Over the last decade, we have been talking about statement of work as the next evolution of managing the nonemployee workforce for the enterprise. And recently, SOW spend under management has gained some traction in the marketplace — not only in the US, but globally. Risk mitigation continues to drive the need the SOW management, while cost-saving opportunities fall to a close second. Regardless of the driver, more companies are formalizing their SOW spend under a managed service with support of VMS technology.
SOW spend is no longer considered the next thing to include in an existing contingent program. More enterprise organizations are separating how they manage their SOW spend in the most recent years. Whether or not they choose to manage the two kinds of business with the same managed service provider or not, the different nuances of each kind of business may give reason to consider managing them differently.
Full management of SOW business includes the on-/offboarding of people delivering the service, tracking of the deliverables and milestones, compliance management, invoicing and contract negotiation. The level of negotiation can vary by category or sector as well as spend threshold, and include negotiation of terms in the contract, deliverables, and rates. All are more complex than contingent program terms, which may focus more on talent quality and rates. To tackle SOW management within your organization, categorization of the SOW spend is paramount. All SOW spend is not equal, so categorizing by sector makes sense. For example, tracking the dollar amount associated within IT by category (such as security, cloud, mobile or data analytics) enables organizations to understand and tackle this typically large area of spend.
How work is being done inside your organization should drive how you manage the spend associated — solutions may vary across all locations and categories. In some situations, SOW is the primary vehicle to get work completed, therefore you may have a higher level of support to manage the SOW process inclusive of the contract negotiation. In those cases, the same process may be used for managing the SOW spend and contingent spend under one program. If both parts of the business are large and complex, separating the programs might be the best way to bring SOW spend under management.
The focus on visibility and transparency regardless of management approach will give you the opportunity to be in the best position to evaluate cost savings and risk compliance opportunities. Evaluate by company objectives and complexity of the management process and apply the best approach by location and/or service category. Use early wins to help bring more spend under management and don’t push a single program model to serve all SOW needs. SOW spend under management is finally growing and creating opportunities for cost savings and risk mitigation, adjust your message and plan to meet the needs of your enterprise globally and locally.