What is a Statement of Work and what are the benefits

In our digital society, organisations need a workforce that is agile, scalable, cost effective, and capable of delivering change rapidly; this is where Statement of Work can help. By using a Statement of Work, or SOW, organisations can engage the skills they need quickly, something that is crucial when designing and delivering new products and services.

If your company is considering using a Statement of Work, or perhaps you’d like to find out more about SOW and its benefits, we’ve put together a guide to help you decide if it’s the right fit for you.  

What is a Statement of Work (SOW)?

Let’s begin by defining Statement of Work. A SOW is the name given to a binding document that captures and defines all the work aspects of your project, typically between two parties. It usually contains conditions that an organisation agrees on with a service provider, for example, Lorien. The document will outline the work that needs to be done, or the scope of work being provided, project deliverables, timelines, work location, and payment terms and conditions. So, in other terms, Statement of Work (SOW) models are outcome-based contracts.

The outcomes, or contracts, will usually be project, milestone or service based, typically with a fixed fee for delivering the goal that was promised at the beginning of the agreement.

Many businesses may not realise that they need a Statement of Work, but on average, 65% of all contingent workforce spend comes from SOW based services and not recruitment! 

What business problems can a Statement of Work solve?

Statement of Work engagements may work best for an organisation for a range of reasons, these can include –

• Headcount restraints 
• Time to hire
• Lack of agility in resourcing
• Variable costs
• Project misalignment
• Inconsistent work quality
• Varying workloads
• An overload of supplier management
• Skills gap, training, and management time

For example, a small business may want to make their products or services available to an online audience, but their team is too small or lacks the skills, time, or motivation to build a website that is fit for purpose. To solve this business problem, the company will either need to hire a permanent employee, hire a freelancer, or outsource to a specialist – this is when a Statement of Work will be used.

The key difference between hiring a person and using a Statement of Work (SOW), is that the business is paying for an outcome, not a person. And this comes with a whole new set of expectations, and benefits.

How is a Statement of Work created at Lorien – what is the process?

When creating a Statement of Work, we follow a process to ensure that our clients achieve the best possible outcome. Firstly, we work hard to understand the customer problem, challenge, or opportunity. We use our unique expertise and experience to outline the scope and the solution. Next, we build and manage teams to meet the outcomes stated in the SOW. In every Statement of Work agreement, we are responsible for our client’s outcomes, whether that is a milestone delivery, an installation of new technology, or an ongoing technology service. Operational and delivery risk is shared with the client organisation, and deliverables are measured against the milestones or service-level agreement.

What questions will we ask?

At Lorien, we go through a process with our clients to outline exactly what their needs are and how we can craft a service that best suits them.

SCOPE: How can we help you meet your outcomes?

DELIVERABLES: What tangible items will we deliver to you?

ACCEPTANCE CRITERIA: How will you know what we delivered is good enough?

DEPENDENCIES: What will we need from you?

SCHEDULE/MILESTONES: When will we do the work?

PEOPLE: Who will work on the project?

GOVERNANCE: How will the work be managed?

COMMERCIAL MODEL: What are the costs and when will payment be made?

These questions will change slightly for every organisation depending on what they are looking to achieve and whether their outcomes are product, service, or project focused.

What are the benefits of Statement of Work?

Statement of Work or (SOW) provides a solution for businesses to benefit from optimal deliverables and access to the best talent.

Here are some of the key benefits of Statement of Work: –

• Cost saving and greater spend control – fixed costs and set milestones mean results will meet expectations and fall within budget.
• Improved performance, reduced risk, and increased compliance – because the project is managed end-to-end, the risk is mitigated and the pressure to deliver is lifted from the organisation to the provider.
• Better control and efficiency – When the scope for a SOW is agreed, there will be realistic timeframes set, which will ensure the best results are delivered in the most appropriate timeframe.
• Lifecycle transparency – Throughout the process you will receive detailed reporting and clear performance management, so you can be assured the project or service is aligned with your goals.
• Standalone services – by outsourcing, you will free up time to refocus on your business and have the peace of mind that your services are in safe hands.

Why choose Lorien? (Valinor)

In response to client demand, in 2019 Lorien launched a new service line (Valinor) to deliver outcome-based managed services through Statement of Work. Since then, we have helped clients across multiple sectors including Financial Services, Manufacturing, Pharmaceutical, Life Sciences, Telecommunications and Public Sector to meet their technology goals.

Utilising key strengths from our recruitment background we are able to engage the right skills at the right times to meet client requirements. With access to STEM’s highly skilled talent network, we can hire teams faster than other services providers so projects start faster. We have been growing our capability and our delivery team and currently have over £60m of SOW spend under our delivery control, working with multiple clients and delivering a wide range of services.

At Lorien, our team manage the full Statement of Work lifecycle, from project scoping all the way through to project delivery and measurement. We help our clients with projects and services of varying scales and durations, delivering both onsite and offsite support. We use cutting edge technology, advanced analytics and a dedicated change management system, to ensure our clients have a clear view of the SOW project and it’s spend. We design a solution that suits your needs, not ours. 

Want to see our SOW management in action? Take a look at some of our Statement of Work client case studies?

We worked with this client to deliver significant digital change, supporting their existing in-house technology team with our delivery services utilising temporary capability that was flexible and agile. Through the duration of this ongoing partnership the client was able to reduce from 12 suppliers to a single managed partnership. These projects were all delivered on time and to budget.

 Following a competitive tender process, a global life sciences company selected Lorien to deliver their HR Transformation Programme via a fixed price Statement of Work. Lorien successfully deployed Workday to the client, managing 140 different integrations from over 30 3rd party supplier systems and successfully migrating 14,000 employee’s data across 42 countries to the new system without any loss.