Statement of Work (SOW)-based services and labor now account for more than 40 percent of the average company’s total workforce spend per year. Knowing this, it’s essential that businesses gain visibility into this critical segment and establish procurement control. But where do you start?
Last week, SAP Fieldglass and Sourcing Industry Group (SIG) presented a webinar that looked at key components of true end-to-end SOW management, as well as proven strategies for driving strategic value with services procurement. We were joined by Ryan McNair and Tim Goode, SAP Fieldglass Program Managers, Global Services and Procurement Services, at leading insurance provider AIG. They shared their real-world experience in partnering with us to streamline SOW management and drive business impact.
AIG kicked off the session by highlighting the evolution of their longstanding relationship with SAP Fieldglass. The organization launched its program managing contingent workers, but quickly realized that consulting services was one of their largest expenses. It then deployed the SOW module of SAP Fieldglass to ensure that this key labor segment was properly managed.
AIG has gained unprecedented visibility into, and developed strategies around, how they leverage vendors. Far beyond being better equipped to negotiate rates based on volume – although that has been a key benefit – they are able to make deeper rationalizations about their business, such as whether a role should be SOW or contingent-based, or might be best filled by Human Resources with full-time headcount, rather than through procurement channels.
Why is it essential for businesses to get SOW-based services under better management and control? SOW spending represents a highly untapped market, with three times the annual spend opportunity over contingent, and total spend growing by 20% each year.
In short, it’s a big piece of the procurement pie. While many clients have rigorous processes in place around sourcing and contracting with their vendors, we often see opportunities for improvement around downstream compliance, quality and efficiency measures, and lack of visibility into project details. It’s important to note that this isn’t just a procurement challenge – many of our customers are starting to think creatively about how process management can apply across the enterprise to solve common pain points.
Enabling a services procurement solution to drive better operational control around SOW engagements not only drives tremendous cost savings opportunities, but also enables key benefits including:
- Increased efficiency, automation and quality around the entire source-to-settle process for engaging external workers and service providers
- Compliance and control around the SOW workforce
- Improved visibility into total spend under management
If you’d like to learn more about end-to-end SOW management, or the business case behind AIG’s program, you can access the webinar recording here.
Many thanks to Ryan, Tim and SIG for an educational and engaging presentation.