Feature
Breakups are complicated — in life and in business. And in today’s turbulent digital workplace market, amidst new advances in technologies like artificial intelligence, companies are growing increasingly discontent with their digital workplace vendors.
Yet, a bad split can hurt both vendors and their clients, which is why planning the separation might be the best way to part ways.
A Post-Pandemic Itch
There’s a number of reasons that can drive companies to split from their digital workplace vendors. Think: decline in service, changing technology needs, a desire to declutter the digital landscape or a mere shift in strategy.
Andrew Hewitt, senior analyst at Forrester, believes that for as much uptick in the rate of adoption of new technologies in recent years, there’s been a similar uptick in the number of companies looking to make a change in their vendor roster.
“What we're seeing now is organizations getting towards the end of a refresh cycle,” Hewitt said. “They may be looking to partner with other service providers that may be more in line with their needs.”
Mergers and acquisitions also play a role, on both sides. The digital workplace market is experiencing some consolidation, and companies merging or acquiring other companies often end up with overlapping systems or providers, which means something has to go.
Another cause of churn? The buzz surrounding new AI capabilities and what it promises for business. Organizations are racing to embed generative AI into their processes and business strategies. Case in point: Reworked’s 2023 State of the Digital Workplace report shows 80% of digital workplace leaders say that at least some employees at their organization are using generative AI to help in their job duties.
Hewitt said that has led to companies coming to the realization that they need providers that offer these new capabilities or are, at least, equipped to support them.
“If I see a competitor that has a much better AI strategy than the service provider I'm using right now, I may want to switch and take advantage of those opportunities sooner rather than later,” Hewitt explained.
Related Article: How Smaller Digital Workplace Vendors Are Integrating Generative AI
The Terms of Separation
Considering all the reasons why a vendor relationship might not work out, it makes sense to think ahead.
“We now get more questions from customers about exit strategies,” said David Bowman, product director at Fresh, an intranet and digital workplace for Office 365. “The intranet market has been around for long enough that vendors have come and gone in this space and customers have experienced that pain.”
While most contracts have some standards and processes surrounding termination of service, it’s not always proactively discussed upfront.
“It’s a super awkward conversation, isn’t it? Because you're at the beginning of that relationship and everyone is happy, and the last thing that you want to do is introduce this notion that one day it’ll be over,” Bowman said.
Furthermore, vendor relationships can be delicate, and mismanaging an exit has consequences. Once a customer has a lot of content or data stored with a provider, it can be difficult to extricate, and stakeholders in the purchasing process aren’t always aware of this.
“You've got a group of people like internal communicators, and because these are technology projects, it can be really easy to overlook these risks,” Bowman said.
While there may not be strong motivation for vendors to help, Hewitt added that being spiteful when a client decides to leave also comes with risks.
“I've heard that from a couple of clients where they’ve signaled to a provider that they're going to leave and the provider immediately raised their prices,” Hewitt said. “These clients then go out and tell all their friends that are also looking for service providers that this one was really poor to deal with.”
Related Article: Is It Too Early for HR Solutions Providers to Jump on the AI Train?
Avoid an Acrimonious Split
The first and most obvious step in ensuring things don’t go awry in the event of an exit: review the contract. Companies should always make sure that they understand what the termination process looks like at the onset of a relationship.
“You want to make sure that you define [the terms] up front, so that as you're making the transition, you're not getting subpar support, service, availability — those types of things,” Hewitt said. He added that customers may also have to pay additional costs in the last few months of their contract if they choose to leave, so companies should ensure they have the cash and resources on hand.
Non-technical leaders should also seek out expertise from internal or external experts to better understand the risks of a potential vendor relationship. Bowman said he’s had that experience firsthand at Fresh, where the team has worked to develop and document a clear exit plan for clients looking to move away from their product.
Conference
Sep
16
HR Tech Conference Las Vegas 2025
Register
Conference
Oct
27
Gartner HR Symposium/Xpo Orlando 2025
Register
“It's something that we could have produced and given to the customer, if they'd asked, so if that situation ever happened, it wasn't something that was going to spiral out of control, create reputational damage or end up costing us a lot of money,” he said, adding that it also helps set expectations for potential clients upfront.
Exit support can even be a valued-added service to clients that ultimately elevates the customer experience and protects the brand, Hewitt said.
“Sometimes, it's not really the vendor's fault in terms of why someone might leave. In that case, having a really good experience with that transition can be really helpful.”
