up years later.

Exit management requires self-discipline

The most important thing to realise is that you need to write your exit strategy as if it will certainly be needed - for rainy weather and not for sunshine. If the contractual partner offers highly standardised cloud services and does not negotiate, IT managers need to develop a rigid organisational discipline and make sure that they do so every time they outsource: Do I have to get the service back? If yes, can I get it out of the cloud again? If not, do I really have to give it there? Compared to the problems that arise without an exit plan, a robust exit clause is a far more efficient option.

Best practices for exit management

Helpful procedures can be found, for example, in regulated industries whose companies are obliged to have comprehensive exit management, such as the financial or the healthcare sector. After all, this involves critical infrastructure and sensitive data. Requirements from national or international regulators and supervisory authorities demand clear exit strategies in order to guarantee data sovereignty and service continuity. These sectors serve as best practice examples for structured exit processes. Companies should therefore not see the exit as an inglorious end to a relationship, but as part of a continuous improvement process.