Why Use Your Managed Service Program to Manage Project-Based (SOW) Services?

Organizations are utilizing project workers or Statement of Work (SOW) consultants far more today than ever before. However, many do not source their SOW consultants through a standardized process or channel. Consultancies providing access to SOW resources would have you believe that this is because these types of resources are somehow more difficult to procure or require a different set of skills to procure than other types of contingent labor.

Looking back to approximately 15 years ago, as internet technology was just beginning to explode on the scene, experts from Volt and others from within the staffing industry met with experts in the fields of procurement, project management and information sciences to solve a very complex business challenge. They sought to use the emerging new and powerful technologies and internet connectivity to devise a system that could procure and manage human resources the same way that companies like Oracle, SAP and Ariba had done years before for material commodities. In the past no one had even tried to address this challenge because it was felt that sourcing talent brought far too many variables into the equation, making replicable results impossible to achieve. Most staffing companies scoffed at the ambitious plans of these pioneers. They knew the intricacies involved in supplier management and the pitfalls of making assumptions in the sourcing process. At first they didn’t even view the innovation as a threat. But as we all know, this intrepid group of innovators persevered and today, managed service programs (MSP) have proliferated and the use of MSPs to procure and manage human capital has become a standard industry practice.

Yet the modern human capital MSP’s progression from experimental program to mainstream business practice was not instantaneous. In fact most large organizations had no reason not to believe the disparaging words of the staffing companies. Besides, most were not interested in being guinea pigs for this untried and radical new method. However, there are always organizations whose cultures embrace innovation and trailblazing ideas. As we know, early adopters of human capital MSPs ultimately provided proof of concept for the early MSP providers and their early success launched the industry.

After these early successes, staffing companies perceiving MSPs as a threat, began to campaign against the idea. They argued that these new providers could not handle the nuances and detailed knowledge required to accurately deliver talent, while at the same time perform all the involved functions the staffing companies could. Ultimately though, a good idea cannot be suppressed and it was proven that the MSP for human capital was not only viable, but actually preferential. Also, it was shown that the MSP could work in conjunction with the staffing suppliers and could be a tool for suppliers to use to increase their business volume.

Today, the competitive nature of a globalizing business environment is driving the ever increasing use of project workers to perform highly specialized jobs for organizations in many areas. Using project workers, companies are able to tap highly specialized teams to complete specific tasks outside the core competencies of the organization. It is a very effective strategy and helps companies boost their competitive edge in the market while optimizing the efficiency of their workforces. Just like the staffing companies before them, consultancies – accustomed to providing SOW resources to organizations without the efficiency and cost control benefits of an MSP – are disparaging the use of MSPs to manage SOW engagements. They are often heard stating that their offerings are different from those of a staffing company and thus cannot be adequately managed by MSPs. In reality, this is just the latest iteration of the differences of opinion that existed in the past between staffing agencies and managed service programs at the time when MSPs were just coming into vogue. It is clear the differences in opinion were resolved since MSPs are now widely accepted facts of business life and work in harmony with the staffing companies.

While there are some decided differences between the strategies used to procure temporary labor and those used to acquire SOW resources, the basic fact is that nearly all of the theoretical precepts that support the efficacy of the human capital MSP are equally applicable to sourcing SOW resources. You can read about just how transferrable these tenets are in our newest white paper entitled, “Overcoming the Challenges of Managing Project Based Engagements – Reduce Risk, Save Money, and Improve Quality”.

Sincerely,

Larry D. Kaylor