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Statement of Work (SOW) Stoppers

Contract Negotiations, ERP, Software Selection

The SOW is a key document from your vendor that can make or break the implementation. The vendors will do their best to reduce their risk by limiting scope to a high level list, assuming that you will follow best practices, and making a lot of other assumptions about you doing work that you don’t know or understand the effort to complete. 

As the vendor risks go down, the customer risks go up.  We recommend the following:

  • Scope is tied to the requirements in the RFP which need to be specific
  • Best practices should only be applied to processes that are considered basic.  It should not be tied to ones that allow a company to differentiate themselves from the competition or address critical success factors (what an organization must do well in order to be successful strategically). You should limit the best practices to a few basic processes such as accounts receivable and accounts payable.
  • Ensure you understand what is involved in your roles and responsibilities. Many organizations don’t have the experience or qualifications to do some of the tasks that may be assigned to them without a lot of help from the vendors. An example of this is developing to-be business process documentation.  If you don’t have a resource on your team with the skill set to do this, you may be setting yourself up for a vendor change order.

A good way to limit scope for both the vendor and the customer is by arranging a “paid-for” business needs analysis (BNA) or discovery process prior to signing any long-term contracts. This should not delay the implementation process as it is work that would need to be done anyway. It should also not be a full-blown design phase by the vendors. It should be enough work for the vendors to define scope clearly and provide a fixed or not-to-exceed fee to do the implementation. It will also involve deciding what to do with all the requirements that are not met out-of-the-box by the vendors which include customization or custom reports, 3rd party modules, changing the process and workarounds.

The vendors would rather close the deal without doing the discovery if possible but we think this is short-sighted. In the end, the vendors don’t want unhappy customers and taking this extra step will help reduce the risks of unexpected and costly surprises during the implementation.

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