Exploring a successful SOW Spend management program
Learnings from implementing an SOW spend management program, told from the perspective of both procurement and MSP partner.
With Alan Withers, Telent and Chris Burke, Morson Projects
00;02;10;06 - Project background
00;11;35;15 - The drivers behind SOW spend management programs
00;22;05;06 - Pressure testing the business case
00;30;02;22 - CWS and SOW working alongside each other
00;43;53;09 - End to end management of SOW
00;50;36;06 - Ownership of the SOW issue
01;01;47;25 - Proactive engagement with suppliers
Episode Highlights
Transcript
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00:00:00:08 - 00:00:24:04
Jonny Dunning
Okay. very pleased to be here for the latest edition of our podcast. And very pleased that there's three of us here today. so, massive welcome to Alan Withers from Telent and Chris Burke from Morson. we're here to talk about asset management and look at that in a genuine real world application. So I'm really excited to get into this topic.
00:00:24:07 - 00:00:33:10
Jonny Dunning
before we do that, as is kind of traditional with the podcast, can we get you guys to give a little bit of, kind of potted history? would it be okay to start with you on it?
00:00:33:13 - 00:00:46:27
Alan Withers
Yeah. Okay. So, Alan Withers, senior procurement manager for Telent pending. Now, just over three years before that, working in the civil engineering industry and before that, spent some time overseas.
00:00:46:29 - 00:00:48:05
Jonny Dunning
Excellent stuff.
00:00:48:07 - 00:01:13:12
Chris Burke
Okay, I'm Chris Burke, I'm the managing director of Morson Engineering. Great. I've been there for 24 years. And prior to that, I was an apprentice, Turner and a machinist for a few years. and then with Sellafield in the nuclear industry, but also the paper industry, the chemical industry and the pottery industry. So a potted, you know, a wide spread of, of experience.
00:01:13:12 - 00:01:28:14
Chris Burke
And you think, well, where does a jack of all trades like that end up? And it's Morson Engineering Group, because we do a lot of we do a lot of things in a lot of sectors. So it's so I found my, I found my home really and been there for 24 years.
00:01:28:16 - 00:01:52:27
Jonny Dunning
But I think the, the point about your technical engineering background is quite a key part of this discussion as well. Kind of come on to and a key part of how this is all worked, obviously. the real world example we're going to discuss is is Telent and the case example, the Alan is leading within Telent. and that has ended up being a collaboration between Morson and Telent.
00:01:52:29 - 00:02:22:20
Jonny Dunning
And obviously utilizing Zivio the technology within that relationship working via via morse and into Telent. So this is truly about collaboration and it's truly about problem solving. and hopefully there'll be some really interesting things that come out of it for, for people that are listening to this too. so I guess to get into the background of what we're talking about and where we are and what we're doing, it comes back to what was the initial problem that existed within Telent.
00:02:22:22 - 00:02:31:15
Jonny Dunning
Alan, would you be able to just kind of set the scene with that? And it was almost it was pretty much. Was it before you'd actually joined Telent? There was there was some stuff kind of in the works.
00:02:31:17 - 00:03:01:27
Alan Withers
Yeah. So. Okay. so I started working for Telent in March 2021, and I'll, I'll leave your audience to decipher the significance of that date. Hey, before I started, there were obviously the fundamentals already in place. so, you know, statements of work as a, as a principal was already in action for most of the company, but labor as a category, I've said it before, to some people was like the message roll.
00:03:02:00 - 00:03:22:20
Alan Withers
You know, it was it was a fair few million pounds worth of spend, but everything in anything was just being piled into it. As far as categorization or control of that category was concerned. You know, you had, you know, had engineers doing design works in the same sort of spend bucket as tree surgeons doing vegetation clearance on, on one of our sites.
00:03:22:23 - 00:03:42:10
Alan Withers
So when I started, I obviously did the first hundred days of looking around, seeing the governance and the controls of it, understood the concept and the reasons why statements of work was so important to us. But where I felt like it needed to be improved was the actual controls around statements of work. So you've you've got the the first step.
00:03:42:10 - 00:04:00:03
Alan Withers
People are being able to articulate out what it is that they're looking for from their supply chain. But how do you make sure that you put it into a system, which you can then start to pull data from and actually start to influence, where you go and what you, what you're procuring. So that's how it started.
