CWS 3.0: October 9, 2013

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Why SOW Arrangements Are So Important

Buyers are becoming more and more interested in statement of work arrangements. Here are some of the top reasons why.

1. It can be the one thing that gets the CW manager a seat at THE table. SOW spend is the hardest to manage which means it is harder to forecast and even harder to show savings. The big SOW arrangements are decided at an executive level typically well above the CW manager’s executive exposure. Making a difference with reporting, tracking or forecasting these activities could get the CW manager the executive exposure they need to elevate their career.

2. The small SOW arrangements can cause the biggest headache. Whether your headache is compliance and risk with independent contractors or jumping through hoops to pay these contractors outside of a managed process, these issues can bring bad publicity for the entire program. Smoothing out the requisition/RFQ process inclusive of on/off boarding and payment makes sense, and in a process that typically gets a lot of bad press, it could make you a hero to both the hiring manager and the contractor. The contractor especially is pleased with you because he gets paid faster.

3. More under management is more power. In this case more is more! Adding SOW spend to your spend under management can take a fairly large $100 million dollar program and grow it exponentially. The added spend under management changes everything from how CW managers utilize and develop their team to how much in dollar savings they can show through better management of the program.

4. That which is tracked/managed has more of an opportunity to be impacted/influenced. We have heard over and over again that companies don’t know how much spend they have going through SOWs because they don’t track it. In many cases SOWs are engaged by hiring managers or department heads with little vetting due to these contracts being written after the work has been done, which makes a procurement person believe he or she is leaving money on the table. Even with good management and tracking, there are still deals that get done after the work has been completed but at least if it is tracked, it will be known. At the end of a month or quarter, the CW manager can show spend based on how much was saved going through the program and how much was not by being sorted after the fact.

5. A challenged team is a happy team. A well-oiled machine needs the parts to work well together. Expanding a program to include SOW gives a CW manager the opportunity to develop his or her team and provide a career path that fosters more longevity. Face it, the job of the CW program team is a tough one and depending on your particular role can become old too soon. Having the ability to create a career path on the team gives the members another reason to push for excellence in service delivery and challenges them to seek solutions that meet everyone’s needs and be seen as a problem solver. Appreciation from multiple levels of management will enhance job satisfaction and hopefully reduce burnout from your best performers.

6. Risk associated with SOW consultants falls in a wide range. Risk can range from worker classification to intellectual property protection, managing the process can provide significant risk mitigation. A tightly managed contractor compliance program can address the risk associated with misclassification, however, unless it is coupled with an on/offboarding and security process that is easily managed with the contingent process, things can slip through the cracks and contractors can have access long after their contract has ended. Intellectual property is also becoming a higher risk. Without proper contract language and a managed document collection process, SOW consultants could have rights to the work they develop. Running the SOW work through a centralized managed program plays a significant role in mitigating risk.

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