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In this guest post, Procurement Leaders invites IQNavigator's Brian Hoffmeyer to explain why he believes procurement's approach to selecting VMS providers needs fresh thinking.
Sometimes, the old school way of doing things is the best way: Handwritten thank you notes will always be better than an impersonal email; Classic Coke will always be better than New Coke; and the original actress that played Will Smith's aunt on the "Fresh Prince of Bel Air" will always be better than the new one they brought in after a contract dispute. Sometimes, however, the old way of doing things isn't better, it's just outdated. And the way many organizations select Managed Service Providers (MSP) and Vendor Management Systems (VMS) definitely needs a new approach.
For a variety of historical reasons, the conventional approach to implementing a contingent labor program has been for an organization to select a managed service provider first and then worry about their VMS later on. That approach made sense back in the day when the primary objective was managing temp labor. A few decades ago, temp labor management was pretty much the whole enchilada when you looked at "contingent labor" as a whole.
Organizations needed a system in place to manage that extension of their workforce, so the natural sequence was to first find an MSP that met their needs and that perhaps specialized in the type of temp labor required. Selecting a VMS came later when it was time to scale the program. That may have made sense in the 80s and 90s and maybe even the early 2000s, but things are very different today.
Today, and for the foreseeable future, the much bigger challenge is managing the rapid growth in services procurement spend. In contrast to years past, temp labor is a much smaller slice of the pie for most organizations. Procured services (particularly those associated with SOWs) are the far bigger challenge today. Given that major shift, organizations that take the MSP-first approach (the old school approach) are painting themselves into a corner and limiting their ability to address the SOW issue—especially since so many organizations defer to their chosen MSP for the VMS that should be deployed. That is essentially putting the cart before the horse and asking the cart to pull.
It's time for a new approach that emphasizes the importance of selecting the VMS first.
VMS technology should be selected before the selection process for an MSP charges ahead. This allows the organization to keep its focus on all of its services procurement strategies as the primary target and establish a technology platform strategy that effectively tackles that challenge. The process of selecting and implementing a VMS compels an organization to undertake a comprehensive services procurement strategy, which includes defining program governance in a clear way, establishing highly defined roles and responsibilities, and implementing supporting workflow technology.
Putting VMS first is critical because these processes are much more complex for procured services and SOW management than for temp labor due to a variety of factors. As just one example, think of how varied, inconsistent and sometimes chaotic the scopes are for procured services, then compare that to the neat and tidy, highly-defined job descriptions of temp labor.
There are a hundred similar reasons why it is imperative that your VMS is designed for complexity. When your selection of a VMS comes second, you could find yourself ill-equipped to manage SOW engagements. So it's time for conventional wisdom to make way for an approach that is better suited to the contingent labor challenges organizations actually face today and, to us, this means selecting the VMS first.
Brian Hoffmeyer is IQNavigator's VP product marketing and has been a key member of the company's product development and implementation team for nearly a decade. You can follow his thoughts on workforce management issues on his Twitter feed at @chezhoff.