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HRO TODAY May 2014

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[ 30 ] HRO TODAY MAGAZINE | MAY 2014 Too Much To Manage? It's actually the complexity of SOW projects that make them ideal for vendor management systems. By Peter Parks Many organizations believe that vendor management systems (VMS) are only appropriate for the management of straight time-and-material engagements, and that statements of work (SOW) are just too complex for the software to handle. SOWs are often viewed as in a different class, with many variables and higher fees. This is due to the fact that SOW projects can be billed in many different ways: by milestone, at a fixed fee, or hourly rates. Ironically, it is some of these very qualities that make SOW spend an ideal and sensible target for a VMS. If asked in the abstract, most project or purchasing managers would tell you that consistency in process is a good thing. They might also tell you that the more costly the project, the more important it is for the organization to be aware of the details and have maximum visibility. When properly implemented, a VMS offers many things to SOW management: compliance, consistency, efficiency, visibility, and auditability. Is consistency of process an undesirable thing for SOW spend? Does the purchasing manager want an SOW presented to a vendor that has not yet been vetted by the procurement or contracts team? When analyzing services spend, does a CFO want to ignore 20 percent, 40 percent, or even 70 percent of it just because it is on an SOW? Clearly no. By keeping SOW-based spend out of the system, organizations lose these benefits for what is often the majority of its services spend. Adding Intelligent Structure to SOW Without a platform like a VMS, most organizations have little consistency in the process around SOW engagements. Some may track the various categories of contractors manually through a spreadsheet, but that can open up an organization to considerable risk of inconsistency. The inherent structure of a VMS includes categories of services along with specific services or project types, highly configurable requisition forms, and approval workflows that can be triggered by one or multiple data points in the project plan. A well-implemented VMS guides the project manager down a logical path, and once the correct template is selected, the manager will be prompted for appropriate details. These features help ensure that SOWs are crafted properly, in compliance with corporate policy. For example, marketing might require five templates, depending on the type of SOW. Three could be milestone- Contingent Labor

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