Concurrent Session: Leadership and Execution Building the SOW Business Case

Transcription

1 WEDNESDAY 13:30 14:30 OTTER/ESPERANCE Concurrent Session: Leadership and Execution Building the SOW Business Case Facilitator: Kirsten Hastings, Associate Editor, Staffing Industry Analysts Speaker: Tom Mason, SVP EMEA, Pontoon Sponsored by: 2015 Crain Communications Inc. All rights reserved April 2015 Hotel Okura, Amsterdam

2 DIGITAL SURVEYS Don t forget to provide feedback Building the SOW Business Case Rate this session by accessing the evaluation from your Conference Mobile Community OR tap the ipad screen as you exit Crain Communications Inc. All rights reserved April 2015 Hotel Okura, Amsterdam

3 Statement of Work Solutions April 2015

4 SOW

5 SOW Capabilities and Experience SOW PROGRAM COVERAGE Current Run Rate: $1.8B Spend Annual Volumes: 50K SOWs 106K Workers

6 SOW Defined Purchasing a delivered service by engaging project based talent (consultants or services) from a third-party supplier (AKA SOW Supplier) through a Statement of Work (SOW) contract SOW Supplier provides project/resource direction and owns delivery risk Deliverables governed by SOW contract with billing tied to performance completion, often fixed or event based invoicing Time and Material (T&M) can also be used but more difficult to hold to deliverables based work Financial rewards or penalties tied to milestone, project success and Service Level Agreements

7 SOW Global Market Trends Temp/Contract GROWTH (2012 TO 2013) IN MSP SPEND BY WORK ARRANGEMENT SOW 10% 13% 74% 61% 0% 20% 40% 60% 80% United States Global SOW managed by MSP s increased worldwide Up 61% Globally Up 74% in the US Largest MSP Programs overall dominated by SOW scope SOW programs are likely to grow ~100% as contractor spend management will evolve to include reviews of outcome based contracts, as the market matures Staffing Industry Analysts CWS Council 2014 VMS and MSP Supplier Competitive Landscape

8 SOW Global Market Trends MSP SOW SPEND IN $ BILLION (2012 TO 2013) United States Global Companies reliant on MSP for SOW program development, routines, and VMS design Traditional % of spend / Supplier funded models common in SOW VMS / MSP fees interest in activity pricing with large $ spend programs Staffing Industry Analysts CWS Council 2014 VMS and MSP Supplier Competitive Landscape

9 SOW Marketplace Drivers Spend Compliance Spend Service Visibility Assurance Optimization Quality

10 SOW Spend Visibility Lacking holistic, dedicated view to SOW procurement Existing ERP/PO systems limited in active project oversight and controls around budgeted spend/ scope expansion 60% of companies profess SOW projects received the most organizational attention but only 14% have high visibility into their SOW spend. (Aberdeen)

11 SOW Compliance Assurance Lacking Loose Limited visibility of SOW qualification of pre-engagement Supplier workers assigned to projects; SOW vs. Staff Augmentation; open environment for vetting of SOW Suppliers for insurances, active contract Visibility and compliance into worker tracking is often the first interest area (in SOW mgmt.) the client s exposure to risk often accelerates their adoption speed (Spend Matters) transient staff leading to poor controls on tenure policy violators status, etc. The majority of contingent programs suffer from classification non-compliance, both due to confusion and managers purposely going against policy (Staffing Industry Analysts) facility/systems access and company asset return

12 SOW Spend Optimization Disparate/ non-existent competitive bid environment Overpriced Staff Augmentation buried within non-vetted SOW s Weak project budget controls; out of scope/ cross charging on mismanaged purchase orders Lost volume/ early pay discount opportunities It is common to see about 20% of misclassification of SOW consultants, with bill rate inflation typically in the 20% - 70% range (Staffing Industry Analysts) Companies deploying a service procurement program can achieve positive ROI in <1 year and reduce cost by 5-10%... (Forrester Research) The majority of contingent programs suffer from classification non-compliance, both due to confusion and managers purposely going against policy (Staffing Industry Analysts)

13 SOW Service Quality Relationships driving Supplier selection; not quality or price Limited ability for oversight of SOW Supplier performance and milestone delivery throughout engagement lifecycle Executives cannot rely on vendor provided reports to gauge performance & effectiveness rather internal benchmarking data to gauge the quality of the vendor's work (Spend Matters)

14 SOW In the Driver s Seat of SOW Management YOUR BOTTOM LINE SUFFERS WHEN YOUR SOW PROGRAM LACKS SEASONED VISIBILITY CONTRACTUAL REPORTING PROGRAM AND RISK AND AND MANAGEMENT CONTROL MISCLASSIFICATION ANALYTICS TEAM PREVENTION

