S ervices Procurement…what does it really mean? Many in the industry have their own definitions for Services Procurement such as Statement of Work (SOW) engagements, Project-based workers, Projects and Services or Consulting Services.
Here at Beeline, we define Services Procurement as a process for buying and managing strategic outsourcing of work and consultancy through a SOW.
You may be sitting there thinking, “That is great and all, but how do these workers differ from the contingent staff I already manage?” In their 2011 Landscape report, SIA describes Statement of Work Consultants (aka, Project-based Service Consultants), as workers who are typically given a regular, consistent salary by their employer and continue to receive this salary when off project assignments (i.e., benched resource). These workers, who are in open-ended employment relationships with the supplier, are paid a salary plus performance compensation and are on performance-based, billed projects.
Hopefully it is beginning to sink in. Let’s talk about a real-life example to help draw this out for everyone. Think about it in terms of remodeling your bathroom. You more than likely won’t have the skills to remodel your bathroom (if you do…awesome, you can skip this section), so you look to outsource this project. As you know, it takes a supplier with specialized skills to remodel a bathroom, you can’t go grab some guy off the street to make it all magically happen (well, you could, but I wouldn’t recommend it). So, where do you start?
You begin at Angie’s List to get details on how others have rated these types of suppliers. As you are searching, you remember you worked with another company in the past to remodel your kitchen, so you include them in your top three suppliers. (Since you already had an agreement in place with them in the past; this would simply be a new project) Before you move forward, you want to go through a competitive bid process to make sure you are getting the best price with the best outcome you want. You ask each supplier to provide details to any questions you have in order to get the bathroom you have been dreaming of. Once you review all bids, you decide on the supplier you want to move forward with. Now it is time to put a formal document (SOW) in place with this supplier which captures scope, milestones/deliverables (e.g. tile walls, install new sinks, new light fixtures, etc.) and a timeline they have to execute against based on the mutually agreed upon terms. If they don’t, there may be penalties. You may get to discount a percentage of what you pay them if they don’t deliver the project on time, within scope or within the budget. Since the chosen supplier is going to have several workers coming into your home, you want to know who has access to your house but that leads to an entirely different blog post.
Hopefully this helps to paint a picture of what Services Procurement is (for at least 98% of you).
Services Procurement is strategic outsourcing. So I need specialized workers to come remodel my bathroom. Non-strategic, or service workers, could be the lawn care folks that come mow my lawn. The work they do isn’t a core element of my life, but it is a necessary, ongoing service that needs to be provided. I really don’t care who comes to maintain my lawn. All I care about is that I signed an agreement with this company to meet certain deliverables (mow my lawn or trim my bushes, etc.). If these workers needed to come into my house to tend to any of my plant life, then I would definitely want to track who had access to my home, similar to how our Resource Tracking solution works. This is important to me because if there was an issue that occurred, I would want to know which worker was onsite that day during that time.
Well, hopefully this blog has helped to clear up any confusion on what Services Procurement really is. I hope to spend some additional time with you in the future to delve in deeper on specific market problems we are trying to solve and what some of the benefits of implementing a Services Procurement solution are.