Keep Your Edge

  • Recruiting

Don't Let SOW Become Your Rogue Spend: The Case for VMS

blank avatar
Brian McDonald
on September 19, 2016

With the growth of the Gig Economy, Statements of Work (SOWs) are becoming increasingly popular. In reviewing upcoming trends at this week’s CWS Summit in Las Vegas, some leading global recruiting experts see SOW as the source of maverick spend, making it a hot topic at CWS Summit this week. Staffing Industry Analysts’ 2015 Global Contingent Buyers Survey indicates that companies plan to increase the use of SOW as a proportion of their overall workforce by a greater extent than any of the other forms of contingent work.

SOWs are a project management tool used to define specific project deliverables and timelines, but can also include acceptance standards/criteria as well as the contract type and payment schedule for the project. And that’s where it can get tricky to manage the SOW. Payment can be hourly, fee-based or milestone-based (based on accepted deliverables i.e. milestones, up to and including final project completion, delivery and acceptance). 

Add into this the mix of vendors supplying contingent workers, and you can see how maverick spend can creep into your projects and cause them to go over budget and under deliver.  Maverick spend results from purchases that break corporate purchasing processes and rules, whether the intent is deliberate or not.

So how to you keep your SOWs from creating maverick spend? The best solution is to have a Vendor Management System (VMS) to manage your SOWs and all your contingent workforce. A VMS automates the management and procurement of contingent staff and can prevent SOWs from creating maverick spend through six key areas outlined in our ebook.

Value of SOW through VMS

Here are 6 ways that a good VMS can help you control maverick spend:

Increased Spend Visibility

The best way to mitigate maverick spend is to locate and find it first. But without a VMS, are you able to look at your SOW spend across the company for a complete view? Looking at services spend across an organization can yield hidden cost-saving opportunities, as well as the ability to evaluate project success. At the same time, a VMS can provide visibility into pricing across suppliers to see if there is a large variance.   

Putting Controls in Place

Any good process and enabling technology requires controls to keep all the parts in check. With VMS, several important controls are put in place, including approval processes, budget warnings and compliance measures. These controls also allow for budgets to be developed during negotiation states and then have payments tracked against the budget. These controls help ensure that the project can be managed accordingly at all phases, thereby reducing the risk of maverick spend.

Creating a Negotiation Platform

Negotiation can be exciting, as it’s where the deal is made. However, keeping track of all the materials that accompany negotiations can be time consuming, confusing and counter-productive. A VMS automates this process and allows you to negotiate with multiple suppliers at the same time.  By tracking communication and assets, time-stamps create the vital historical timeline of when different stages of the negotiation took place and what proposals and counterproposals are relevant

Supplier Management

Procurement professionals are all too aware of supplier management challenges. The various details, processes and expertise of each vendor are important to successful SOW management.  That’s where a VMS can flex its muscle by being able to corral and manage suppliers with categorization and distribution technology that meets both the company and supplier’s needs, like the ability to track hours on milestone based projects.  

Even more critical is the day-to-day supplier management needs that can range from on/off boarding of workers to knowing who is working on your premises, actual and virtual for total compliance and crisis management if enacted.

Process Driven

Like other business processes, procurement of contingent workers has multiple stages to properly source, acquire and maintain resources. By implementing a VMS, SOW-based projects have to fall into these processes’ order and succession. Each step should have specific controls and visibility into the process to allow for proper management and decision making.

Analytics and Metrics

Evaluation is always the last step in any process. Today’s Vendor Management Systems are enabled with robust analytics and reporting tools to allow customers to adequately track and measure progress.  For SOWs, it is extremely important to measure planned and earned value at various times during the project to determine if the project is on track and on budget. 

Compliance and audits are a fact of life for procurement and HR professionals as it relates to managing contingent workers. Without strong reporting tools, compliance audits can become laborious and create huge risk for companies.

Don’t let SOWs become a source of maverick spend for your organization. Invest in a VMS to create reliable vendor management processes and intelligence that will benefit both your organization and the vendors that work with you.

If you’re interested in additional SOW guidance for your organization, we invite you to download our free ebook, 7 Steps to SOW Success, to assist you with managing your SOWs.

If you’re at CWS Summit this week, visit us in Booth 117 and enter for a chance to win a GoPro!

Keep Your Edge

© 2019 Peoplefluent. All rights reserved. Peoplefluent, the Peoplefluent Logo, Mirror and Colossus are among the registered trademarks and trademarks of Peoplefluent in the United States and various other countries.Other names and brands may be claimed as the property of others.

Privacy Policy   Sitemap

Part of Learning Technologies Group plc