Peter Parks, Director Product Strategy
At the 2010 CWS Summit, we heard from large, blue-chip companies on panels that a ‘big bang’ approach to implementing a contingent workforce strategy is best. But based on my interaction with people every day in the field, it is clear that this philosophy has yet to work its way into the mainstream of organizations considering implementing VMS and/or MSP programs.
Based on my experience, here are some of the factors that often influence customers’ decisions on which route to take.
Integrations Overpromised and Under Delivered
Some companies aim to get all spend into the program/solution in phase one and to undertake system integrations in a second phase. Reasons for this approach can include an immovable implementation deadline, highly complex integrations, or a shifting customer IT infrastructure.
There are certainly times that this approach is wise, but I have seen it used because of integration shortcomings on the part of the VMS. Nearly all VMS solutions are niche solutions, built from the ground up by the provider. This saddles the VMS (and the customer) with a high degree of effort to deliver quality, robust integrations in a timely fashion, leaving the customer with a less-than-complete solution until the integrations can be completed. It also introduces risk for the VMS/MSP because a non-integrated solution will not produce the anticipated returns that a properly integrated one would. Add to this the increased cost of integration maintenance and uneasiness about integrating a niche solution becomes more understandable.
Ownership without Authority
VMS/MSP programs are often implemented with little or weak executive sponsorship. Procurement, HR and IT are often tasked with reducing costs, enhancing process, rationalizing the supply base or driving compliance and wisely turn to a VMS/MSP program to aid in the pursuit of these goals. Whether it is because of these departments’ failure to articulate the value of their approach, or failure of executives to appreciate the potential for improvement that can come with a well-executed program, the departments can be left to deploy the program throughout the company without top-down support. In this case a phased approach is often used, getting buy-in and results in a select department or labor category, and then using this as the business case for the expansion of the program. With proper executive sponsorship this barrier to a full implementation can be removed and immediate, enterprise-wide benefit can be achieved.
So Many Projects, So Little Time
Competing initiatives can drive program sponsors toward a phased implementation. There may be the perception that a VMS/MSP implementation will demand significant internal resources that may be dedicated to other important projects, or are just fully booked with their day jobs. If you find yourself in this situation, I would suggest that you are not sufficiently prepared for a proper implementation, phased or otherwise, or that the MSP has performed insufficient preparation and is not shouldering the appropriate degree of the workload. A well-executed implementation should install a program that will make the company’s process more efficient, thereby enhancing their ability to concentrate on core competencies. With the possible exception of customer technical resources needed for a truly custom integration, other initiatives within the customer generally should not impede the VMS/MSP implementation.
Change is Good – a Little at a Time
The phrase “change management” can invoke bad memories and often makes the list of considerations when making the big bang / phased decision. While change management is critical, and often not executed well in one-off internal projects, if done properly within a VMS/MSP implementation it should be less impactful than customers anticipate. This is because the VMS and MSP have performed dozens of implementations across a variety of verticals and geographies and therefore have well-tested change management plans. Unlike a one-time implementation in which the customer must build anew a relevant and complete communication plan, training, etc. there are proven templates for VMS/MSP implementations that require fine tuning rather than building from scratch.
It’s Different Over There
Multinationals, particularly US-based companies, often pursue a phased approach to VMS implementation. Within the country of origin a big bang may be undertaken, but prudence sometimes dictates tackling each country separately. In this way, standards and best practices can be established and significant savings and improvement produced because the home country is typically the biggest consumer of services. When there is one customer team responsible for the entire global deployment, this approach may be essential to success.
These are just some of the reasons I have seen organizations choose a phased approach to their VMS/MSP implementation. As outlined above, each of these reasons can be traced back to:
- Incomplete or improper planning on the part of the customer and/or MSP
- Weaknesses in the VMS solution as it relates to global requirements or integrations
So… if you can overcome these deployment challenges, would you go big or use a phased approach to VMS implementation?
If you are like most procurement and finance leaders, a new calendar and budget year also brings new cost savings targets.
Over on spendmatters.com, Jason Busch recently posted sound advice for driving cost reductions out of complex categories, including contingent labor. If you want to learn more about how to save on contingent labor and services (SOW, outsourced providers) spend, read on for target savings areas.
Tackling unmanaged services spend can yield substantial savings results. In fact, our customers generally realize 10-20% savings when implementing a Vendor Management System and Managed Service Provider (VMS and MSP) solution to manage their contingent workforce. (For industry definitions, click here.)
So how do companies save 10-20%? We benchmarked our customer base and outlined areas where they have realized cost savings in services procurement. Here are the top eight savings targets for your contingent workforce program:
- Time is money. How much time does your central team spend trying to aggregate and analyze spend data on contractors and contingent workers? How much time do your end users spend working with suppliers and processing transactions?
- Supplier network. How many staffing suppliers do you use across your organization? Do they compete on requisitions to deliver the best talent at the best cost?
- Bill rate management. Are your labor bill rates aligned with the market? How effectively do you hold your suppliers accountable for delivering to contractual commitments?
- Invoicing. How many invoices do your process? How much time do you spend reviewing, approving, and reconciling invoices for staffing and services?
- Consultants. Are you correctly classifying workers to mitigate risks? Are you capturing department spend on consultants, projects, and SOWs? Are you getting the best resources for the best price and managing to agreed-upon milestones?
- Rogue spend. Are hiring managers using approved suppliers? How do you ensure rate consistency for all services procured in your organization?
- Supplier performance. How are your suppliers delivering against their commitments? How can you hold them accountable for their performance?
- Forest for the trees. How do you analyze your spend across the entire services category throughout your organization? Are you driving continuous improvements in performance, savings, and risk management in your contingent workforce program?
There are many factors to consider when developing cost savings targets specifically for your company. But this list should help in narrowing down the target areas for consideration.
I love this stuff… so feel free to leave a comment or email email@example.com if you would like more information or support in building a business case for your organization.