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The Baker’s Dozen: Program cost management, part 2

Costs have always been a matter of high priority for the CW program manager regardless of the economy. As the world emerges from the fallout of the pandemic, companies’ focus on cost-management will be heightened.

As I wrote last week [1], cost management as conducted across the marketplace today can be segmented into two major management practices: cost savings and cost correction.

Last week, I introduced the “baker’s dozen [1]” list of costs management initiatives being executed in the marketplace today:

  1. General rate management
  2. Partner optimization strategy
  3. Optimizing discounts/incentives
  4. Job and skill set description alignment management
  5. Remote engagement savings
  6. Attrition reduction management
  7. Talent sourcing channel mix and engagement classification management
  8. Direct sourcing
  9. SOW engagement management
  10. Spend data management and analysis
  11. CW program digital transformation
  12. CW engagement TCO and enhanced resource utilization
  13. Strategic CW workforce spend management

This list comprises cost management practices being executed in the marketplace today. We explored the first six last week; here’s a breakdown of the final seven. Note, for some of these cost management practices, it is an integrated implementation of these that produce the most optimized results.

Talent sourcing channel mix and engagement classification management. A cost-correction strategy, where you would leverage and align the most appropriate and cost-effective talent sourcing channel with the relevant CW engagement classification requirements. Execute specific classification cost management by engaging the appropriate CW classification and the associated engagement costs and execution requirements. Having solid job and skill level descriptions will go a long way in supporting this classification cost management initiative.

Sometimes a rogue SOW engagement is not just risky, but expensive too. Also, enhance a CW program manager’s understanding and management of emerging talent sourcing channels and mix. There is great value to be found in the development and management of a CW program’s talent sourcing channel mix. Each talent sourcing channel will have its own QECR Performance capabilities that will drive a CW program’s channel mix management. It’s not solely about costs.

Direct sourcing. This would fall into the cost correction category as you would be engaging pre-identified, reliable talent — CW talent you already know. This saves money because you are eliminating unnecessary repetitive sourcing activity and costs — to the tune of 12% to 16% potential savings over the traditional CW engagement supply chain practice. Build ongoing known-talent relationships and capture savings with volume, repeatable, engagement activity engaged over time. This does require initial investments in direct sourcing-enabling technology; direct, CW engagement management know-how; a passive recruiting strategy; and risk management standard operating procedures. While it can be a challenge to execute, it is highly cost effective if you can.

SOW engagement management. Once SOW engagement spend management capability is established, this strategy provides significant cost-correction and savings opportunities. It is a complex spend channel to manage, but it provides real opportunities for the CW program to add the value of centralization and create hard and soft cost savings. It is typically a “tail spend” savings management opportunity for a CW program, managing whatever SOW spend services procurement does not address — and also helps to control scope creep that often occurs with some unmanaged SOW engagements.

Spend data management and analysis. In this cost-correction strategy, you would mine a CW program’s data transaction set for cost trends and savings visibility and opportunities. Enhancement of CW program data visibility and data mining analysis is required for this to be an effective means of cost management. But there is gold to be mined and captured in the CW program data!

CW program digital transformation. This cost-correction strategy captures process and CW engagement savings with the emerging digital transformation opportunities. Technology can connect the engagement manager directly with the required, vetted CW talent. You do not need to maintain CW program oversight bureaucracy for repeatable staff augmentation engagements. Enhance your program’s cost-effective performance by driving its digital transformation and optimizing the “value of centralization.” Leverage staffing and supply chain partners’ growing digital transformation knowledge and expertise.

CW engagement total cost of ownership and enhanced resource utilization. Manage all the key cost segments of a CW engagement’s total cost of ownership, or TCO, from demand creation to sourcing to assignment completion. A cost-correction strategy, it manages the efficient use of resources/investments to deploy the value of centralization of the CW program itself. Are you optimizing the deployed resources of the CW program and its supply-chain partnerships? A majority of programs can better do this to either capture cost savings or enhance services provided.

Strategic CW workforce spend management. This cost-correction strategy focuses on the entire CW engagement spend, not just the partner markup and pay rate spend segments. Provide CW engagement support that more precisely align the wants and needs of the engagement manager’s requirements with the actual terms of length of assignment and the engagement skill sets deployed. Eliminate overbuying or underfunding of the CW engagement spend as a whole.

I hope this “baker’s dozen” list proves useful; if I missed anything, please leave a comment and we will consider adding it to our list in the future.

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