CWS 3.0: August 6, 2014

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To SOW or not? What every program manager should know

Statement-of-work (SOW) management has sparked quite a bit attention over the past couple of years, especially as contingent workforce programs mature. In fact, 45 percent of buyers participating in Staffing Industry Analysts’ 2013 Buyers Survey said they already include some level of SOW management in their program; another 46 percent said they would to do so within the next two years.

Risk avoidance and cost savings are among the top drivers of this program expansion. Risk avoidance includes understanding whether the project is a true SOW engagement and the resources are not what many call “hidden staff augmentation” or if the current supplier agreement is appropriate to cover this type of work. The cost savings driver is a viable factor because often those agreeing to and signing the SOW agreement are not necessarily informed of current market rates or even consider competitive bidding for the project deliverables. Both factors are important reasons to include this scope of spend in your program.

Although the reasons may be pretty simple to identify, it is not easy to sell and implement this internally. We often hear that getting the internal stakeholders to “give up” their relationships and control of the SOW suppliers, agreements and projects are met with great distain. So when a program finally gets the support to move SOW spend within its scope, it must be done smoothly and with minimal disruption. Most importantly it must provide key benefits for both internal stakeholders and suppliers.

For program managers who are either currently selling this program spend management internally or for those that have received approval, here are a few things to consider before going live with the SOW program management initiative.

  1. Understanding SOWs. You need to understand how your organization defines SOW. Working with the procurement legal teams, one should create a SOW best practice and policy template or document or even training that will be extremely beneficial to all involved.
  2. What SOWs to include. Will you track SOWs that include products and services or just services? If a project will include both, how will you track each? Is the SOW engagement “time and material” or just a milestone management, fixed-fee project?
  3. Elements of engagement. Define what elements of the SOW engagement will be best managed by whom. Tracking, compliance and payment management for the SOW engagements should be core elements of the CW program, while milestone management might best be handled by the content experts found on the engagement manager’s team. Also, procurement and legal might be important SOW process management partners in terms of enhanced sourcing/agreement expertise for more complex, large and/or mission critical SOW projects.
  4. VMS capability and cost. Is your VMS capable of tracking the SOW activities and to what level of detail? Will you be tracking resources (service/product costs, access to systems/buildings) and if so, will you also be able to include milestone billing approval or time and material billing? What will the VMS charge for this additional service?
  5. User friendly? Is the VMS technology easy to use for all the stakeholders in the SOW process?
  6. MSP involvement. If you will be using an MSP, do you know for what roles/tasks and is it able to meet these expectations? Will it just be assisting with tracking resources and payments or would you want it to support an engagement manager through the entire process from bid to payment? The MSP may not be able to do what you want it to do, so be sure to identify roles and responsibilities clearly. Even if your program is run internally, the same questions must be addressed.
  7. Rollout. How will you roll the new process out? It is usually unrealistic to think you can do this as a “big bang” approach, which means it will probably be done in phases. If done by business units, what happens if a supplier supports both a unit that is live and one that has not gone live yet? If by location, the same issue may occur. Having a plan in place that will address these types of scenarios will be critical to avoid confusion and ambiguity with the suppliers and engagement managers.

Deciding whether to include SOW in your program will depend on how well the process has been thought through and documented and how well your team and organization is prepred for the change. It is also important to provide the benefits for the stakeholders. What will they get for going along with this change? You also want to make sure that the change will be adopted because without adoption, there will be no change.