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Spend Matters welcomes this sponsored article from Michael Matherly, who leads the SOW practice for Geometric Results, the world’s largest independent, conflict-free MSP solutions provider.
We all strive to instill best practices in our organizations — I’m a procurement guy, so those revolving around sourcing, contracting and vendor management are what I seem to be constantly pursuing on behalf of our clients. Recently, I’ve been thinking about what precedes these so-called best practices. Were they actually the worst practices or were they the result of an organization’s a natural tendency to settle on adequate or merely sufficient practices?
And how can we discern the difference? There is no collective measuring stick we use to gauge the “bestness” of a practice, as those practices are, at best, subjective. Does that mean that worst practices are also subjective? I suspect so. One critical difference is that by sharing the horror stories generated out of worst practices, we can learn and disseminate tribal knowledge.
So, instead of another article about how our company’s SOW management best practices are, well, the best, we feel it’s important to talk about those not-so-great practices we can identify and change.
Here are two real-life examples where failing to recognize a lack of a best practice potentially cost organizations in a multitude of areas, including cost, risk, effort and reputation.
SOW Compliance and the Missing/Questionable NDAs
Upon extending for the third time a client’s large SOW with more than 100 workers identified, all of those workers were supposed to have signed non-disclosure agreements. When the new program team began verifying that all NDAs were properly signed and archived, as required in the contract, we found that only about 75% of the names in the amended contract were current workers and even fewer had properly executed NDAs on file.
When we addressed the problem with the supplier, we were met with resistance and even a few complaints. The supplier’s account team saw no reason to comply with the contract requirements, grousing about the extra work. The previous MSP never required that they follow the contract, so why change now? For more than two years and three SOW updates, they had skirted the rules and were peeved about the change. We held firm because the contract required it.
A team member conducting an SOW compliance review at a different client noticed that every NDA for the more than 130 workers appeared to be signed in one of six handwriting styles. To verify the suspicion, the team member pulled another large SOW with the same supplier and compared the signatures of those NDAs. The same. Without accusing anyone of questionable behavior, we submitted an inquiry to the supplier that included documentation about the commonality of signatures across both contracts. We soon received new NDAs for all workers with much more believable signatures — that’s SOW compliance at work.
Sometimes a company’s internal weaknesses — in this case the lack of a contract compliance mechanism — are exposed (or even made worse) when taken advantage of by a third party. Establishing contract compliance programs or procedures is most definitely a best practice. While we don’t need a special measuring stick to determine that, companies all too often seem reluctant to recognize or acknowledge that until having no contract compliance impacts them.
In our next installment, we’ll continue our review of SOW compliance as a best practice with a look at bad pricing and payment practices.