Statement of Work (SOW) practices can become overwhelming and outdated very quickly. Sometimes the bigger the company, the more challenging it is. This was the case for DZConneX's (DZX's) client, a giant in the health care IT space, whose SOW services lacked any visibility or insight into spending, sourcing and performance metrics.
DZX completely redesigned the way the company handled its Services Procurement practices. Everything became digital and was brought into one central location so managers and leadership could see company spend and improved 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, DZX eased client concerns about supplier adoption and reservations about adding another tool to the budgeting process. Six months later, DZX was managing 32 suppliers and counting, a lot more than the 3 that were in place at the beginning.
DZX took what was once a 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 teams were free to focus on more strategic responsibilities. Rogue spending had been eliminated and non-preferred/non-essential supplier relations were optimized. With consistent on-time payments via an automated invoice process, suppliers' experiences also improved.
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 efficient 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 DZX’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 DZX as its managed services provider (MSP) partner, the company knew how fast and agile DZX performs. When the company’s Services Procurement process started getting out of control, leaders knew they’d need to lean on DZX once again to get the business back on a successful path.
Without knowledge or insight into the important elements 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. After some brief convincing of both the client and its supplier, DZX was able to introduce a SOW program that completely transformed its old, outdated, manual process into a fully automated process, delivering previously unheard of visibility, savings and performance insights. We were able to improve our client's Services Procurement process, making it more efficient than ever before.
The Evolution Of SOW
When DZX first began its relationship with the health care IT company, it was responsible solely for overseeing an MSP program, but there had always been discussions about incorporating a SOW program into the MSP. The client knew there were issues with its SOW process but didn’t quite grasp the severity of the problem.
The company lacked any visibility 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 dedicated partner, DZX was consistently 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 change their process. After about 18 months (large companies have many elements to handle in order to change the way they do business), and the client was ready to launch a pilot program.
Steady And Ready
DZX, in conjunction with the company’s vendor management system (VMS) partner, worked to design a best-in-class SOW solution to streamline the overall process. DZX completed a nationwide market analysis to assess supplier rates and identify savings opportunities while eliminating unnecessary fees and costs. We also conducted a contract compliance/invoice-payment audit to examine them for inefficiencies, inaccuracies, and savings. We found plenty which allowed us to determine exactly how their program needed to improve.
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 became more sophisticated, DZX 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. DZX makes it a top priority for clients to feel completely comfortable with the processes we’re implementing, so DZX's project managers made sure everyone understood the benefits and what to expect the first days, weeks, and months with the new process in place. Additionally, to make the suppliers lives easier, we met with them one-on-one to share the benefits they would receive, provide training on the new process and 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 DZX brought to the company by introducing this SOW system. We made sure everything, from contract language to payments processed, was continuously improving.
Benefits For All
Completely automating their SOW process from a previously all manual system, we set up all suppliers, 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, 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 happen 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 into spend control and supplier management limits rogue over-market spending and engagement with non-preferred suppliers.
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 have been eliminated. Additionally, they each have their own reporting capabilities and easy access to one main point-of-contact from DZX 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 improved overall work experience for everyone in our client's organization.