00:04:00:06 - 00:04:25:28
Jonny Dunning
And in terms of the kind of the problem solving exercise, there was a solution of sorts that was being utilized. and I think this is the situation that you see in a lot of organizations is you end up with, I mean, you know, 50% of global organizational spend is services procurement. And, you know, everything you're procuring under a state going to work engagement is effectively an outsourced service.
00:04:25:28 - 00:04:48:27
Jonny Dunning
You're not buying people's time. You're outsourcing a problem for someone to deliver you some sort of service or solution. it's a it's a big area of spend for organizations, but a lot of organizations aren't managing this effectively, which is why it's so great to be able to kind of get this conversation out there in the wild and give people some idea of what what's been the process, how it's all gone, you know, the ups and downs and the drivers behind it.
00:04:49:00 - 00:05:14:17
Jonny Dunning
but a lot of people were kind of seem to paper over the cracks with it in the sense that they'll be spending they'll have a massive amount of spend that's going through statement work engagements. But due to having a lean procurement team, which most organizations do have, and, you know, lots of are going through, you can't get the spend on the management, you can't get your arms around it, then you end up with essentially no process or manual processes, and just a lack of visibility, a lack of control, lack of governance on it.
00:05:14:22 - 00:05:35:05
Jonny Dunning
Some people will be using Excel email teams, phone calls, some people will be trying to capture certain information. but it's pretty difficult without a specific take on it. So what was the what was the kind of spark of initiative that really got this moving towards? Hang on a minute. We need to do this differently.
00:05:35:08 - 00:05:57:16
Alan Withers
So when I first started, statements work like I say were there or thereabouts, but there was a Microsoft word template which, you know, stakeholders would to to the best or worst of their ability. Each one articulate what it is that they're looking for from third party. It would go to me to obviously review make sure that it had, you know, a commercial balance to it.
00:05:57:16 - 00:06:20:25
Alan Withers
The rest were obviously managed accordingly around if I was happy with it, I would sign it, give it back to the stakeholder, stakeholder, raise the purchase order and how it goes. But couple things happened in that in those steps. Number one, you're very much dependent on the stakeholder. having even the capability to articulate a good statement works straight away.
00:06:20:27 - 00:06:59:02
Alan Withers
Or secondly, cares enough to articulate a statement to work straight away. and then once they receive your signed copy and they raise a requisition, create IPO and give it to the supplier, you've got no surety that anyone's actually even following what has been agreed thereafter. And in in the first few months that I started working for telling the absolute tsunami of statements of work hit my desk, you know, and I was trying to keep up with the way that, so I guess some of the drivers for me were I just trying to keep my own head above water with the demand that was coming through with hundreds of stakeholders that were doing, you
00:06:59:02 - 00:07:19:17
Alan Withers
know, time in the work, engagements with the supply chain. And then obviously, from a procurement perspective, it was frustrating me that I wasn't making any impact. You know, I was basically just a transactional part of a cog. That was all I was doing was, you know, box ticking. In a way, it goes again. And I had no influence.
00:07:19:17 - 00:07:50:01
Alan Withers
I had no, no, no way of trying to save any commercial risks or anything for the business. It was just, off you go. And I think that's quite the norm in, in a lot of industries, in a lot of companies, you know, I think third party spend is normally managed depend on the industry, of course, but I think third party spend is usually done at a localized, typically project manager Oakes level, you know, so you've not got that holistic visibility of your spend.
00:07:50:01 - 00:08:10:00
Alan Withers
You've not really got that real detail about how you can start, influence and make decisions based on performance and obviously SLA, KPIs and that kind of thing. It's just this is my project. This is what I need to deliver. As long as they're doing that small little bit for me, I can pay them. I get paid, you know, if I go to the next challenge.
00:08:10:02 - 00:08:20:00
Alan Withers
So putting it into a system like we've got now allows you to start making much more of a strategic sort of decision based on what you're seeing in real time.
00:08:20:02 - 00:08:46:10
Jonny Dunning
Yeah. And the thing that I think is worth pointing out about this program, about this, this asset management program is it is genuinely a proper life services lifecycle management program. And that's where obviously, the more some component of it, from the management side of it is, is a critical part of that. so being able to kind of outsource some of that and offload some of that, bring in that additional kind of, capability.
00:08:46:12 - 00:08:51:01
Jonny Dunning
but, you know, statement works have been around for a while, Chris. It's not they're not, they're not nothing new.
