whitepapers, case studies and more

statement of work (SOW)

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2 In another case, a manufacturing organization was challenged with a high proportion of single-sourced SOW projects, leading to pricing inconsistencies as a result of vendor-developed contracts. The manufacturer then shifted SOW management to its MSP. The MSP partner took a collaborative and consultative approach with stakeholders to create standardized SOW templates, provided a customized real-time reporting solution and succeeded in ensuring 85% of contracts were competitively bid. Such successes don't come easily. Effective management of SOWs by an MSP requires the willingness of suppliers to get on board. Certainly one of the biggest challenges is engaging these SOW vendors and getting them to see how they, as well as the buyers, can benefit from a new governance model. managing SOW suppliers When you start talking with your MSP about managing SOW suppliers, make sure you assess the MSP's real readiness to take on this type of talent management, especially if you are planning to put the entire SOW lifecycle into the program. Many MSPs have experience with the transactional aspects of SOW management. Far fewer are accustomed to the more value-added, upstream activities and relationship management elements. For example, the skills, tools and acumen for building harmonious relationships with suppliers (that will likely be paying a fee to get involved in the program) are essential in an MSP that will implement a service procurement, full lifecycle model. SOW suppliers, even the big four consulting firms, are likely to see MSP-managed SOWs as a threat, given the transparency inherent in such a relationship. Certainly these suppliers will have to accept some changes to what may be longstanding, direct relationships with hiring managers. Some steps that MSPs can take to smooth the transition for suppliers include: • Taking care to approach discussions in a spirit of partnership • Working together with suppliers on SOW template drafts • Selling the benefits suppliers can gain from joining the program, which include: – Faster approval processes – Increased opportunities for suppliers to be involved in future projects – More accuracy in invoicing and payment – Access to actionable sales data • Selection of providers • Negotiation and drafting of contracts • Development of statements of work • Supplier performance and relationship management When your MSP takes care of all these functions, aided by a portfolio of spend management and e-sourcing technology, including a Vendor Management System (VMS), your company may reap savings of up to 10% of spend. And that's not all. Along with reduced procurement costs, an MSP program can deliver a number of additional proven benefits, demonstrated by firms that have already taken these next steps in talent management. Areas of value include: • Improved transparency and control over SOW procurement and management • Greater pricing clarity and a reduction in cost overruns • Greater visibility of demand • Higher quality talent and improved service from suppliers With core experience in managing vendor relationships, MSPs can create tailored service level agreements, replete with Key Performance Indicators (KPIs) and penalty processes. This helps to ensure adherence to program timelines and milestones, as well as to ensure quality deliverables. By creating these KPIs before commencement of a project, an MSP can secure supplier buy-in and clarity of expectations. Statements of work can be tricky to develop, with many pitfalls for unwary hiring managers. MSPs know how to use appropriate terminology when writing SOWs to avoid confusion. This is an important aspect of risk management, which can keep customers from running afoul of misclassification issues. In one example, a large telecommunications corporation was struggling with these very issues on worker misclassification as staff bypassed the company procurement protocols to engage SOWs. The Chief Procurement Officer (CPO) had limited visibility of expenditure, and the company was exposed to substantial compliance risks. By integrating SOW procurement into its program, the company's MSP was able to put $16 million in SOW spend – with more than 200 engagements – under management in the first year of the new program's implementation. Within two years, the company had gained full visibility into $80 million of annual expenditures on service procurement, eliminated misclassification issues for a savings of $350,000 per year, and decreased the number of vendors by 27%. www.randstadsourceright.com

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