It is a key reality in statement-of-work management that a greater variety of types of vendors will be engaged compared to staff augmentation. This variety can create management challenges but also important opportunities and benefits for the program. Partner portfolio management requirements such as vendor optimization and permutation will be applicable for SOW solution providers, just as it is for staff augmentation partners. But within the variety of SOW solution providers, there are benefits in leverage, competition and higher-quality SOW solution service delivery to be mined and captured.
Typically, SOW solution providers fall into four categories, each with certain specialties.
Large firms. These are organizations that have capacity to provide a wide variety of SOW projects/services across many different disciplines and geographies. They deliver SOW projects and services that are generally of high value and strategic in nature and often carry with them a significant risk/reward mechanism commitment.
Small to midsize. These are organizations that often provide specialized SOW solutions. While these organizations also accept risk and reward, the projects and services are often less mission critical/global in nature and require a more focused skill set and specific operational expertise.
Individuals. These SOW solution providers most commonly work directly for the end client — not via a small, midsize or large solution provider — under an SOW contract against fixed deliverables and milestones rather than time and materials. Individuals under an SOW may not be undertaking risk/reward in the same way as small, midsize or large firms.
Staffing providers. As with individuals, typically these services do not include risk/reward, and you should take care to assess whether the workers involved are providing SOW services or are disguised/misclassified time-and-materials staff augmentation. With that said, there is a gold mine of SOW solution access with your current staffing partners because many of them have been in the SOW solution delivery marketplace for decades.
Key Management Challenges
Just as each provider type offers specific benefits to the contingent workforce program, they each present unique challenges as well. The key here is to understand these challenges, address them and then safely incorporate the risk associated with each partner type and leverage the engagement benefits to meet the wants and needs of the engagement manager.
Larger firms. The skill set and caliber of the buyer’s SOW project/services management team needs to be at a sophisticated level in order to understand the complexities of large strategic projects being delivered as well as address any reluctance of larger, SOW solution provider firms to have a third party — e.g., an MSP — governing their SOW engagement, performance and optimization. High-quality management and governance is needed to oversee the strategic nature of these projects/services and their importance to the company’s overall goals and objectives. Further, there often are established, close senior-executive relationships with partners in this category that need to be understood and carefully addressed and managed. Hence, project management here can be more personal in addition to corporate oversight with the large SOW solution provider.
Small to midsize. With small to midsize size firms, the CW program management team needs to understand some of the unique specializations provided by these SOW solution providers and the potential risk associated when engaging with smaller organizations to deliver important SOW projects and services. There is also the inherent challenge of sourcing and vetting the many different small to midsize firms in the marketplace that can provide specialized support. Finally, the business needs to optimize these solution providers to potentially provide larger and more strategic statements of work in the future. Continued investments in these firms will require them to grow their capabilities to expand the value they bring to the buyer organization. Strategic purchase investments/volume will be made in specific small or midsize partners to optimize the value that can be gained from these growing relationships.
Individuals. A unique challenge in engaging individuals and independent contractors is discovery; learning who they are and where or how they operate is not always straightforward and may involve protracted discussions with the business itself and engagement managers. Further, these discussions may reveal potential SOW engagements being provided in a rogue spend/risky manner. There is a critical need to accurately classify these IC-type workers. Programs should carefully assess individuals who are performing on a time-and-materials basis in case their work would be better managed as a strict SOW engagement regimen and vice versa. There is a serious potential risk to the client for engaging these workers directly; hence, correct worker classification management is essential — and even if you wrap an IC engagement in an SOW agreement, misclassification can still exist and needs to be properly addressed.
As with small to midsize firms, there is also the need to understand the risk associated with individual worker engagements not completing assignments and the need to optimize individuals to move up the value chain to deliver more enhanced SOW engagements/value in the future.
Staffing providers. As with individuals, discovery is not always straightforward and may also involve protracted discussions with the business and SOW engagement managers. There is also a need to determine the difference between workers engaged on genuine SOW engagements and those engaged on disguised/misclassified staff augmentation. There are special risks associated with worker/talent permanency (for example, whether there is a right of substitution permissible by the staffing provider within the contract).
Utilizing technology, CW program management should be able to properly classify their own mix of SOW solution partner types and prepare templates, opportunity distribution, workflow and financial characteristics to balance between consistency of governance and flexibility of process in order not to disrupt business operations.
While SOW solution partners may fall within multiple categories, they should only be mapped to the templates where they have been vetted to deliver. Additionally, programs can restrict bid distribution to SOW solution partners that service particular categories — increasing responsiveness and maintaining the integrity of sourcing-based reports.
As noted, this automated segmentation and management of SOW solution partners is critical to optimization/rationalization strategies because in most cases there will be considerably more SOW providers under management than staff augmentation providers in the CW program partner portfolio.
Sometimes in business there is a wealth of choice, and that indeed is the case with SOW solution partners. A categorization of SOW solution partners can inform CW program management when and how to deploy the right partner for the SOW engagement requirements. Contingent workforce program technology can greatly assist in engagement and deployment and meet the special requirements that each partner category may require when engaged. Most importantly, the categorization of SOW solution partners can lead to SOW solution partner strategy of optimization and critical support of a repeatable and reliable SOW solution services catalog for the organization’s engagement manager community.