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Why Have A Scope Management Program

You are about to embark on a road trip. You have relaxation on your mind and the destination in your sights.  Your bags are packed and the keys are hot in your hand.  What is missing?

Included in the June ANA issue of FORWARD is a thought-leadership article by Richard Benyon, CEO of Decideware, titled "Why the Right Scope of Work is So Important: An Effective Scope of Work Ensures the Right Work Gets Done in the Right Way".

Included in the June ANA issue of FORWARD is a thought-leadership article by Richard Benyon, CEO of Decideware, titled "Why the Right Scope of Work is So Important: An Effective Scope of Work Ensures the Right Work Gets Done in the Right Way".

This year, one of our clients approached us to help them design and implement a global Scope of Work program.  

At the upcoming ANA Joint Production Management and Advertising Financial Management, West Coast Chapter meeting on Feb. 25, 2016, Steven Wales will lead a discussion on the parallels between managing scopes of work and production budgets. Participants will be engaged in a discussion about their steps to standardize global data, centralize it and apply analytics to get the most from agency scopes and production budgets.

Scope of work agreements are crucial documents that help agencies and brands agree on the type of work that is required and what the costs will be. Scope of work is relatively straightforward for many industries. However, in the marketing and marketing procurement worlds, these documents can be highly complex because they deal with ideas and creative talents, along with several deliverables. To deal with these complexities and better manage overall spend, it's important for businesses to have an effective scope of work management strategy. What exactly does that mean, and how do you go about it?

Here are some of the key benefits behind scope of work management:

As part of the Scope of Work survey, the WFA & Decideware explored the entire Scope of Work process, including skills gap, approval, budget, rate cards and process standardization. Below is a summary by the WFA of peer recommendations regarding Scope of Work management:

WFA Peer Recommendations

What recommendations/ watch-outs would you give to peers managing the SOW process?

  • Be realistic about your starting point. Identify where you want to drive to and phase the best practice behavior that you want to achieve starting with largest spend buckets and work your way down.
  • Align with marketing on a single SOW template for all agencies. (SOW setting + on-going management). Get clear expected deliverables and “priority projects” list per brand. Decide whether this will be global, regional, local and which agencies it does not apply to and why.
  • Design SOW formats that can easily be self-serviced by Marketing / Marketing Operations. Develop common templates, but allow for minor alterations to suit a variety of commodity areas. Get all stakeholders/teams that have vested (similar) interests in managing agencies bought-in to this template.
  • Don't just count campaigns; take other needs into consideration such as required resources. Check agency time sheets regularly (not just to monitor, it’s a learning tool as well). Build the SOW into the same template and process for obtaining the costs.
  • Involve marketing procurement at the beginning to obtain the right balance between senior/junior, rate-card, resource talent, etc.
  • Develop a database for tracking/reporting/comparison etc. Automate where possible. Use system support and contract management tools to assist you and help drive structure and compliance. Set up a regular reconciliation template/process.
  • Be attentive to comparing different agencies, even those that are similar but doing different jobs. (Also watch out for standards like “working/non-working” ratio per project as they are not standard at all).
  • Get a clear RACI on what is marketing’s job and what is procurement’s. Ensure those roles and responsibilities are clearly defined.

For more information please contact Steve Lightfoot s.lightfoot@wfanet.org

Download the WFA/Decideware Scope of Work Survey

As part of the Scope of Work survey, the WFA & Decideware explored the Scope of Work process, including rate cards. We looked to explore rate card usage as well as the level of detail agencies provide for cost. Below are the results as well as commentary from the WFA regarding the findings:

Agency Rate Cards

Have you negotiated rate cards on the following?

WFA Commentary

    • Naturally almost all respondents have negotiated rate cards of some kind with their agencies.
    • Some remuneration models exist whereby this is not done as part of the calculation of fees, but even in those it is often included in the assessment of the resources needed to complete projects.
    • Staffing rate cards are most common with almost 97% having negotiated these. Deliverable rate cards are less well used (especially in the creative space), but are still undertaken by 75% of respondents.

As part of the Scope of Work survey, the WFA & Decideware explored the Scope of Work process, including standardizing the process. We also looked at the existence of a centralized database to store scopes. Below are the results as well as commentary from the WFA regarding the findings:

Standard company-wide method, content & database

Does your company have a standard company-wide method of executing their Scope of Work process, i.e. using templates with standardized values, contracts, etc.?