00:08:51:03 - 00:09:15:14
Chris Burke
Well, I think, a lot of people know Morson as a recruitment agency and a provider of, engineering Telent, to one of the UK's largest things going to lead the UK's largest engineering and scientific agencies. and it's been going for 55 years. While people don't know as much about is that Morson Engineering Group anymore, some projects have been going for 45 years.
00:09:15:14 - 00:09:41:14
Chris Burke
So. So we've been in the off flow business for a long, long time and we've got the scars of of delivering projects and fully contracted out services on the back of that. And so that 45 years of pedigree of managing defining scope of works for the client because often the client wants to give you a job, but they don't know how to specify that and put a price around it.
00:09:41:17 - 00:10:03:10
Chris Burke
so we in the discovery phase of any project, we, we help the client to define the scope. Once the scope defined price is agreed, we win the work we carry on the work doing. we carry on delivering the work, as a project because, inevitably these variations. So, there are extra astro in the client.
00:10:03:10 - 00:10:21:17
Chris Burke
Can you just do this while you're on the job? So variation management's k Olsen's have been doing that for 45 years. So when, Alan asked us to come, can you help us with our thought? Well, yeah, because it's what we do and what we do every day on a day to day basis. And, and that's how the conversation started.
00:10:21:17 - 00:10:40:14
Chris Burke
So and as with a lot of clients, you do a discovery. You look at what they're doing now. And between the two organizations we work well. Is that really a true business business relationship? You look at, you the supplier as well. He's is fearful, thinks he's going to lose his job, think he's not going to be right.
00:10:40:14 - 00:11:05:24
Chris Burke
I said, no, all you've got to do is define the outcome of what you're supplying. And then write that down on the piece of paper. And you get paid based based on the outcome. And, and the suppliers, when we started talking to him, were quite on board with the event, the Allan that they, they said, well actually, yeah, thank thanks for that because we actually now, the relationship is more formal and they also realize it's a, it's a compliance.
00:11:05:29 - 00:11:13:19
Chris Burke
This is a fully contracted out service. So and that's what we well Telented to get to that that place.
00:11:13:21 - 00:11:38:16
Jonny Dunning
Yeah. I think it's a very interesting point to bring up the supply chain. you know, this is the parties involved with this supply chain are incredibly important part of that. And I think everyone benefits, you know, as you say, having that clarity, having that formality, having things documented. Did you know if if overruns are happening or there are changes happening or things are late, it's not always the suppliers felt there might be, you know, things that are outside the suppliers control.
00:11:38:23 - 00:12:05:02
Jonny Dunning
So I think just being able to document that whole process is so much value in just that part of it. but when you look at the key drivers for why people are generally need to address their spend and get some management around it, it the drivers tend to come from an area of either like misclassification risk or procurement efficiencies, or just kind of spend management angle in terms of just getting more spend under management.
00:12:05:10 - 00:12:10:06
Jonny Dunning
But but all three of them kind of come together really. when you've got that actual visibility.
00:12:10:13 - 00:12:39:06
Alan Withers
And I think that's just touching on Chris's point. I think that's why this works so well, is that when I first started to question the way that things were working, it wasn't because I thought that, you know, I could outsource all of my third party spend to it to a single company, because I know that a lot of statement of work MSPs are, you know, you give us this time in the works and we will draw in from a contingent labor arm of our business and we will deliver that for you.
00:12:39:08 - 00:13:02:00
Alan Withers
And it wasn't that I think that's if you remember that meeting that you and I had, that I think that may meeting it was it was I, I have an excellent supply chain and I do an excellent work for us. You know, there's no question that the quality of what they're doing for us, it's about ensuring that we give them a fighting chance at delivering what we ask and to.
00:13:02:02 - 00:13:24:01
Alan Withers
So articulation of the statement of work being the first point of that. Once we have agreed on that and made sure that obviously commercially it health and safety element wise, there's there's a balance to it, you know, ensuring that the execution of the project is then delivered on time to cost to quality, that the supplier knows where they stand in, you know, the delivery of it, the payment of it.
00:13:24:01 - 00:13:39:04
Alan Withers
If there's any variation, variations in change, it's not ambiguous. They understand where they are. And I think that's where I think that's where what really. Well, Chris wasn't it was I think you and I sat down there was a it was a bit of chaos around it at that time. And I think you and I sort of sat in a corner.