Statement of Work. Those three simple words –– or SoW –– has the power to change how individuals and organizations think about work. Today, SoW is one of the largest categories of spend for an organization and has increased 21% year-over-year, according to a recent Transform Talent Podcast episode. This rapid growth is likely fueled by the rise of the gig workforce, who look to maintain their independence and desire flexible working arrangements, while organizations want to shift risk, maintain quality, and control costs by moving to outcome-based solutions.
Setting clear expectations
A major difference between long-term work and a SoW contract is the level of detail needed in the contract for an individual project. When organizations are paying by the project, they need to make sure the deliverables, timeline and contingencies are spelled out in the SoW. “It is a contract in itself,” said Sana Ali, Service Procurement Manager at Talent Solutions TAPFIN. "A SoW or a statement of work itself is essentially the contractual paperwork that outlines delivery, outlines timelines, milestones, and just essentially the full life cycle of an actual delivery of that particular piece of work."
Driving tangible outcomes
SoW arrangements provide flexibility, and allow organizations to quickly switch work on and off. As Kayleigh Kuptz, Co-founder and COO at Deployed, explained, "the job for life is dead. You don't hire for people anymore. You hire for services and outcomes, and the Statement of Work enable that flexibility and that agility. I need XYZ done is the statement, and then you look who can do that. You don't look for: I want that person with that skill, but I'm not sure what they will do. It's the other way around. It's a shift from permanent staff and job descriptions to flexible, service-based, output-based work."
Speeding up the process
"There’s a lot of room for manually-designed SoWs to be streamlined. Currently, SoWs are usually Word documents that get exchanged by email up to 42 times," according to Kuptz. With so many versions out there, there is no single source of truth. “If you think about the components of the Statement of Work, there's a start date entered as a supply and you always ask the same questions, that can all be automated,” Kuptz said. “You can integrate your preferred supplier list. You can integrate a decision tree for the right pricing models. If it's this type of work, it's this pricing structure. You can work with legal and automate a clause database and certain validations as to when what clauses is triggered, which saves legal a lot of time having to review it after.”
The rise of the SoW is evident in Google –– where searches for the term “statement of work” rose to its highest level ever in 2020. From here, SoWs will only continue to grow, and organizations putting thought into their processes now can reduce risk, maintain quality, and control costs.