15 SOW Program

16 SOW Program Business Case Drivers PAIN POINTS OPPORTUNITY ASSESSMENT AREAS VISIBILITY COMPLIANCE SPEND OPTIMIZATION & COST SAVINGS SERVICE QUALITY Service Procurement/Statement of Work (SOW) spend $ annually # of SOW engagements created annually # of SOW Suppliers engaged on projects annually # of SOW Supplier workers engaged annually (with access to systems/facilities)

17 SOW Program Program Benefits VISIBILITY FUNCTION/FEATURE PROGRAM BENEFITS RFX Sourcing Effectiveness, RFx Bid Cycle Time and Attained Savings SOW SOW Scope, Clauses, Deliverables, Budget/Timeline Performance, Negotiated/Rate Card Savings, Negotiation Cycle Time SUPPLIERS Program Spend, Service Competency, Performance, Budget Adherence, Savings WORKERS Worker Roles, Rates, Location and Tenure

18 SOW Program Business Case Drivers PAIN POINTS OPPORTUNITY ASSESSMENT AREAS VISIBILITY COMPLIANCE SPEND OPTIMIZATION & COST SAVINGS SERVICE QUALITY Strength of SOW Suppliers prequalification coverage prior to project engagement Strength of controls to ensure SOW agreement conformity, risk prevention & assess misclassification Timeliness of your SOW approval process & SOW Supplier Onboarding process Strength of onboarding screening process of SOW Supplier workers

19 SOW Program Program Benefits COMPLIANCE FUNCTION/FEATURE WORKERS SOW AGREEMENT SUPPLIERS PROGRAM BENEFITS On/Offboard Admin Oversight Worker Tenure Linked to Billing Activity (T&M) Controlled SOW Template, Enforced Clauses and Proactive Staff Aug Vetting Enforcement of Contract Rate Cards and Remittance Tied to Delivery/Budget Approvals Committed Spend Visibility for Finance/Accounting Accruals Enrollment Vetting and Qualification Controls/Process Remittance Linkage to Program Enrollment, SOW Agreement and Manager Approval

20 SOW Program Business Case Drivers PAIN POINTS OPPORTUNITY ASSESSMENT AREAS COMPLIANCE SPEND OPTIMIZATION & COST SAVINGS SERVICE QUALITY Strength of competitive evaluation process (bidding) of SOW Suppliers on new engagements Strength of volume pricing leverage with higher tier SOW Suppliers Strength of process to capture negotiated and delivery spend savings per project Strength of process to secure spend approvals (engagement budget, scope changes, invoicing, etc.)

21 SOW Program Program Benefits SAVINGS FUNCTION/FEATURE COMPETITIVE BID & RATE CARD MGMT. STAFF AUG REDIRECT SUPPLIER CONSOLIDATION PROGRAM BENEFITS Controlled RFx Bid Forum & Promotion (Preferred Strategic Advancement/Service Competency Linkage) Ability for Enforced Contract Resource Rate Cards Pre-executed SOW Vetting for Broader Savings Attainment Consolidated Spend and SOW Terms Reporting SPEND/BUDGET ENFORCEMENT E-approval of Budget, Deliverables, Invoicing and SOW Amendments w/in VMS

22 SOW Program Business Case Drivers PAIN POINTS OPPORTUNITY ASSESSMENT AREAS VISIBILITY COMPLIANCE SPEND OPTIMIZATION & COST SAVINGS SERVICE QUALITY Strength of project managers (buyers) ability to actively manage SOW Supplier performance Ability to use past SOW Supplier performance to influence future selection Accuracy and timeliness of SOW Supplier invoicing

23 SOW Program Program Benefits EFFICIENCY AND QUALITY FUNCTION/FEATURE SOW CONTRACTING & INVOICING SUPPLIER PERFORMANCE MGMT. PROGRAM BENEFITS Standard Bid/SOW Templates, Workflows; Expediting Build, Negotiation and Approvals Accelerated Invoice Initiation and E-approvals RFx Bid Competitiveness and Responsiveness SOW Contract Rate Competitiveness, Cycle Times and Qualitative Performance Capture Budget and Timeline Performance Monitoring

24 SOW Program Lifecycle PROJECT CLOSE & WORKER OFF-BOARDING PROJECT SCOPING & SUPPLIER SELECTION SERVICE DELIVERY & INVOICING SUPPLIER QUALIFICATION & ENROLLMENT WORKER ONBOARDING & PROVISIONING MSA & SOW CONTRACT ADMINISTRATION VMS PROJECT CREATION SUPPLIER MANAGEMENT

