CWS 3.0: September 5, 2012

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The Benefits of Incorporating SOWs

Statement of work (SOW) consultants were once the new kids in town. And there was plenty of buzz around them. SOW is no longer something that programs are just talking about. It is here and gaining significant traction across programs of varying sizes and shapes. They are being included in more and more programs creating the need to look at relevant measurements for success.

For starters, the need to categorize how a CW program is incorporating SOW and then applying appropriate measurements that address how SOW is included in the program is necessary.

Today, many programs are simply tracking the SOW and its terms, milestones, and the on/offboarding of the workers/consultants performing the work. This affects productivity which in turn affects price.  Given our economy, the emphasis on reducing costs around contingent workers is critical. In this case it makes sense to measure items around what you are tracking; on/offboarding requirements, invoice accuracy, compliance with contract terms. This then gives you the visibility into spend by SOW category that you could then use to affect volume pricing negotiations with specific SOW suppliers in those categories. The sheer value of knowing who you have on-site or off-site accessing your buildings and systems should not be overlooked.

Significant productivity gains are easily measured when you can show how long it takes to get your SOW consultants productive with systems and such once on-site. It is realistic for the average time to productivity to drop to less than two days from two weeks once SOW is managed by a contingent workforce program.

Programs could then take SOW management further by actually managing the invoice and payment process, including invoice consolidation. This allows for a higher level of impact on longer-term cost savings, which could be measured over time. The invoice consolidation process itself promises significant productivity gains and soft dollar savings. It would require contract terms to include a pay agent. Further measurements against the contracts and overruns or change orders against a given contract would be tracked and measured. With this level of SOW management in a program, there would need to be a preferred list of suppliers that were frequently used and a supplier vetting process that would support adding suppliers quickly without inhibiting their ability to be engaged within the managed process. You can even measure how long it takes to onboard a new supplier.

Taking SOW management one step further, the sourcing of the SOW can be tracked. If SOW templates were utilized, you can measure how quickly you get from sourcing request to SOW proposals that can be evaluated and negotiated. The RFx process requires that SOW/service request templates and suppliers have previously negotiated contracts to receive and deliver SOW proposals through the system. Then, an evaluation and negotiation process between the service requestor and the program management team would need to be in place. This support allows for the measurement of cost savings as a result of the negotiation process.

The higher the level of management of the SOW, the more the more the opportunity to measure the success of the program and gain additional adoption of this classification of worker. SOW consultants are here to stay. They are gaining significant traction across programs of varying sizes and shapes. The key, however, to keep the momentum going is to measure the success and build in a communication plan that paves the way for increased adoption.

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IQNavigator

Michael Matherly 05/09/2012 7:53 pm

Program expansion into SOW is not only an extension of the contingent labor workforce - which it certainly is, as Kersten's article aptly depicts – but maybe more importantly I see it as an entry into new Services spend types that introduce greater complexities (and greater opportunities!). The underlying distinction I am making here is this: managing spend is different than managing workers, and both are needed to properly manage SOWs.

When implementing SOW spend, emphasis should be placed on understanding the differences among the various SOW services sub-categories, because setting up SOW spend on a VMS is not a one-size-fits-all proposition. Here's a blog post about this very topic http://iqnavigator.com/blog/2012/06/philosophical-friday-is-managing-spend-the-same-as-managing-workers/


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