By Peter Parks, Director Product Strategy
In the contingent workforce management and Vendor Management System (VMS) industry, we hear the word “enterprise” used a lot these days. And it has different meanings depending on the context.
The reason for its popularity is clear – the primary VMS target customer is a large, often multi-national enterprise and in order to appeal to their sense of size and strength VMS players identify themselves as providing “enterprise solutions”.
Mega corporations all manage their businesses on Enterprise Resource Planning (ERP) platforms. In the 1990’s, these companies made substantial transformative investments to implement ERP systems to run back office operations. This was a major architecture change from main frame and internal IT systems to a single vendor enterprise platform.
Today, major corporations would never entrust their critical business processes to niche, or boutique software packages. These companies invested tens to hundreds of millions in their ERP infrastructure, which delivers the technical foundation required to support the procurement, HR and financial activities required to run the business. And it is not a static foundation; it is forever evolving through regulatory changes and new market realities. The foundation consists of labyrinthine matrices of languages, taxes, wage and bill structures, overlapping hierarchies, mission-critical security and permission logic and workflows. This technical foundation is precisely what makes ERP platforms invaluable to large corporations, the same corporations who are ideal targets for VMS solutions.
The major ERP providers spend untold millions every year maintaining their systems, testing integrations across platforms and generally ensuring the safety of their customers’ data and their compliance to regulatory requirements. So, why would these companies, so rightfully concerned with compliance and security, be willing to entrust what is typically their single largest category of spend (services) to anything other than a true enterprise-class system, complete with that critical foundation?
Effectively managing services spend requires significant customization and in-house expertise that few companies possess. So going it alone is not a cost-competitive option. And since the expectation was that the multi-million dollar investments made in ERP infrastructure would support these businesses for the following two decades, new software capabilities need to be aligned as extensions to those investments.
Here comes the shameless self-promotion…
Provade VMS is the only truly enterprise-class SaaS VMS solution available today. (And it can, of course, be used enterprise-wide!) Built on the Oracle platform (not just running on an Oracle database), Provade brings to bear all of the elements of the enterprise foundation that are so critical to our customers and their security.
So, kick the tires and look under the hood. As you are evaluating your VMS options, ask providers what they mean when they say “enterprise.” Ask them about their architecture and security. Ask them how they stay up to date on all of the compliance and regulatory requirements. And get the clarity you need to make the best decision for your business.
Want to learn more? Click here for Jason Ezratty's discussion on ERP and VMS in CWS 30.
I recently consulted with several clients that needed assistance creating a contingent labor management business case to present to their internal executives and stakeholders. These clients were exploring a Vendor Management System (VMS) solution with the possible addition of a Managed Services Program (MSP) to track, manage and report on contingent labor utilization and spend.
In my experience, one of the most important and challenging aspects of preparing a good business case is articulating the problem statement.
Here are 10 key questions to use as a starting point to identify the challenges and opportunities as input to your contingent labor management business case:
- How much does our organization spend on contingent labor (temporary resources and SOW contractors)? Who is purchasing the services, where are they in the organization and what was the business need?
- What is our process for managing the contingent labor lifecycle (requisition to check)?
- Who is responsible for managing the contingent labor lifecycle and what are their responsibilities? How many resources are dedicated to the process?
- What technology supports our contingent labor process (requisition to check)? What applications are utilized internally for this process (HRIS, Identity Management, AP, Project Tracking, Procurement etc…) and how does data get input into these systems?
- How does our methodology vary for how to requisition, track and manage contingent labor across and within each Region/Business Unit?
- How do we optimize our spend and manage to cost savings targets?
- How do we benchmark rates to ensure we are paying at the market average? Do we have a process to hold suppliers to these rate targets?
- How do we measure and drive supplier performance, rate optimization and compliance?
- How do we manage and mitigate risks?
- How do we look at contingent labor utilization trends to assist with better forecasting?
Contingent labor is a complex category to manage with many stakeholders, goals and measures for success. Working together with your cross-functional team to build your problem statement and build your business case will help create alignment and set you up to succeed in your change effort.
Check back soon for strategies on how to quantify these impacts and build a cost savings story for your business case. Or, if you have already built your business case and would like input on evaluating your Vendor Management System (VMS) options, check out the Provade Evaluation Checklist here.
By Peter Parks, Director Product Strategy
In my last post, I discussed some of the reasons SOW spend is often a second-tier priority in contingent workforce programs. Here, I want to cover the opportunities companies have to apply best practices to their services spend.
Think about adding visibility and audit trails to competitive bidding among suppliers. Take that to the next level and allow suppliers to deliver innovative solutions that can save your organization time and money.
Most companies have limited or no visibility into how their SOWs are constructed. Project managers are pre-defining the deliverables, setting the price and selecting the supplier.
Imagine a program in which:
- Suppliers are vetted for their capabilities, certifications and pricing and tracked against SLAs.
- Your organization leverages a central supply base across multiple departments, operating companies and disciplines and by doing so you achieve volume discounts.
- You engage multiple suppliers on every bid and they know they are competing.
- You enable and encourage your project managers to negotiate.
- Project managers receive multiple proposals from each supplier, sharing best practices from their own customers – often your competitors – on how to best execute a project (a true best practice).
- Supplemental resources such as your procurement and legal departments are incorporated into the process at the points where they add essential value.
- You have a robust analytics engine that enables you to track negotiation, ensure SLAs are being met, track project progress and billing and identify misclassified resources.
Just getting spend into the system will continue to yield minimal returns for most programs. With proper planning, VMS users can repeat the revolution that has improved contingent workforce management and take savings to a level never before seen. How much are you leaving on the table?