25 SOW Program Common Adoption Hurdles AREA STAKEHOLDER CONCERN POV MESSAGING/MITIGATION APPROACH Adoption & Program Escapes SOW Suppliers Push back on MSP/VMS fees (added cost to serve) Fee/rate compression Preferred Supplier tiering increases spend share; pulling from one-off/non-program vendors Bidding environment increases market share opportunities on prior sole-sourced procurement with visibility Faster reimbursement cycles with automated invoicing VMS admin burden and approvals within VMS Business Continuity Disruption Engagement Managers Added cycle time delays through MSP/VMS Preferred SOW Utilize MSP high touch to ease VMS and process controls navigation ~ Buyer focus on Supplier capability and project oversight Graduated deployment approach enabling short term Supplier continuity de-enrollment MSP supplier management to gauge longer term capability/viable alternative options

26 SOW Program Best Practices SPEND VISIBILITY AND ADOPTION REPORTING AND ANALYTICS DESIGN-BUILD WITH THE END IN MIND CAMPAIGN ON BENEFITS BY STAKEHOLDER GROUPS TRANSACTION VISIBILITY PROMOTION Invest time upfront to build reporting needs into the VMS especially cost savings capture to strengthen campaign for continued adoption Cost savings is a primary business driver but not always the burning platform for all stakeholders perceived burdens promote escapes around mandates Focus solution and deployment on solving for greatest need first Visibility enables strategic management; without knowledge and data, program policies stall

27 SOW Program Best Practices COST SAVINGS REDIRECT STAFF AUGMENTATION WITHIN SOWs DRIVE COMPETITIVE COST PRESSURE RATIONALIZE SUPPLIER BASE Often largest savings missed due to non-qualification procedures Establish expectations via communications and enable VMS/ Program controls Build mechanisms to quantify savings (i.e. resource categories/ rates crossing SOW and Staff Augmentation) Require resource schedules on fee based projects; promotes price pressure and enables comparative cost analysis Use transaction history to create expected rate cards for competitive guides Promote RFx bidding whenever possible, leverage RFQ s to gain insight Leverage program data to consolidate spend with strategic vendors, to achieve volume pricing and reduce risk configure VMS to push buyers towards preferred

28 SOW Program COMPLIANCE ASSURANCE Common Adoption Hurdles AND EFFICIENCY CONTRACTUAL RISK AND MISCLASSIFICATION PREVENTION Utilize SOW template capability within VMS; enforces scope build into deliverables based format with fixed/un-editable provisions Leverage VMS Resource Guides to steer buyers to proper channel and MSP counsel for eligibility verification 1099/Freelancers are vendors; require SOW s to affirm relationship separation beyond initial entity qualification SOW WORKER COMPLIANCE BEYOND T&M Leverage tracking and onboarding compliance for all engaged workers; offsite/fee based resources may still access systems and intellectual property PROACTIVE SOW SUPPLIER MANAGEMENT Establish expectations, standards and rogue policy up front with strategic suppliers they influence project buyers more than anticipated

29 Questions? Tom Mason Head of Sales, EMEA

30 Full Cycle SOW Procurement Services SOW MSP/VMS Program Capabilities PRE-ENGAGEMENT SUPPORT ENGAGEMENT TRANSACTION SUPPORT SUPPLIER MGMT., VETTING & OPTIMIZATION PROJECT SCOPING & SUPPLIER SELECT (RFX) MSA & SOW CONTRACT ADMIN VMS PROJECT FRAMEWORK CREATION WORKER ONBOARD & PROVISION PROJECT DELIVERY, INVOICE & REMITTANCE PROJECT CLOSE & WORKER DEPROVISION Spend Visibility Compliance Assurance Spend Optimization Service Quality

31 Deployment Considerations OVERALL STRATEGY POPULATION DEPLOYMENT PROJECT TRANSITION Affirm primary program goals (Cost Save, Visibility, Ease of Use, etc.) Analyze current user/spend populations: Largest spend/saving opportunity, process strength, system usage and proficiency Identify/rank gains and risk of approach methods (Business disruption, change mgmt. effort, integration complexity, savings) PILOT Pros-lower risk deployment, smaller change mgmt. effort Cons-slower savings realization, differing concurrent processes for users, size can restrict proof of concept establishment PHASED ROLLOUT Pros-quicker adoption/cost save gains vs. pilot, with tollgate points for go/no go continuation Cons-more change management effort and integration coordination than pilot BIG BANG Pros-consistent policy adoption and accelerated transparency/cost save gains Cons-significant change mgmt. effort, potential issue resolution on a grand scale with large exposure IN-FLIGHT ENGAGEMENT CONVERSION Pros-accelerates adoption and transparency/cost save gains Cons-data conversion load complexity and cut off timing coordination NEW ENGAGEMENT STARTUP Pros-eases users into new program/ process, no data conversion complexities Cons-slow adoption progress; requires users to jockey between legacy and new process for existing and new engagements

32 Statement of Work Solutions April 2015 Thank you

33 DIGITAL SURVEYS Don t forget to provide feedback Building the SOW Business Case Rate this session by accessing the evaluation from your Conference Mobile Community OR tap the ipad screen as you exit Crain Communications Inc. All rights reserved April 2015 Hotel Okura, Amsterdam