An Introduction to SOW Management, Part 2

In part 1 of this series, we explained SOW management and described the common challenges currently face with it. In this post, we will describe the benefits of outsourcing SOW management to the organization as a whole and to the many individual stakeholder groups.

While ERP and HRM systems are an important part of the procurement ecosystem and great for procuring office supplies and related items, they lack the functionality necessary to navigate the complexities of SOW management for services. A VMS enables the business to centralize end-to-end SOW management process. 

Standardizing pricing methodologies empowers hiring mangers or procurement professionals to make better decisions when deciding whether to craft a T&M, milestone, or fixed priced engagement to meet business needs and utilize SOW templates that support each choice. 

This also allows for more accurate workforce planning, accruals and forecasting, and vendor adherence to SOW contract terms. Stakeholders can also confirm the basics such as: where everyone is located, access to facilities and systems, vendor scoring and compliance with company policies, legislative concerns, etc. via the VMS. 

What are the stakeholder benefits of outsourcing SOW management? 

Hiring Manager

• Appropriate classification of engagement: SOW, Managed Services, Staff Augmentation 
• Optimal SOW creation to ensure team collaboration and maximum ROI on the project
• Efficient business unit/manager engagement and project/resource approval, onboarding, reporting and analytics
• Proactive tracking of project deliverables
• Supplier performance metric captured for other managers 
• Process to enhance sourcing options and quality improvements
• Ensures compliance with organizational policies and programs

Suppliers 

• Efficient invoice submission, manager approvals and invoice tracking and payment(s)
• Facilitation and enablement of supplier feedback and escalation resolution 
• Access to more projects, engagements and increase partners’ opportunities to serve client without increased sales efforts/costs
• Consolidated invoicing and faster payment for vendors

Procurement

• Standardized practices for SOW creation and vendor protocols
• Trusted and accountable partner to manage heavy volume of SOWs, freeing up procurement resources to focus on strategic items and vendor management
• Empirically based recommendations for vendor inclusion/exclusion
• Benchmarking of projects/rates to ensure optimal cost and terms
• Oversight on all project work; not just “the big ones”
• Visibility to all stakeholders working on company-related items
• Cost savings and risk mitigation

Business Leaders

• View project spend/headcount by region, category, etc. across SOW, IC, Managed Services in addition to Payroll, VOP, Staff Augmentation
• Process implements appropriate categorization of resources/projects; moves mis-categorized staff augmentation
• Risk mitigation and greater confidence around compliance and spend classification
• Greater visibility to all SOW engagements
• Material cost savings opportunities
• Smarter resource planning through a deeper understanding of how different sourcing options impact cost savings and talent quality

Shared Services

• View project spend/headcount by region, category, etc. across SOW, IC, Managed Services in addition to Payroll, VOP, Staff Augmentation via VMS
• Streamlined process for consolidated invoicing and faster payment for vendors
• Process efficiencies created as MSP becomes agent of payment to suppliers

Human Resources

• Complete visibility into project needs
• Ability to track project costs and associated headcount via VMS
• Compliance and risk mitigation (understanding who is coming and going from campus, where everyone is located, who has access, etc.)

Legal/Finance/Tax

• Compliance and standardized practices for vendor protocols; all legal terms and conditions must reside in master services agreement, so a supplier cannot arbitrarily change terms  
• Standard SOW templates to ensure consistency across the organization
• Seamless integration into a company’s external tax engine (sales tax, use tax, 1441 tax, etc.)
• Ensure payments are accurate and in alignment with SOW due to VMS capturing all billing events agreed upon with vendor 

Companies of all sizes and maturity levels are looking for ways to drive substantial cost savings and process efficiencies without introducing risk. Outsourcing SOW management allows business partners to drive material cost savings, enterprise-wide visibility and overall efficiencies using empirical data from tenured, trusted advisors.