Take control of your temporary workforce with a VMS.
By Debbie Bolla
Temporary workers are no longer the redheaded stepchildren of the workforce. They are, perhaps, driving the future of work forward. Consider these statistics. Aberdeen Group’s latest research finds that 26 percent of an average organization’s staff is considered contingent, contract, or temporary. The U.S. Bureau of Labor Statistics reports that temporary workers—nearly 500,000—accounted for 91 percent of total job growth between June 2009 and June 2011.
With such great changes in the dynamics of the workforce during the last few years, organizations have been forced to get their ducks in a row for managing temporary workers effectively, and developing strategies around this business driver. One solution that companies have turned to is a vendor management system (VMS). This technology enables HR executives to gain visibility on the suppliers, spend, and productivity of workers of their contingent labor program.
Aberdeen’s new report, VMS Technology and the Next Generation of Contingent Workforce Management, has some influential findings. Organizations are leveraging third-party assistance to take command of their contingent labor management. In fact, 89 percent of best-in-class organizations use a vendor management system. Chris Dwyer, the author of the report, notes that organizations “are looking to third parties to drive efficiencies, improve quality, and increase their visibility into contingent labor processes, spending, and suppliers.”
So what does a VMS deliver? According to Aberdeen’s research, companies can expect improved onboarding and off-boarding of temporary workers, increased compliance, transparency on spend management, and assistance in future forecasting of need for contingent labor. Dwyer says, “Automated capabilities can allow users to track the effectiveness of temporary workers, contracts and services. This information can be leveraged in the future when stakeholders are engaging these same services or workers for imminent projects or tasks.”
And many of today’s VMSs go much further than that. “The modern VMS incorporates elements of the social enterprise, recognizing that companies interact with workers and vendors in many different ways,” explains Fieldglass CEO Jai Shekhawat. “A top VMS also has to support the complexities of procuring workers on a global scale, accommodating local laws and languages all over the world. It should be extremely easy to use for lay users, and its complexity is concealed behind a smooth user interface.”
Mobile functionality is also becoming part of the VMS lifecycle, notes Edward Jackson, president of Provade. Smartphones and tablets have provided a platform for managers and workers to stay connected 24/7. Provade Mobile delivers an end-to-end VMS for HR and procurement managers to be able to create requisitions, review candidates, approve expenses, and access reports on all while on the go.
“Mobility has led to significant increases in responsiveness for VMS users, optimizing productivity, and reducing overall cycle times in contingent workforce management,” says Peter Parks, vice president of product management for Provade. “Mobile line-of-business applications promote greater efficiency and performance, and enable workers to stay on top of time-sensitive tasks as they move throughout their workday.”
The Analytics Game Change
Analytics are also becoming a game-changer for VMS technology. “Analytics are consistently at the root of the intent to buy, and are becoming the ultimate purchase decision,” reports Holly Erlichman, senior vice president of global strategic services for Pontoon.
Dwyer—and his research—agree. “Through automated dashboards and business intelligence capabilities, VMS solutions enable and enhance analytical capabilities for organizations looking to improve intelligence into their contract value,” he says. According to Aberdeen’s report, VMS users are 76 percent more likely than those who don’t have the technology to be able to configure contingent workforce data for analysis.
“Analytics are the most important,” says Jackson. “To have a world-class program, business intelligence is the engine to program management and business optimization. Additionally, embedded analytics allow for better decision making at the transaction level that can also dramatically drive program savings and effectiveness.”
Traditional metrics from a VMS are finance-driven: cost control, cycle time, and compliance. Measurements on any given analytics dashboard are numerous and can provide a pretty complete picture of the contingent labor landscape.
Some typical key performance indicators include:
• Total department spend
• Cost savings achieved through competitive bidding
• Actual versus budgeted spend by department
• Headcount by department and location
• Analysis of contractor costs versus full-time employees
• Contractor time and expense reports
• Performance of candidates
• Lifecycle of candidates
Predictive analytics are now the name of the game. What is being done with that data is the question. “Analytics are now broader than category optimization and are being used to feed intelligence into strategic workforce planning,” says Peoplefluent Senior Vice President Thomas Tisdale. “In other words, analytics don’t just help manage the process but strategically align with business goals.”
In fact, according to Aberdeen’s report, VMS users are 67 percent more likely to track ongoing and forecasted trends within their contingent workforce program than non-VMS users. VMS technology allows companies to achieve both organizational and strategic goals. Aberdeen reports that VMS users experience a 70 percent higher increase in total organizational efficiency as a direct result of improving contingent labor program attributes than companies lacking a solution, and 31 percent experienced cost savings on temporary work spend.
Snapshot of the Industry
A vendor management solution is an effective way to gain transparency and visibility around contingent labor planning. Here are a few solutions if your organization is considering implementing a program:
Is There VMS Without MSP?
Managed services programs (MSP) and vendor management systems (VMS) typically go hand-in-hand. Yes, you can have one without the other, but together, they are a powerful source to manage contingent staffing.
“Technology is necessary because it automates the process and provides measurement of key performance indicators of service providers,” notes Peoplefluent’s Tisdale.
The reach and size of the contingent labor program—especially if global—plays a large role. “A major, global MSP program might have anywhere between 100 and 150 tasks that occur on a quarterly, or even monthly, basis,” notes Fieldglass’s Shekhawat. “That said, almost every MSP would require some sort of technology component in order to manage vendors effectively.”
Savvy practitioners are bringing more to the table when establishing a program for temporary labor. “In recent years, we have seen an increased separation of VMS and MSP during the selection process,” said Pontoon’s Erlichman. “The MSP provides experience and expertise in VMS deployment that can be invaluable to establishing a strong program.”
Provade’s Jackson notes that these sophisticated buyers are taking more control of their outsourcing engagements. “While we see most MSP contracts having VMS technology in place, the customer often is reserving the right to assign technology to another MSP, should they cancel the contract.”
MSP providers partnering or offering their own VMS technology include Staff Management | SMX; Randstad Sourceright; Kelly OCG; Allegis Group Services; Pontoon; Manpower; Guidant Group; Bartech Group; Advantage xPO; Agile 1; Yoh; and ZeroChaos, among others.
Learn more about managing contingent labor and find out what MSP providers earned a spot on the 2013 MSP Baker’s Dozen at the hrotodayforum.com, April 30 – May 2 in Philadephia, PA.