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The Good, the Bad and the Ugly of SOWs (Part 4): SOW Mastery

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Spend Matters welcomes this sponsored article from Barb Lauer, senior director of services procurement at KellyOCG.

In this blog series, we’ve looked at elements of good and bad SOWs and how they can quickly turn ugly, affecting your risk around business outcomes, costs and even compliance. Now we’re going to weave all of this knowledge together and take it one step further — to SOW mastery.

Remember, you can use the pointers in Part 1 of this series to compose a good SOW. Knowing what else to watch out for and to be mindful of, however, can help you craft a truly outstanding, highly effective SOW that benefits you and the supplier.

The first thing to keep in mind is that an SOW should never be submitted to a service provider without being reviewed by managers, suppliers, procurement and legal when applicable. Since all of these parties are owners of the SOW and project outcomes, they need to assume accountability for the clarity and accuracy of the SOW. This involves considering other indicators and factors, some of which aren’t even written out in the SOW but are nonetheless critical. Paying attention to the following may provide additional benefit in constructing your SOW, mitigating risk and improving compliance:

  • Is the SOW written based on your company requirements, properly referencing the master agreements and required terms and conditions? Standardizing your SOW template as the primary template that the supplier uses and completes ensures adherence to master agreements and key terms and conditions such as intellectual property, confidentially, indemnification, warranties, liabilities and terminations.
  • Is the service provider operating within its sphere of core competency, or does its specialty lie elsewhere? It should be clear that a company working within its core competency would likely deliver optimal results. If a stakeholder determines that the project doesn’t lie within the supplier’s core business delivery, then consideration on whether to look for a different service provider may be appropriate to avoid issues with quality, time or cost.
  • Is the service provider a service aggregator, or is it a dedicated organization delivering this specific product or service? Both options have pros and cons. A service aggregator is likely to have access to more resources through secondary sources but could encounter challenges, including quality, duration and compliance of the resources. It can also pose classification risks if not properly managed by the supplier. A dedicated organization is able to better control the allocation and mitigate the risks by utilizing their own resources, but might not have the right talent or enough of the right talent to deliver the project appropriately.
  • Is the personnel list reasonable? Do the titles, average rates or estimated hours align with the needs of the project? Can the talent be at a lower level, less hours or lower cost without detracting from the project requirements and delivery? For example, do you need a senior engineer to change a light bulb? Or in contrast, does the project require top talent with more allocated hours due to the complexity or criticality of the project delivery?
  • Are the fees and excess charges reasonable? Are there setup, training or licensing fees included or missing? Are they justified or required? Is there a way to reduce the fees or validate them? Are they tangible outcomes of the project services that should be clearly articulated in the SOW as deliverables versus fees or excess charges?

By investing the time to validate your SOW to ensure that all of the components that make up a good SOW are present as well as properly validated, these points will help avoid bad SOWs and ugly results. With this newly acquired SOW mastery you can control and manage the creation of an SOW so it is clear, mitigates risk and ensures the right talent and costs are provided for quality delivery of the services.

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