WFA Commentary

    • Although around 40% of respondents have fully standardized SOW templates, the majority (over 60%) do not.
    • This clearly points to an area where some multinational marketers could establish processes that would expedite briefing and campaign development, and bring additional clarity to the way their agencies respond to their needs

As part of the Scope of Work survey, the WFA & Decideware explored the Scope of Work process, including Scope budget and reconciliation. We also looked at the reporting that the agencies provide. Below are the results as well as commentary from the WFA regarding the findings:

Scope Budget & Reconciliation

Which approach to SOW management fits best with your organization?

WFA Commentary

  • The above results point to some differences around revealing budget against a SOW and the resulting actions.
  • In some cases, revealing budget up front can limit room for negotiation, and if for a newer project, can set artificial ceilings for costs.
  • However, when done in the spirit of collaboration, it can help maximize the return on the marketing investment if the agency is fully aware upfront of the resources it will be able to deploy.

As part of the Scope of Work survey, the WFA & Decideware explored the overall Scope of Work process, including the scope approval process.  Below are the results as well as commentary from the WFA regarding the findings:

Scope Approval, Work & Revision

What are the duration types on your scopes throughout a fiscal year?

WFA Commentary

    • No clear trend is emerging on the length of time for which respondents engage their agencies.
    • This is likely due to the number of brands within the portfolios of multinational marketers, which results in different (and sometimes concurrent) strategies on roster size, AOR or lead/hub agency, project based work and/or holding company level multi-agency teams.

As part of the Scope of Work survey, the WFA & Decideware explored the Scope of Work process, as well as potential skills gap in the management.  Below are the results as well as commentary from the WFA regarding the findings:

Skills Gap in Scope of Work

Do you feel your organization has a skills gap in SOW management? How important are the following?

Do you feel your organization has a skills gap in SOW management? How well do you do the following?

WFA Commentary

  • “Performance” tracks on average 1.3 points behind “importance”.
  • This shows that almost all respondents feel they could improve their processes and practices in this area.
  • The area with the highest gap is “ensuring all work is defined in advance”: a difficult challenge for many multinational marketers who adapt and adjust as brands change their needs, and media channels evolve at pace.

As part of the Scope of Work survey, the WFA & Decideware explored the Scope of Work process, as well as overall participation.  We also wanted to look at the role Marketing Procurement's involvement in this area.  Below are the results as well as commentary from the WFA regarding the findings:

Scope of Work Process & Participation

Who owns the SOW management process?

WFA Commentary

    • Responses point to a split in the approach taken by members.
    • Although 50% rely on marketing to manage the SOW workflow, as many as a third leave this to marketing procurement.
    • Over time we will see how this evolves, but for now we can see that ownership of this process has no clear trend.

The World Federation of Advertisers, in conjunction with Decideware, conducted a survey to provide a better understanding of how major advertisers manage their scope of work programs.

The survey was conducted as a partnership between the WFA and Decideware in early summer 2014. Nineteen companies took part in this global research with responses coming mainly from marketing sourcing specialists. While results are not statistically relevant, they are indicative of the thoughts and actions of global multinationals within WFA membership.

In an eight part series, we will overview the results of the survey as well as concluding commentary from peer WFA members.

WFA Executive Summary

The World Federation of Advertisers created an overview of the survey and concluded:

All respondents feel that there is a skills gap in terms of SOW management.

  • Over 60% of respondents do not have fully standardized SOW templates.
  • Around 1 in 3 respondents do not reconcile approved Scope budget with actual agency fees.
  • 30% of respondents let their agency begin working as soon as a scope is signed off.
  • The most common way to reduce the costs of a SOW is by simplification, finding alternative creative ideas, or by commissioning fewer executions etc.
  • Top recommendation from members is to align with marketing on a single SOW template for all agencies.

Applying Scope of Work to Deliver Value

Decideware 's paper Beyond Costs and Rates - a practical guide to understanding value, discusses the cutting edge of Marketing Agency Management - i.e. measuring Agency Cost, Resource Planning and Agency Performance data to determine Agency Value.

This release in Decideware's "Innovation Series" looks at the important issue of using Scope of Work to manage agency value, and how to understand if you are getting the most from your agency spend.