If you’re thinking of switching suppliers for one of your major contracts, how far in advance do you ideally need to start planning?

Let's define "major contract." In healthcare, EMR is top of the list when considering your tier one applications or hardware. If we're thinking about how far in advance we want to start talking about replacing EMR, it's years. However, if we want to consider how far in advance to start talking about replacing a project management application that only 50 people use, it may be as little as three months.

When we say major contracts, a good example would be if an organization is a Google shop or a Microsoft shop and there was an opportunity or desire to look at the other. In those cases, it’s a minimum of 12 months, probably even longer than that because you need to start talking with those who need to weigh in on the decision and start calculating switching costs associated with those major agreements.

And you must keep change management in mind when you consider switching suppliers for major contracts or platforms. You might save money on the contract by changing suppliers, but how much money are you likely to spend in switching costs when you factor in implementation, education, changing hardware, and tech support? 

Ultimately, it depends on the scope of the major contract. Is it global? Is it just five users or everyone in the company? The more people you have touching that agreement, the longer runway you need.

Our contracts usually had 90 day cancellation notices but in reality it would take us at least a year to switch off major suppliers like IT Service Desk, or IT Server Operations. If it were for a major business facing contract like SalesForce we would probably start 2 years in advance or more