This post references material from the Compass series report: Overcoming Challenges of Project- and SOW-based Solution Adoption. This paper is available in the Spend Matters Research Library and is free to qualified practitioners.
One of the most fundamental challenges of SOW spend is that it's "owned" by those who are not versed in professional procurement. IT ownership of services is a great example. And often the more senior the non-procurement spend owner (often aside from CIOs), the less likelihood that that these individuals will warmly embrace changes to standardized procurement processes and the overall visibility that SOW management enables.
As another respondent to our recent survey on the topic put it, "These individuals overseeing mission-critical projects and applications are often outcomes-based, and quite resistant to process refinement...the concern of 'We cannot have anything interrupt the continuity of our operations' often is treated as a viable means of opting-out of a deployment."
We also heard from those in the industry that in certain cases, "the traditional driver of cost savings is not as large for SOW spend (as compared to contingent workforce spend), since sourcing processes for SOW often are more mature and remain the same ... [and while] some cost savings does come from budget controls, invoice accuracy, and enforced approvals, these cost savings aren't as obvious or dramatic as sourcing-related cost savings." This perception can often differ from the delivered reality based on how services procurement effectiveness is measured.
Procurement organizations will often cite category prioritization and achieving supplier buy-in for initial wave rollouts as a common challenge as well. But the true supplier management elephant in the closet is what we might term "supplier co-dependency." Indeed, certain suppliers have worked their way into the DNA of companies, pushing their "own agendas" while at the same time minimizing as many hassles as possible for their customers.
Need to tuck a sub-contractor into a master services agreement that's already in place? No problem. Just add a reasonable mark-up and be done (losing all control and visibility in the process, of course). We think there is a simple genius to the phrase that another respondent suggested about when some suppliers truly "go native," often knowing more about the culture and operational nuances of a buyer's organization than the procurement and line leadership at the company.