Here are some factors to consider when building your business case and reviewing your technology choices:
Every service requirement is unique – with its own set of deliverables, milestones, challenges and dependencies. Suppliers are different. And outcomes are nuanced in their definition and measurement.
To effectively manage these factors, a dedicated, purpose-built tool is required. For example, a legacy goods-focused P2P system will have been developed over a significant period of time to be very effective at ordering, receiving and paying for goods – The business needs 100 red widgets so the system orders, checks delivery and then pays for red widgets. It's clear that this binary, transactional system will struggle to cope with the complexity of services procurement; it's impossible to convert a multi-year consulting project, with dozens of deliverables, milestones and stakeholders into a structure that equates to the same transactional structure used for ordering widgets.
Ease of use
An often-missed consideration when making technology choices is ease of use. If a system is complicated, slow or restrictive, people (being humans) will find ways around it
. In other words, if users are motivated by frustration to bypass a process designed to record, manage and control services spend, it becomes ineffective. Ensuring front-line procurement, operations and finance staff adopt the technology and processes is critical to the success of any strategy.
The first consideration in providing a positive user experience is ensuring the solution is fit for the problem – As above, a tool intended to optimise an outsourced services program through better control over statements of work absolutely must be able to cater for the intricacies of engaging outsourced service providers to deliver outcome-based projects.
The second consideration is to provide additional tools and solutions to make people's work easier – Automating routine tasks and providing deep insights with AI are both examples of how the right technology can engage users and ensure high levels of adoption.
There are three technology costs to factor into a business case: The upfront cost, the cost to run the technology during the program, and some hidden indirect costs.
Usually, the broader a technology solution's scope is, the higher the upfront cost: More stakeholders, more feasibility, more business analysts, more process design. In addition to vendor implementation costs, the upfront cost can be considerable.
Conversely, as a technology solution becomes more focused on a specific problem or process, the more contained it is, meaning its upfront costs are usually lower: Fewer stakeholders, fewer analysts and simpler processes and points of integration.
Once underway, the technology underpinning or facilitating the program has a running cost. In most cases, software designed for services procurement is modelled commercially on through-put: a % of the spend managed through the system is charged to cover product development and technical support. In general, the leaner, more focused best-of-breed technologies are able to run at a much lower % fee.
The hidden indirect costs are much harder to quantify but are worth noting. Choosing the wrong technology when designing an outsourced, services spend management strategy can create indirect costs: For example, progress, projects or processes held back by cumbersome, confusing systems can slow innovation and allow competition to react faster to new consumer demands.
Adaptability to existing processes and org structures
The best new systems are those that can enhance an existing process and fit with the incumbent technology and structure of an organisational. This is one of the main factors driving the higher implementation cost when a legacy ATS/VMS/P2P system is chosen to manage a new services procurement or statement of work management program – the systems are designed, over a long period of time, to work in a specific way and bending them to fit with a new process takes a lot of effort.
In comparison, best-of-breed SoW management solutions, designed to overcome the very specific challenges of managing an outsourced services procurement program, can be seamlessly integrated with existing technology, processes and teams with very minimal adjustments.
Can improve return on large and longtail spend
In the scope of services procurement, at the top end of very large projects, legacy vendor management systems can work given the right circumstances. There are usually some concessions to be made around managing milestones and supplier performance but the average VMS could be used to get the basic controls in place. Of course, best-of-breed SoW management systems can offer significant advantages in visibility and control through very tailored and automated workflows.
However, the real advantage of using a best-of-breed solution becomes evident as you move into the long-tail of projects, where the cost and complexity of legacy solutions is prohibitive for effective
project and supplier
For organisations to control 100% of the cost, return and outcomes of outsourced services spend, both large and longtail statements of work need to be visible and in the scope of the services spend management program.
In summary – creating a business case for your organisation
There is clearly a strong business case for using best-of-breed statement of work management software as the foundation of an outsourced, services spend management program: more agile, better adoption, lower costs and better ROI.
Should you need any assistance or advice in crafting a business case for your organisation, please contact us
and we'll be happy to help.