VMS Software Benefits : What Is The RoI?

Every organization with an indirect talent sourcing channel expects cashable dividends when they shift towards a formalized Vendor Management program aided by the use of a VMS. Those economies come from the following:

Bringing transparency over total indirect spend leading to greater scrutiny

Department managers get used to paying out for consultants to get jobs done as a buying behavior because it becomes business-as-usual.  Much of this activity goes unnoticed. Prior to any rationalization, program leaders will be unaware of the total spend going into contracted labor. VMS solutions create transparency to expose poor talent sourcing decisions.

Seeing where the money goes

Over time, departments and hiring managers find ways to pay for talent on other budgets because they can. For example, there’s likely to be a large contingent of ‘needs must’ temp labour spend to cover for maternity/paternity leave.  Even more money is no doubt going to consulting and outsourcing firms.  These suppliers will be delivering work via a fixed price contract, statement of work or ongoing supplier relationship. Organizations are always surprised when they discover the total cost of indirect spend.

Candidate Code Testing

Third-party online testing tools are revolutionizing code testing in the IT market to vet the promised qualities stated by candidates. These industry specific checks are increasing as Artificial Intelligence (‘AI’) installs new possibilities in pre-onboarding checks. Vendor Management Systems have a major role to play in simplifying access to these popular platforms by integrating these features into their platform and offering Single-Sign-On (SSO) to useful apps that organizations want to use.

Bias Avoidance

Unconscious bias happens when people either intentionally or unknowingly insert terms into documents (like Job Definitions and CVs) or recruitment processes. For example:

  • Requiring roles to be fully co-located or inflexible hours will rule specific groups out;
  • Sifting through CVs that contain potential triggers for bias such as the use of masculine terms;
  • Adoption of a policy to reject CVs with an unexplained gap in employment history that can impact on people from poorer backgrounds that are more likely to take time off to care for relatives;
  • The unknowing installation of interview, short-list or on-boarding bias where operational behaviours aren’t corrected where bias might exist.

Recruitment bias can introduce unintentional discrimination and result in poor decision-making. It’s become one of the hottest recruitment topics in an era where the ability to demonstrate fairness and parity of opportunity for people from all sorts of backgrounds is not only a legal requirement but also a major contributor to a positive brand reputation.

Vendor Management Systems serve to enforce positive behaviors in recruitment processes and therefore have a major role to play in the avoidance of recruitment bias, and yet very few solutions embrace explicit functionality to enforce positive behaviors.

Job Pricing Intelligence

VMS capabilities to aid organizations in gaining a rich appreciation of the rates they should be charging for the right skills to get their jobs done have moved to a new level with artificial intelligence-led solutions. A broad range of third-party ‘big data’ oriented platforms now harvest job category pricing data across regions to offer employers forensic pricing indicators they can use to make sure they pay the going rate for the talent they need in their area. Vendor Management Systems have a key role to play in bringing access to these platforms and seamlessly integrating them with job boards and recruitment tools to build a joined-up (and ‘rate-aware’) Total Talent Management (TTM) ecosystem for employers.

Vendor Risk Management and Compliance

With an increasingly regulated business environment, further exacerbated by changes to tax systems and the introduction of the EU’s GDPR, organisations are under pressure to ensure they don’t fall foul of employment law. Vendor Management Systems have a key role to play in governing data appropriately and enforcing vendor terms and conditions; honouring tax systems, data protection, data security and diversity policies.

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Exposing costly sourcing options

You will want to compare the performance of vendors to expose costly sourcing options because, otherwise, it’s impossible to see a level playing field for vendors.  We’ve seen staggering examples of consulting firms charging exorbitant fees for project costs, like overnight stays for their people, that rapidly scale up charges. Invariably, the hiring manager or department lead will quote ‘special factors’ to justify their reasoning to use a particular supplier (and their terms).  Use a VMS to look across the entire indirect channel and appreciate the true extent of variations in pay rates and terms.

Eradicating sunk back-office operational costs

Installing a VMS allows you to put your finger on the pulse of talent sourcing costs. Using ONE SYSTEM is much better than adopting a fragmented procurement approach because when processes are not visible and formalized, they result in a higher level of manual intervention. Vendor Management Systems bring formality and consistency to the lifecycle of contingent workforce recruitment providing opportunities for automation, thereby reducing back-office costs.

Reducing or removing recruitment costs

Vendor Management Systems and programs cut substantial costs out of budgets that senior managers previously wrote-off to ‘business-as-usual’ costs. Indeed, there are many areas of the recruitment lifecycle that can ‘build cost’ into operational behaviors whilst still going unnoticed.

Cutting unbudgeted overspend

As contracts run up to their expiry rate, vendors can be very cheeky and add in significant ‘out-of-contract’ uplifts for their consultants and contractors. These unexpected costs leave any unexpecting procurement team with the impossible choice of refusing the terms (and therefore upsetting the hiring manager) or accepting the rates and running over their budget.

Examples of avoidable costs include:

  1. Broadcasting opportunities to the market
  2. Paying over-the-odds for talent owing to a lack of understanding
  3. A myopic approach to ONE WAY OF SOURCING resulting from a lack of understanding or capability in go-to-market recruiting options
  4. Preventing unbudgeted costs resulting from poor background check procedures

Improving and normalizing supplier terms

 Vendors wil take huge liberties in payment terms as a lack of transparency across the indirect sourcing discipline enables vendors to take liberties.  This can result in extended credit lines for some.  Adopting normalizing payment terms cuts out significant unnecessary costs. Procurement chiefs use Vendor Management systems to enforce contracts of service, and payment terms and conditions.

Saving Management Time

The introduction of a Vendor Management program will result in a significant reduction in the amount of time hiring managers.
Examples of time-saving areas of VMS adoption include:
  • Reductions in time spent agreeing job descriptions;
  • Lower down-time committed to interviews and candidate selection;
  • Less time spent managing workers day-to-day activities, and;
  • Fulfilment of mundane admin tasks like signing off timesheets and managing escalations.