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Our customer had a huge SOW worker population in the UK.
Problem was, they didn’t know it — more than half of their 90 SOW projects had been misclassified and contractors were being used in a staff augmentation capacity.
This had already started to cause regional issues for the company, and put them at risk of many more serious consequences.
Our procurement team worked with the company’s vendors to reclassify the SOWs correctly and set out clearly defined roadmaps for the projects.
Ultimately, this led to 488,000€ in cost avoidance for 2019 — and another 72,000€ in 2020.
We were drafted in to help our customer — a global financial services company — get a handle on their UK staff augmentation spend.
The company’s hiring managers were using vendor consultants to augment their teams — something that was costing a significant amount of money.
And that wasn’t the only issue.
We discovered 90 SOWs in progress — each with unique parameters, no time and materials metrics, and no set deliverables. The lack of specific project outputs meant vendors had almost no accountability for their consultants.
The results of all this?
Misclassified spend, inconsistent reporting, unclear compliance requirements and a serious co-employment risk.
How we helped
First up, we needed to get a complete picture of the existing UK SOW/staff augmentation situation.
Our team did an audit of all existing SOWs to determine which were correctly constructed and which resulted in misclassified spend. We discovered a huge number of inconsistencies in the structure of the SOWs.
And so — in what can surely be described as a heroic effort — our team held 1:1 sessions with all 78 managers.
We were able to evaluate individual SOW scope, perform a gap analysis and determine whether the agreements were staff augmentation or the beginnings of a true SOW.
We also took the time to assess the compliance and co-employment risk of each individual contract.
Our customer’s stakeholders had limited knowledge of what an SOW agreement actually was — which is more common than you’d think.
To address this gap in knowledge gap, our team held a roadshow: 10 training sessions to educate the 120 hiring managers on the capabilities and deliverables they should be getting out of their SOWs and vendors.
The hiring managers took the training on board. They gained a solid understanding of the benefits of a true SOW and the positive impacts for their business units.
We were also pleased with the full support and buy-in from key stakeholders and the executive leadership team.
Our procurement team worked extensively with the company’s vendors to migrate SOWs away from staff augmentation.
We held an all-hands education call so everyone knew about the upcoming changes to the programme — as well as to our expectations and the company’s future state.
We worked with each vendor individually to:
As a result of this partnership, the vendors were able to develop fixed price SOWs measured on deliverables and set outputs, rather than simply placing consultants to augment teams.
What’s more, the data captured by the vendor management system (VMS) now allows us to accurately benchmark our vendors on consultancy-based metrics.
Our team discovered that most of the existing SOWs were constructed as Time and Material (T&M). This meant that the customer was paying for consultant labour — there was no vendor accountability or set project deliverables.
So how did we solve this issue?
We developed a standard framework and output-tracking method for all future SOWs.
Our universal SOW template made it easier to track deliverables and keep vendors accountable. We also provided the company’s hiring managers with a simple checklist to use during the vendor SOW evaluation process.
These standardised documents helped the hiring managers to take ownership of their SOWs — and to understand the milestones and deliverables they should expect from vendors.
Finally, we generated a communication plan: regular reports and status updates now pass reliably between vendors, hiring managers, and the Pontoon team.
We always like to offer as much value as we can to our customers. In this case, the added value came in the form of a fully implemented change management system.
Our customer can use this system to implement and track all changes to statements of work. They can also add in extra governance to ensure that every change request is actioned promptly and fully approved.
Previously, the customer’s UK hiring team were making change requests informally via email — communications pinged to and from varying sources, and was almost impossible to keep track of.
All requests are now centralised in a template that’s approved by the manager, executed in the VMS tool, and saved against the specific SOW they refer to.
It’s not only quicker and easier to implement changes to SOWs, but we’re also able to get a wider view of data relating to the SOW programme as a whole.
We can report back accurately on the true cost of an SOW, and continue to reduce misclassified spend when it occurs.
And as new projects are needed, managers can challenge the market to discover competitiveness among vendors through a structured tender process.
If vendors can’t commit to delivering on pre-determined expectations or adhering to the company’s new standardised operating procedures, they’re removed from the supply chain.
The impact of our work with this customer has been enormous.
The now clearly structured programme, and the reclassified SOW contracts, have decreased risk to the company and led to significant cost avoidance.