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The evolution of SOW: 4 keys to successful services procurement

Jon Kesman
By Jon Kesman
on September 28, 2016
Image credit: KavalenkavaVolha via iStock<

Contingent workforce management programs have changed. Having worked on both the procurement as well as the provider side in this space, I have seen the Managed Service Provider (MSP) market mature and its value proposition evolve first-hand. Next-generation MSP solutions have moved beyond operational efficiencies and temporary spend optimization toward full lifecycle spend management of complex services categories.

Services procurement solutions, also referred to as Statement of Work (SOW) programs, have also changed. Everest Group research has validated that procurement best practices are becoming more important across the board, with the function increasingly prominent across countries and business units, rather than in headquarter, key markets alone, and continually seeking ways to bring value to the organization.

As a result, services procurement is becoming a strategic outsourcing solution in its own right and not necessarily just as part of a wider MSP program. To meet this demand, Allegis Global Solutions (AGS) has recently launched a standalone services procurement offering, which is the first of its kind in the European market, and is increasing its scope and focus on services procurement solutions for our clients.

Our objective is to help procurement leaders better manage what can be a complex area of spend by delivering a comprehensive level of visibility and control. By outsourcing tactical and some strategic elements of the services procurement lifecycle, your internal resources are free to focus on areas where they can deliver incremental tangible value.

If an outsourced services procurement solution is to achieve these goals, there are four key factors to consider:

1. Complementing culture

A strategic services procurement solution should be adapted to suit your business' overall objectives and culture around compliance. There can be no one-size-fits-all approach if genuine value is to be delivered.

2. Understanding program management support

The level of support provided by a services procurement solution also needs to be tailored to the specific needs of your organization. Whether it be a more basic model that focuses on resource tracking or a full source-to-settle program, your solution provider should work alongside you to determine which level of support will deliver maximum value for your organization.

3. Considering the funding model

While the supplier-funded model that is traditionally used for MSP solutions is a possibility and a model that is increasingly embraced by suppliers, the differing value proposition of a services procurement solution means that a client-funded model may be worth considering due to the return it can provide. This may not seem as attractive an option as having costs absorbed by the supply chain, but, by allowing you to attract the best suppliers, who may not initially see the value in funding the program themselves, can prove more cost-effective in the long term.

4. Ensuring best-in-class implementation

The implementation process is fundamental to the long-term success of any procurement transformation or outsourced solution. Taking all of the factors above into account, your service provider should work alongside you to ensure any potential obstacles are identified and addressed to prevent them from becoming bigger issues down the line.

To find out more about the evolution of services procurement and how AGS' solutions can deliver visibility, cost savings and more, register to attend our session at the SIG Fall Global Executive Summit in October. We will also be discussing the subject at the SIG Symposium in New York on September 29th. In the meantime, feel free to reach out to us with any questions about what an outsourced services procurement solution can do for you.

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Jon Kesman
Written by Jon Kesman
With more than 20 years of procurement experience across various organizations and industries, Jon Kesman, Global Procurement Director for Allegis Global Solutions (AGS), serves as part of our Center of Excellence for Services Procurement and SOW management. Working to continually expand this offering, Jon helps to ensure that AGS clients enjoy the full extent of benefits available through their programs. Over the course of his career, Jon has delivered outstanding results in both advisory and consulting roles, as well as in steady-state procurement organizations. The vast majority of his procurement category expertise lies in contingent workforce and professional services categories. Prior to joining AGS, Jon was an executive procurement sponsor for one of AGS’ MSP clients, and spent eight years partnered with AGS to expand that program across the US and into the UK, including incorporating independent contractor compliance solution to mitigate risk. Additionally, as a consultant, Jon spent more than three years working with clients to develop and implement strategic sourcing and category management plans as a part of significant procurement transformation programs. Jon also spent more than five years in the procurement BPO space working with clients on contingent labor and professional services category development and execution. Jon’s coequal roles as a solution provider and buyer also provide him with a unique advantage. As a leader in steady-state corporate procurement organizations, Jon’s extensive experience over a combined 12-year period drove results related to cost savings, risk mitigation, and managed spend across multiple organizations in the categories of professional services and contingent labor. With his distinctive blend of experience, Jon is able to understand many of the challenges facing AGS’ clients when it comes to managing their contingent workforce and services spend categories, thus ensuring that client requirements are met by the best solution that AGS has to offer. Jon earned his bachelor of arts degree in Purchasing and Operations Management from the acclaimed Supply Chain Management Program at Michigan State University. He has been a frequent presenter at industry events hosted by ISM, Staffing Industry Analysts, SIG and ProcureCon.

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