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Revisiting ‘SOW Lite’ — What’s changed in two years? (Part 1)

02/27/2020 By

Back in the fall of 2017, we made the case for “SOW Lite” when we wrote about “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.”

We also implored 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.”

Since then, direct sourcing and multi-channel sourcing have been emerging as mainstream models and practices. And laws and technology solutions have been evolving.

In this two-part brief, we revisit the whole topic. We’ll look back two and half years and then discuss where SOW Lite is today, including how software solution providers, like San Francisco-based Shortlist and UK-based Talon, have stepped up to the plate and how recent legal changes may have an impact.

We’re also interested to know what you think! After reading, please take our four-question, multiple-choice flash survey at the end of this article.

SOW Lite in 2017

In 2017, we clarified what we saw as the conceptual model of SOW Lite:

“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.”

We also noted that 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 ensure desired outcomes and be made available to business users, who in general are ill-equipped to manage projects and project activities.
  • 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.

In a follow-up post that fall, we interviewed SOW expert and CEO of Sourcing for Service, Michael Matherly, who also saw a growing need in this area. Matherly stated:

“Last year [while providing an SOW processing service to businesses], we started to see an increase in the frequency of SOW engagements with freelance contractors or small businesses with fewer than 10 employees being routed to our team for processing. This meant the pre-screening process upstream was either inadequate or non-existent. So, rather than continue to send those misclassified SOWs back to the beginning of the process, we developed the capability to do the full IC screening ourselves, and we began distinguishing between IC-SOWs and C2C SOWs.”

For Matherly, IC-SOW (SOW engagements with freelance contractors or small businesses with fewer than 10 employees) aligned with SOW Lite (in terms). His main points were:

  • IC-SOWs needed a classification screening process in front of the SOW Lite lifecycle to separate IC-SOWs and C2C-SOWs
  • IC-SOWs required their own specialized fit-for-purpose life-cycle process, including specialized contracting processes and enabling technology

To sum up, in 2017, the need for something like SOW Lite was beginning to be seen and discussed, but it would be hard to say that it was something being widely embraced by organizations and procurement functions — or being made widely available by contingent workforce/services technology providers. In other words, it was pretty much a new idea (perhaps driven — at least, in part — by the “gig economy”) and the need for organizations to adapt themselves to the new realities.

Next up

In Part 2 tomorrow, we’ll look at where SOW Lite stands in early 2020. And we’ll have more on Shortlist and Talon.

Let us know what you think by responding anonymously to our four-question, multiple-choice flash survey here. If there are enough responses, we’ll tabulate and report back.