IT sourcing: What should the exit plan achieve?

 

The reality is that IT sourcing relationships can end - due to a strategic realignment, dissatisfaction with performance or the expiry of a contract. Without an exit strategy and a detailed exit plan, these transitions can lead to major disruptions in IT services - resulting in financial losses and reputational damage. A proactively designed exit management plan should be a formal part of the sourcing contract to turn a potentially chaotic relationship end into a controlled transition. Despite this realisation, sourcing partnerships are still divided into three parts:

1. An exit plan is in place.
2. An exit management plan is in place, but it is essentially just a schedule, i.e. a calendar with a few milestones. It does not clearly define how the provider will hand over the services to the successor.
3. There is no exit management plan because this is the first time these services have been outsourced to a customer (Gen1), or because the provider did not create it (Gen2).

The problem is bigger than you might think. In the Lünendonk study of IT sourcing trends for 2025, only 29 per cent of companies surveyed said they had exit strategies in writing with relevant IT providers as part of their sourcing contracts. Furthermore, only 17 percent had formulated an exit strategy for switching back from SaaS providers and hyperscalers, with the aim of easily and completely retrieving and transferring their data. The situation looks better in industries such as finance, where regulations such as DORA force companies to demonstrate the continuity of IT services, even during the transition.

What is an exit plan in IT sourcing?

The exit plan outlines how the customer (1st generation) or existing provider (2nd generation) will transfer responsibility for their services to the new service provider. It also specifies the necessary cooperation, in the form of support and cooperation obligations, from both the new provider and the customer. Therefore, the exit plan is key to facilitating communication between providers. Each service exit is structured in such a way that it can be defined and explained individually.

The exit plan must be available by the time the contract with the new provider is signed, and it should be updated throughout the contract. It should not be a snapshot of the situation at the time of the initial service transition. However, this presents a dilemma: although the exit plan is often viewed as a simple yes/no check, it is actually a tool that extends across the entire sourcing lifecycle and beyond.

 

Exit plan and Transition-IN plan

In our consulting work, we have found it helpful to consider the exit plan of the existing provider and the transition-in plan of the new provider together, because a successful transition requires seamless interaction. The transition-in plan is an official contract document within the Metrics Contract Framework (MCF), outlining the new provider's plan for taking over the provision of the customer's (1st generation) or existing provider's (2nd/nth generation) contractually agreed services. This includes all services that, while not specified in the contract, are essential for the transition of services.

The new provider is responsible for creating the transition plan. This plan is created, updated and finalised during the transaction phase, before the contract is signed. It defines the scope and milestones of each service, as well as the cooperation obligations of the customer, the existing provider, and the new provider.

When the exit plan comes into effect

Once the selection has been narrowed down to a maximum of two providers, the transition-IN and exit plans must be agreed upon jointly during the transaction phase. If the exit plan is unavailable from the customer/existing provider, it must be drawn up in coordination with the transition-IN plan. Ideally, both documents should be agreed upon before the right provider is selected and the contract is signed, so that implementation (transition) can begin. The ideal solution is one that ensures both plans are clearly understood and open to coordination.

The contents of the exit plan are as varied as the IT services to be transferred. This also includes overarching areas such as:

• Governance and roles with responsibilities (internal and external), escalation mechanisms, and a communication plan.
• A schedule and milestones with an exit timeline, handover phases and deadlines for documentation and data migration.
• Documentation and knowledge transfer, including technical documentation, operating documents and training for successor providers or the internal team.
• Data migration and system access, including data formats, interfaces, access control, security protocols, and archiving obligations.
• Contract and licence management, including returning licences, clarifying IP rights and dealing with subcontractors.
• Infrastructure and assets, including the return or handover of hardware, cloud resources, virtual machines and location-related issues.
• Compliance and legal aspects, including GDPR compliance, audit trails and exit clauses in the contract.
• Risk analysis and contingency measures, including worst-case scenarios, backup strategies and a business continuity plan.

Best practices for the exit plan in a provider transition

Given the scope of the project, it is clear that a ‘pragmatic solution’ for the exit plan with vague declarations of intent is not enough, because crucial issues concerning the interests of those involved could be overlooked or lost in compromises. Therefore, it is necessary to hold new providers accountable for drawing up a professional exit plan before signing the contract. Additionally, exit plans must be simulated, and service documentation must be regularly updated, particularly following major change requests. This will save a lot of effort and expensive rework if the exit plan is ever needed.

 

Looking for more information?

Here you will find an article on the general relevance of professional exit management in the era of cloud computing and sovereign IT.

We also report on the critical phase of provider transition and transformation in IT sourcing.