Our client, a global financial services company, had a large portion of their services procurement programme misclassified and being utilized as Staff Augmentation. At the time, hiring managers were using vendors to augment their teams with vendor consultants which came at a cost premium. There were 90 SOWs in process, each created different parameters and no time and materials metrics or deliverables. The lack of specific and measurable project outputs allowed vendors to have little accountability for their consultants. This created misclassified spend, co-employment risk, inconsistent reporting and unclear compliance requirements.
To fully understand the scope of the existing arrangement, our team completed an audit of all current SOW’s, to determine which were correctly constructed, where we had misclassified spend and this highlighted there was an abundance of inconsistencies in the structure of the SOWs. Pontoon’s team held 1:1 sessions with 78 managers to evaluate individual SOW scope and perform a gap analysis. These sessions helped our team understand the scope of each statement of work and determine if it should be reclassified as staff augmentation or could be developed into a true SOW. The compliance and co-employment risk of each individual contracts were also evaluated.
Client stakeholders had limited knowledge of what constitutes an SOW agreement. To address this knowledge gap, our team of SMEs held a roadshow consisting of 10 training sessions to educate 120 hiring managers on the capabilities and deliverables they should be getting out of their SOWs and SOW vendors. With support from key stakeholders and executive leadership buy-in, hiring managers were receptive to the benefits of a true SOW and the positive impacts to their business units.
Pontoon procurement team worked extensively in partnership with the vendors to assist in the migration of SOW’s away from staff augmentation. Pontoon held an all-hands education call detailing the incoming changes on the programme, our expectations and future state. Our team then worked with each vendor individually to understand their SOW’s, assist on re-engineering and ensure all vendors were brought on the services procurement journey. This education and partnership enabled our vendors to facilitate fixed price SOW’s, measured on deliverable outputs of projects, as opposed to placing consultants to augment teams. Moreover, the data provided by the VMS tool now enables Pontoon to truly benchmark our vendors on consultancy-based metrics.
Our team discovered that the majority of SOW’s were constructed as time & material, with no vendor accountability for project deliverables. This was addressed by developing a standard framework and output tracking which served as the basis to develop all future statement of works. The universal template that was used to write SOWs also made tracking deliverables and vendor accountability much easier. Managers were also provided with a checklist guide that could be used during the vendor SOW evaluation process. The vendor checklist and structured SOW template created ownership to understand project milestones and deliverable expectations for the vendors. A communication plan was generated to provide a regular cadence of reports and status updates between vendors, hiring managers and the Pontoon team.
To further enhance our services procurement offering, Pontoon implemented a change management process. This process facilitates and tracks all changes to SOW’s coupled with adding extra governance to ensure all change requests are fully approved and actioned promptly. This removed change requests being discussed over email with multiple sources and is centralized in a template that is approved by the manager, executed in the VMS tool and saved against the SOW. Pontoon is now able to report back to the client the true cost of an SOW and support reduction of misclassified spend. In many instances, vendors were billing as if they supplied contractors on a staff augmentation time and material basis and not in accordance with a true SOW, constructed on a fixed priced, milestone-based project. As new projects are required, managers are now able to challenge the market to discover competitiveness among vendor and a structured tender process. If vendors could not agree to deliver to the pre-determined expectations or adhere to the new standardized operating procedures, they were removed from the supply chain.
With new parameters in place, 50 SOWs were reengineered to be compliant with true SOW requirements. Roadmaps for SOW projects were clearly defined which led to timely delivery, vendor accountability, controlled costs and enhanced visibility.
Competition and controlled rates based on deliverables led to 488,000€ in cost avoidance for 2019 and 72,000€ currently in 2020. Now that vendors were held accountable to manage resources and project deliverables, our client hiring managers were able to spend time on more strategic initiatives within their teams instead of managing SOW resources.
Trust between client stakeholders, hiring managers and our Pontoon team was at an all-time high with the successful revamp of their Services Procurement program.