CWS 3.0: December 18, 2013

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Where’s the Beef in SOW Management?

Much of the talk at  contingent workforce (CW) conferences today is about integrating statement-of-work (SOW) engagement management into the traditional managed service program.

One key reason for the growing interest in SOW is because SOW spend at the typical organization is two to five times what it spends through staffing firms in its MSP. Also, the SOW category is a notorious hideout for rogue spend and misclassification. But while it has benefits, wrapping SOW into the CW program can be quite challenging.

Many of the leading providers of MSP solutions and a number of internally managed CW programs already include, or are beginning to include, SOW management services, in their workforce management programs. But these SOW management additions are more administrative in nature and less about talent management.

Staffing Industry Analysts recently completed its 2013 VMS and MSP Service Differentiators research, which reviews the solution feature sets of leading VMS and MSP provider offerings in the marketplace. Our analysts reviewed SOW offerings from VMS and MSP solution providers based on a specific, detailed client engagement scenario. That research revealed that today’s SOW features focus on bill/invoice management, onboarding and offboarding, and tracking SOW project milestones/deliverables. Hence, at this stage, the services rendered in a majority of SOW engagements appear to be administrative and limited. Solution features such as negotiating contracts and project pricing, project management, sourcing SOW talent/management of a vetted SOW talent bench, and/or conducting project performance evaluations are not yet core service features when it comes to these engagements.

Invoicing and bill-pay services are the most common across all providers, which is not surprising as this fundamental infrastructure component yields immediate efficiencies and opportunities for visibility and controls.

Management service features are emerging slowly in SOW solutions. In some cases, SIA’s MSP research respondents claim that a few of these type of features are included in 40 percent to 60 percent of their SOW solutions. VMS providers are more aggressive in reporting the existence of technologies that go beyond administrative process support. Below is a snap shot of the prevalent SOW service features reported in the 2013 VMS and MSP Service Differentiators research initiative from leading MSP provider respondents.

Click image to enlarge.

Looking back at the MSP/CW program management solutions, one realizes they started just as humbly, with solutions being more administrative than CW program management focused. The enabling technologies were not as advanced, and in general, buyers’ engagement managers were not willing to allow the complete takeover of their staffing supplier relationships. This resistance has waned considerably, as will engagement manager resistance of more in-depth CW program management of their SOW engagement/relationships. It’s just that the SOW engagements seem more intimately focused and aligned to business goals given the project results focus of these CW engagements. It’s not surprising that a close relationship with tight controls exist between the buyer engagement manager and the SOW talent/project.

Additionally, knowledge of the services rendered in an SOW arrangement is even more critical than in temporary staffing because SOWs are meant to deliver results, not workers. Accordingly, MSP personnel taking on the role of reviewing supplier fit for an RFP award or negotiating contract terms and pricing must have deep knowledge of skills involved, how to gauge quality/performance, how these teams should be structured, and what risks should be contractually mitigated.

So where’s the beef? Well it’s emerging and coming soon to your local VMS platform and/or MSP solution. The “Beef” will also be delivered in the form of talent sourcing and ongoing talent management value of an SOW offering. At the end of the day, the MSP provider community will incorporate their core value of sourcing and capability to manage relationships with talent. This will turn SOW administrative solutions in workforce management solutions that will be competitively attractive to buyer engagement managers.

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