Scoping versus Workflow: Why scoping is different - and more important - than workflow.
Ten years ago the team at Scope was selling resource planning and time-sheet software to creative and marketing agencies and it was big business. Here’s why we believe that scoping fixes the problem of leaky profits far more effectively than managing workflow.
Ten years ago the team at Scope was selling resource planning and time-sheet software to creative and marketing agencies and it was big business.
Occasionally, we would speak to an agency owner who told us they didn’t ‘do’ time sheets, it wasn’t in line with their culture. It suppressed creativity. We would roll our eyes and move on to the next agency that did ‘get it’ – and there were plenty of those. We believed firmly that the only way to ensure profitability was to track time as accurately as possible and use this visibility to make better commercial decisions. For the most part, agencies agreed and still do.
We helped hundreds of agencies implement our time-tracking tool TrafficLIVE and watched as they made marginal profit gains. But still, there were leaks. Jobs would be over-serviced, clients would negotiate aggressively and no matter how closely time was tracked, it didn’t prevent hours from spilling over.
What is key to agency profitability?
So what if we were focusing on the wrong thing? What if the key to profitable agencies isn’t in the tracking of jobs once they’re live, but in the initial planning, estimating and scoping? Toby Drummond, MD of global business operations at Ogilvy answers that question succinctly: “It’s more important to measure the business than to control the process.”
“It's more important to measure the business than to control the process.”
We set about investigating what agencies needed to be doing differently and better to fix the problem of leaky profits. If not time sheets, then what?
Are agencies finally moving on from hours-based billing?
In recent years, agencies have been playing with the idea of pricing differently. Instead of selling rates and hours, they’re looking at selling value, deliverables and outcomes. Fixed-fee is a model that appeals to both agencies and their clients. It offers consistency, clarity and more focus on creativity for the client while removing much of the financial risk for agencies. We’ve talked a lot about deliverable-based pricing on this blog, you can read more about our thoughts here. We’re big fans and proponents of this model for helping agencies increase profitability. After all, as McKinsey says – a 1% increase in sales income can impact profits by 8-11%. Selling deliverables gives you the potential to recognise that uplift.
...a 1% increase in sales income can impact profits by 8-11%. Selling deliverables gives you the potential to recognise that uplift.
As well as a shift to a deliverable-based mind-set, we think there needs to be a spotlight shone on the scoping process in general. Fundamentally, the way agencies build scopes of work needs to change.
Time to stop using archaic tools that aren't fit for purpose.
First of all, it’s the only agency process that’s still done entirely on spreadsheets and Word documents. When every other function in the business has a tool to systemise it, scoping is still a very manual and inconsistent process. Why? When finance, sales and HR are all using systems to streamline processes and capture vital business information, why are project teams not doing the same to price and plan client work?
For most agencies, jobs vary ever so slightly each time, which means every scope of work is built from the ground up – or the project manager will dig out a similar previous scope and tweak it slightly. Deliverables are named and described differently from one team member to the next. Too much emphasis is placed on roles and rates instead of the outcome to be delivered. On top of that, the whole process is subject to version mismanagement and human error. It’s a messy jumble that leads to inconsistent pricing and inaccurate planning.
Connect what's been sold with what’s being delivered.
It should be a no-brainer then that some clever spark would eventually build a tool that enables you to create and store scopes in one place. A system that categorises deliverables using a common language and framework so teams can collaborate on what’s being sold and connect that to what’s being delivered. That kind of structure and visibility is essential to make sure projects are profitable at the point of sale instead of chasing profit once resources are allocated.
So, we built that tool. Scope gives you clarity and consistency of what you’re selling, underpinned by the hours required to deliver the work. It’s the missing piece in agency management systems and it integrates seamlessly with the other tools in your business including workflow and time tracking.
Can't scoping be done in a workflow tool?
And on the subject of workflow and time tracking, we were speaking with an agency CFO recently who asked us why scoping can’t just be done in their workflow tool.
The answer? Because scoping isn’t workflow. It informs and drives workflow – which is vital – but it’s not the same thing. Scoping focuses on what you’ll deliver and how. Workflow is quite simply about planning and tracking who will do it. Scoping draws the outline of the image while workflow provides the colouring in.
Really though, the answer is in the question – if agencies could use their workflow system for scoping, they would. As it is, they’re all still using Excel because workflow systems just don’t have that functionality.
Is it time to remove the ceiling created by selling time?
What’s more, we believe scoping is way more important than workflow. Done properly, scoping gives you a full picture of the outcome to be delivered and all the component parts. When a project is scoped clearly using the right tool, staff planning becomes inherent. If we had to choose between a system for better planning or one to track delivery, we’d choose better planning every time.
Some agencies have come full circle and decided that time sheets aren’t for them – not for cultural reasons anymore, but because nailing the scoping process means that time tracking becomes inconsequential. Marketing Week reported recently how S4 agency MediaMonks, “doesn’t use timesheets, so they couldn’t sell time even if they wanted to” instead, “they accept the risk of pricing based on outputs, knowing that if they get it wrong, they’ll apply the learnings next time.”
"...an ability to measure the business effectively will bring higher rewards..."
Whether you decide to make a radical shift away from time tracking or you believe that it’s still important to measure delivery, we respect both positions when it comes to workflow. Where we draw the line is better scoping from the outset – and we haven’t found an agency yet who’s already doing it better than they could with Scope. Toby Drummond from Ogilvy has the final word: “As an agile industry it’s incredibly difficult to activate tools that control a business workflow as we are not process driven. Whereas an ability to measure the business effectively will bring higher rewards as we can then adapt our processes quickly and easily to adjust to our client demands.”
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