SOW LONG, FAREWELL: REPLACING A HEALTH CARE IT COMPANY’S
INEFFICIENT SOW PRACTICE
- Automated and formalized process that ensures consistent and timely supplier payments
- Adoption grew from 3 to 32 suppliers in less than 6 months
- $10 Million to $40 Million growth in active projects managed globally
- Savings and structure with ability to see where all supplier spend is coming and going
WHAT YOH BROUGHT TO THE TABLE
- Statement of Work (SOW) Management Services
Degree of Difficulty
- Previously decentralized SOW services with no visibility, costing time and money
- Reluctant supplier adoption and
- No defined policies in place prior to implementation
Statement of Work (SOW) practices can become overwhelming and outdated very quickly. And the bigger the company, the worse it is. No truer was this than for Yoh’s client, a giant in the health care IT space, whose SOW services lacked any visibility or insight into spending, sourcing and performance metrics.
Yoh completely redesigned the way the company handled its SOW practices. Everything was brought into the digital age and into one central location so managers and leadership could see spend and results immediately. And for a client of this size, starting off slow was the only way to go. First introducing the three top IT suppliers into the program, Yoh eased client concerns about supplier adoption and reservations about adding another tool to the budgeting process. Six months later, Yoh was managing 32 suppliers and counting. That’s quite a jump from the 3 that were in place at the beginning.
Yoh took what was once a clunky and disorganized process and set up a standardized and automated SOW process leveraging VMS functionality. Mangers now had visibility and control over spend and approval chains. Procurement was free to focus on more strategic responsibilities. Rogue spending had been eliminated and non-preferred/non-essential suppliers were optimized. With consistent on-time payments via an automated invoice process, suppliers were happier too.
HEALTH CARE TECHNOLOGY INDUSTRY FAST FACTS
$10,224 per capita spent on health care in U.S.¹
74% of hospitals that use tablets/mobile devices to collect healthcare data are more effiecient than those that don't²
Healthcare occupations are expected to grow 14% from 2018 to 2028³
$760 - $935 billion in wasted health care costs each year ⁴
The health care industry is ever-changing when it comes to technology. One of Yoh’s clients, a leader in providing information and technology services for the health care industry, has to consistently keep up with a fluctuating market. Already working with Yoh as its managed services provider (MSP) partner, the company knew how fast and agile Yoh performs. When the company’s statement of work (SOW) process started getting out of control, leaders knew they’d need to lean on Yoh once again to shock the business back into reality.
Without knowledge or insight into the “vital signs” of its SOW program — what is the spend, where is it going, what are the performance metrics, and how are they being paid — the company was operating in the dark. Thankfully, after some brief convincing of both the client and its supplier, Yoh was able to introduce a SOW program that completely transformed its old, outdated, manual process into a fully automated one, delivering previously unheard of visibility, savings and performance insights. Not exactly brain surgery, but we did bring the client well ahead of where they were.
The Evolution to Sow
When Yoh first began its relationship with the health care IT company, it was responsible solely for overseeing an MSP program but there had always been talk of incorporating a SOW program into the MSP. The client knew there were issues with its SOW process but didn’t quite grasp the immensity of the problem. It wasn’t pretty.
The company lacked any visibility at all into its SOW services spend — leaders had little idea what the business was buying from suppliers, what fees were being paid and to whom they were being sent to. They didn’t even know what the status of supplier selections or engagements were. Most of the SOWs in place were out of date and/or non-standardized. There were no defined policies, no sourcing mechanisms or tools, and not nearly enough competitive sourcing. Additionally, business leaders were provided with very limited performance metrics to assess how suppliers were performing against their SOW.
As the company’s trusted partner, Yoh was always in contact with the client about how to improve its business and its relationships with suppliers. Eventually, following a deep conversation with a new client contact about the scope of the SOW issues, a decision was made to disrupt the norm. Fast forward 18 months or so (large companies have a lot of hoops to jump through to change the way they do business), and the client was ready to launch a pilot program.
Steady And Ready
Yoh, in conjunction with the company’s supplier management system (VMS) partner, worked to design an ideal SOW solution to streamline the overall process. Yoh completed a nationwide market analysis to assess supplier rates and find savings while eliminating ballooning fees and costs. We also conducted a contract compliance/invoice-payment audit to examine them for inefficiencies, inaccuracies, and savings as well. And yes, we found plenty. Such is the case with high numbers of SOWs.
Starting with a pilot-based program with three IT suppliers at go-live, the enhanced and advanced program enabled control, management, and optimization of the full SOW spend, and established a formalized system of record for all SOW-based transactions. This included the formation of a supplier engagement model to support internal sourcing activities and business objectives.
Ultimately, as the pilot program started to gain some steam. Yoh held 40 in-person and/or telephone meetings with company managers to introduce them to the program, detail what changes would occur, and answer any questions they had. At Yoh, we want everyone to feel completely comfortable with the processes we’re implementing — after all, we’re doing it to make their lives easier — so Yoh project managers made sure everyone knew the benefits, what was in it for them, and what they would expect the first days, weeks, and months of the new process. Additionally, to make the suppliers lives easier, we met with them one-on-one also to share the benefits they will receive, provided training on the process and the new technology and maintained continuous check-ins with the suppliers to ensure program participation is easy and consistent.
As the project reached its apex, 32 total suppliers had been on boarded into the program, 15 of which had active projects worth about $12 million in total spend. But organization was just one small benefit Yoh brought to the company by introducing this SOW system. We made sure everything, from contract language to payments processed, was on the up-and-up.
Benefits for All
In the end, how did this help deliver value to this health care IT giant? Let us count the ways.
Completely automating their SOW process from a previously all manual system, we set up all suppliers from the get-go, improving approval workflow and standardized master service agreements (MSAs) while also enhancing cycle times for the entire process. As a result of this new system, we were able to deliver detailed reporting and metrics down to the nitty-gritty, including insight into spend, milestones, delivery, time spent against budget, cycle times, and more.
Managers now had visibility and control over spend and approval chains at a moment’s notice when before it would either take days to find out or, most often, never at all. Procurement was removed from daily tactical SOW set up, approval and PO request process, and could now focus on more strategic responsibilities. Additionally, procurement visibility on spend control and supplier management limits rogue over-market spending and engagement with non-preferred suppliers.
The benefits didn’t end there. Because of the SOW program, suppliers would now receive consistent, regular on-time payments via an automated invoice process. The days of manual invoice requests/approvals and invoices 120-plus days past due are long gone. Perhaps better still, they each have their own reporting capabilities and easy access to one main point-of-contact from Yoh who provides support across the entire SOW lifecycle, including set up, payment requests, payment issues, approval status, etc.
We brought visibility, consistency, compliance, change management processes, and tracking and cost management to all current and future SOWs. We reduced risk and made people happy. After all, that’s why we’re here right? Let us show you how it’s done.