A common pitfall in statement-of-work engagement management is not understanding clearly the strategic reasons the contingent workforce program is going to manage SOW in the first place. The tactical reasons are sometimes fairly evident, such as rooting out rogue staff augmentation spend, increasing the volume of spend management and savings through the CW program facility, or adding management value to SOW engagement activity not formally managed by services procurement.

At the end of the day, program leadership in the marketplace indicates that SOW spend management will be part of their services portfolio in some form or fashion in the next few years, if it isn’t already. The strategic question is why and what benefits will including it create for the organization it serves.

Too many times, SOW spend management is added to a program for short-term, tactical reasons, without a strategic vision in mind or understood. The reasons for this are numerous and opportunistic in nature. But instituting some key strategic development practices can go a long way in mitigating this failure mode when adding and growing SOW spend management to a CW program.

Benefits. What are the benefits and value of a well-designed SOW spend management strategy? It may seem simple and obvious, but managing SOW engagements can take a CW program into many directions and the program can quickly find the benefits running the management expertise and resources capability of the program. So creating strategic guard rails and designing limits on the execution of SOW spend and future expansion is critical in terms of success. More specifically, a well-conceived strategy can offer the following clarity:

  • Set a course of your journey — Establishing an SOW practice will take time, focus and multiple phases of development, no big-bang launch recommended.
  • Plan creation for competitive advantage — Organized, effective operational leverage of SOW engagements will create competitive advantage for the organization in terms of savings optimization, SOW solution provider permutation, cost-effectiveness and talent/skills leverage.
  • Create ROI alignment — Secure program focus on established ROI drivers and practices to deliver the results required by SOW engagement managers.
  • Enhance decision-making — A well-defined strategy enables focused and efficient decision-making support in the execution and development of a successful SOW management practice.
  • Support of PMO team leadership — Enhances confidence and understanding of PMO team leadership decision-making and keeps the program on track to only engage what it can manage successfully.
  • Hope is not a strategy — Be proactive so you are prepared to deal with change and unforeseen circumstances in order to keep the established end goal in focus, most everything else is an undersigned distraction.

Competitive advantage. Answering “What competitive advantage does the CW program offer to the organization it services when managing SOW spend management?” is an important start in designing a strategy for SOW management. Answering this question can bring some important clarity to understanding the strategic reasons a CW program is going to manage SOW engagements.

Once the strategic benefits and value of SOW management in the CW program are understood and targeted, the next level of strategic operational questions can be addressed, such as:

  • What type of SOW engagements will be managed?
  • What size ($) of SOW engagements will be managed?
  • What type of content and level of complexity will be managed?
  • What elements of an SOW engagement will be managed?
  • What will the CW program’s SOW management processes and policies be?
  • What business units and geography will be covered?
  • What will the supply chain partner integration engaged be?
  • What will corporate function partners’ roles be?
  • What SOW enabling management technology will be used?

These operational SOW design questions cannot be answered fully until you have defined the strategic value that will be created by SOW spend management in a CW program. That target will clearly inform and affect the answers to the above operational/execution questions. Furthermore, understanding your strategic focus for SOW management in a CW program in most cases will more closely align the program efforts to the organization’s goals and objectives and additionally serve as an enhanced quality management platform for the program as a whole.

Bottom line: A CW program needs a strong and clear understanding of the strategic value it will commit to create by incorporating SOW spend management in the program, so that it can remain steadfastly focused during the complex management ride of SOW engagement activity.