Our four key ingredients for effective Statement of Work management
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OUR FOUR KEY INGREDIENTS FOR EFFECTIVE STATEMENT OF WORK MANAGEMENT
The most common questions around Statement of Work (SOW) management generally fall into four distinct categories.
Let’s consider the best ways to effectively manage this type of spend. We can create our own recipe for success with four key ingredients.
What does SOW mean in business?
First, let’s explore what we mean by a statement of work (SOW). A statement of work is a legally binding document between an external worker and a company. SOW documentation outlines the activities, time and materials needed for a particular project, supporting employers as they hire workers with specialist skills, on demand.
Our first ingredient: focus on your desired outcome
Learn the value of focus from the consulting parable
There is a consulting parable that neatly summarises the concept of focusing on the outcome, which goes like this:
A man is walking by a construction site, and he comes upon somebody laying bricks. He asks the person, “What are you doing?” The worker looks at him and says, “I’m laying bricks.”
The man continues walking down the road and he comes to another worker doing the same thing and he says, “What are you doing?” And this worker says, “I’m building a cathedral.”
This approach is how consultants must think when talking to prospects about adding value. The focus should not be on the services - in this case the laying of bricks - but the outcome of building the cathedral.
How does an outcome focus affect SOW management initiatives?
Focusing too much on the process of the product or service will doom your SOW management initiatives from the outset. Always design your SOW management solution to empower your organisation's people to achieve their required outcomes.
Our second ingredient: have a clear problem statement
Our second ingredient is a clear problem statement. But what exactly do we mean? Essentially, a problem statement is what separates a situation from being either a ‘mess’ or a ‘difficulty’.
What makes a problem a ‘mess’?
We consider a mess to be an unbounded problem that is full of unknowns. There are many characteristics to this type of issue, including:
- Uncertain timescales.
- Questionable priorities.
- Unknown implications.
- Varying numbers of team members involved.
- Not knowing what the actual problem is.
- Uncertainty about the required class of solution.
How does a difficult situation differ from a messy one?
Although they may seem the same from the outside, a difficult problem is a bounded problem. The difference will be clear from a project management perspective. For example, a difficulty has:
- Limited timescales.
- Clear priorities.
- Limited implications.
- A set number of team members involved.
- A clear type of problem.
- An obvious class of solution.
What type of problem statement do you need for your SOW management solutions?
You should design SOW management solutions around bounded problem statements. If you want your SOW management solution to be fit for purpose you must be clear about your current situation. For example:
- Define what your SOW stakeholder map looks like and who your biggest SOW users are.
- Document what your internal governance rules currently look like and what role you want procurement to play.
- Consider the internal approvals required. Do these approvals vary by type of work?
- Consider stakeholders who may have pre-existing relationships with SOW service providers. These team members may be reluctant to consider somebody new. Ask how you would expect to treat your established SOW service providers in the short and medium term.
- Remember: the SOW marketplace is dynamic. It is important to document your approach to using preferred suppliers and how internal service users stay current.
There are many more nuances to consider. But with a clear definition of where you are now you can begin to consider how to move forward.
Our third ingredient: be pragmatic throughout
It is far easier to make a strong start by focusing your energy on designing SOW good practices for the future. This is instead of simply trying to control what is happening today.
Use whatever knowledge you can about your current state to help you predict the business benefits ahead. No one has all the answers in the beginning, but the more pragmatic you are about your current state the faster you will go.
Don’t worry about where you are starting from. What matters is that you start.
What SOW stages benefit from a pragmatic approach?
1. Assessing your work in progress: Use current activity as an opportunity to learn why stakeholders think certain service providers are better than others.
2. When SOW providers protect their business relationships: It is important that service providers view your SOW management initiative as a potential enabler for new business opportunities.
3. Picking internal battles carefully: There will always be projects and stakeholders who are more influential than others. Identify project types and stakeholders that could be positive early champions for the programme.
Our fourth ingredient: don't take your partnerships for granted
The more attractive you are to deal with as an organisation, the better overall value you will achieve.
To become an SOW client of choice you need to operate on a true basis of partnership. For example, post engagement reviews should be genuinely bi-directional. The service provider will have some valuable feedback to offer your organisation regarding:
- Whether the original definition of their project scope of work was effective.
- How they optimised productivity and value during the engagement process.
- Whether optimisation continued throughout the delivery of the service.
The importance of empathy and trust for SOW management solutions
Empathy and trust are crucial components of internal client decision making. As such, it is important that the type of SOW management solution accounts for these qualities. The service provider should have access to all appropriate information and personnel for designing, costing, and delivering project proposals.
Never underestimate a service provider’s need to make a fair return
Your goal may be to maximise the return on investment for your own organisation. But it is very easy to exhaust a service provider's commercial goodwill before the project even starts. Be mindful of where the line of over-negotiation might be.
A successful SOW management programme can help an organisation thrive, but it’s also easy to be unsuccessful. Don’t doom your programme from the outset by not having an outcome focus.
If you have an MSP, then co-create the problem statement with them. Expect the project requirements to evolve and know that there will be bumps in the road. Finally, treat your SOW service providers as a valuable business asset.