Is SOW a talent supply channel or is it an outcome-based services spend segment?
SOW is both… and more.
How clients respond, how they think about SOW (statement of work) in their current state is a powerful predictor of their future success at bringing SOW-based services spend under management. And their responses to these kind of basic SOW questions give our partners and me a good indication of the amount of education, change management and delivery support we will have to incorporate into our recommended solution.
Context is everything
More important than our clients’ direct answers to the questions we ask is the context in which they respond. Context is critical at the organizational level and is the primary reason why, at least to date, there is no consensus or one-size-fits-all solution for SOW management like there is for contingent labor. Identifying and interpreting unique organizational context is more art than science when it comes to SOW, which is why it is a significant deliverable of the Program Audit and Assessment service we provide clients. Specifically, we determine context by focusing on three key current state elements regarding the client organization or program:
Visibility & Control
Does the client have visibility into and control over their organization’s SOW transactions or not? If so – or even if just partially – then their current opinion about SOW may be more reasoned and defensible. If not, then they are inherently standing on weak ground, regardless of how they define or think about SOW. One of the most frequent questions we ask about any SOW strategy or any declarative statement about the current state of SOW is “how do you know?” The ultimate, long-term solution, in order for it to be successful, has to be fact-based or it has to include in it a direct pathway to factual support (ie visibility and control).
Services Procurement Maturity
The more mature an organization or program is at managing Indirect Services spend (consulting, professional services, IT services, outsourced or managed services, etc) the more credible their current thinking is apt to be, relative to SOW in their organization. So when we encounter a client with clear services procurement successes (as most clients have at least some), we test their current line of SOW thinking against broader market experiences and we focus their attention on operational scale and effective governance relative the Services spend not yet under management. We subscribe to the “continuous program improvement” philosophy, believing that there is always more spend to bring under better program management.
There is a strong correlation between the maturity of stakeholders and services procurement maturity, but in our assessments we consider them separately. There is an increased likelihood of competing stakeholder goals and conflicting program objectives when a program begins to mature or expand beyond temp labor. Often (but certainly not always) it turns out not to be a question of individual stakeholder maturity, but rather a question of the breadth of the collective stakeholders’ subject matter expertise and how that expertise (or lack thereof) is impacting program maturity and expansion aspirations – i.e. HR vs Procurement.
Industry confusion about SOW can be overcome…
All too often we see even veteran industry players (including your humble geek) getting caught up in and sometimes inadvertently perpetuating the murkiness of SOW. So it is not a surprise that we are all over the map when it comes to doing something as simple as defining what SOW is. Industry analysts, MSP and VMS leaders, as well as HR and Procurement practitioners frequently use the term SOW singularly, inconsistently, and in scenario-driven or generalized terms to mean any of the following:
- SOW is a separate, distinct type of spend
- SOW is a segment of Services spend
- SOW is a supply channel for various and different types of spend
- SOW is a contract vehicle
- SOW is workflow in the VMS
- SOW is how to hide headcount
- SOW is a solution for Independent Contractors
- SOW is how consultants are engaged
- SOW is how external service providers are engaged
- SOW is how you hold vendors accountable
- SOW is 3/5/10 times the size of temporary labor
- SOW is more complex
- SOW is…
Is SOW really all this?
Sure, depending on your company context it can be any one or all of these, even at the same time! And that is the point:
Don’t put too much stock in industry analyst reports, MSP and VMS pitches or even a consultant’s advice about SOW. Because without the context of YOUR current capabilities, YOUR company or department’s level of maturity and YOUR objectives as a stakeholder set, what others say SOW is really doesn’t matter.