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.
Looking at the SOW market in the past on a volume basis, we saw roughly 10-25% annual volume growth going through platforms -- we base this and the following percentage ranges on interviews with roughly twenty-five consultants and practitioner organizations in the past six months -- in recent years. While this growth certainly represents a solid CAGR, adoption levels vary significantly among VMS users today, suggesting an incomplete picture.
In less sophisticated market segments over the past three years, we've seen 10-15% penetration of SOW usage (generally) in Global 2000 organizations (of those already deploying a VMS). In more advanced market segments (e.g., Fortune 100), we've seen penetration levels as high as 50%. Generally speaking, we expect these adoption numbers to rise dramatically in the coming years. Many organizations are currently "shopping," in the words of one company with adoption levels expected to spike during initial ramp-ups later in 2012 and into early 2013.
The picture the past 12-18 months tells a stronger growth story. Providers have reported growth rates of SOW adoption ranging from 20% to over 200% in the past year and a half (on a volume basis). When asked about the interest levels by current VMS customers, vendors reported interest levels focused on expansion into broader SOW enablement of between 25-50% that suggests current VMS users are actively considering broader adoption of SOW platform capability.
These are very strong growth numbers, even compared with impressive overall growth in contingent staffing volumes flowing through VMS systems (which is growing above the average rate of growth of the procurement technology market thanks to both a general uptick in systems usage as well as the continued effects of a slow economic recovery with less full-time hiring).