Services Procurement Practitioners: Is It Time for ‘SOW Lite’?

In a time when skill and talent gaps are a serious problem, business hirers are increasingly finding that the gig economy, freelancers, independent professionals and small scale, specialized service providers offer new solutions. Skills, talent and services can be consumed in new ways that are efficient, fast, targeted and effective.

But contingent workforce and services procurement organizations today do not provide a means for business users to leverage these resources. Is it time for procurement to take the bull by the horns and give business users some new tools to do what they need to do to tap into these resources — and at the same time meet many of the goals of procurement?

Introducing ‘SOW Lite’

Statement of work (SOW) has become big deal in contingent workforce and services procurement, which has logically focused on big spend while leaving another important set of business end user needs unmet. There is a mismatch between what is required for contracting projects with freelancers, independent professionals and small service providers, on the one hand, and the current SOW framework for larger scale projects provided by larger, incorporated service providers, on the other hand.

Given that, business users may find ways to engage non-staffing individual contractors and small-scale providers, but the process is often ad hoc and may not be visible to procurement. Furthermore, procurement’s focus on this area has tended to consist of concern about the absence of compliance and efficient sourcing — not on business user enablement and value. Certainly, there is a need to avoid unnecessary risk and costs associated with suboptimal contracting and project management, but there appears to be no reason why procurement cannot use enablement as a way to address these issues.

Hence, our question: Is it time for “SOW Lite”? While we use the term “SOW Lite,” we are not simply referring to contracting. Contracting is a kind of linchpin in a whole lifecycle process that is analogous to that of large-scale SOW management. As such, we are really talking about a lifecycle process — call it “SOW Lite” management — which runs from sourcing, through contracting, onboarding, project management, and all the way to invoicing and payment. Moreover, this process, and the technology that supports it, must be fit-for-purpose.

‘SOW Lite’ is Different

An organization's establishment of “SOW Lite” management needs to take account of the following:

  • The sourcing subprocess will need to be "direct sourcing," including buying guidance and seamless support for ensuring appropriate classification of the contract provider.
  • Contracts must be appropriate for, and proportional to, the engagement and the type of provider engaged:
    • Contract templates need to be available for business user “self-service” (whether in the form of document templates or better, in the form of software-based, rules-based tools)
    • Contract terms and conditions must be appropriate, as well. Standard large-scale SOW contracts' terms and conditions are usually not suited for engagement of individual or small services providers of projects. For example, insurance requirements can be inappropriate or even overkill. Payment terms may be reasonably unacceptable to these contractors.
  • Suitable project management tools must be made available to business users, who in general are ill-equipped to manage projects and project activities and ensure desired outcomes.
  • Business users must have access to streamlined invoice approval and payment processes.
  • To ensure all of the above and not make the process even more difficult or confusing for business end users,  fit-for-purpose technology solutions would ideally be deployed.

This is just an overview of some of the issues and requirements that procurement practitioners would need to take account of when establishing “SOW Lite” management in their organization. And there are benefits to doing so:

  • Allow business end users to get the resources and services that they desperately need.
  • Make the process efficient and effective for business end users (rescue them from the current no-man’s land)...while supporting enablement, ensure compliance and visibility into costs.
  • If suitable technology is used — some of which is already available in different forms — data analytics will also be available to feed best practices, fine-tune artifacts (like contracts) and find savings opportunities.

The upshot of all of this is that procurement has an opportunity to enable business end users to achieve their business goals, while simultaneously achieving many of its own. Getting out in front of this and laying down the enabling foundation can be a big win for procurement organizations that understand this is not just fragmented, commodity tail spend but rather crucial, high-value, decentralized sourcing events.

Bottom Line

We think that the need for “SOW Lite” is real and will become more important as time passes, so we expect to be publishing some follow-up posts to further unpack the subject, drill into details and explore where and how “SOW Lite” may actually be emerging. If your organization has started down this path or the topic resonates with you, we would love to hear from you: akarpie [AT] spendmatters [DOT COM].

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