What are the advantages to purchasing one of the latest Vendor Management System (VMS) platforms to support your flexible workforce sourcing, onboarding and management? And is it worth upgrading if you have an ageing VMS? Are there features you can’t live without? In this article we dive into the new machine-enabled capabilities of cloud born VMS platforms.
When the world was flat
Staffing was all so simple back in the era of turquoise bath sets and colorful domestic appliances. Back in the 1960’s and ’70’s, pretty much every company recruited a permanent workforce and staffing was about finding the best permanent hires. It was a period when freelancers were relatively rare unless you were in the press and publishing industry. And ‘temp’ did genuinely stand for temporary.
The Y2K bubble
Fast forward to the millennium—that moment when computer experts all expected the sky to fall in the moment the clock struck midnight—and the staffing industry had already shown signs of morphing into something different. Shortages in talent became visible in the tech industry as it sought to fight the millennium bug. Large corporations began to seek their talent from around the world, taking advantage of the new super-powerful desktop PCs that offered upwards to 20Mb of disk space (a brave new world).
2020 Pandemic—The event that changed the way business thinks about talent (among other things)
Now, twenty years on, I’m sure the doctors and nurses working long hours to serve the ever filling COVID-19 wards would be happy enough to be dealing with a computer bug that wasn’t trying its best to wipe out humanity. Yes, the healthcare industry too is short on talent, but today it can rely on a large pool of ‘temporary permanent’ contingent workers—and the numbers are growing. 2020 has become the pivotal year when the talent industry changed.
The digital platforms making flexible working possible
Visit almost any large business today and it’s a 40:60 chance that the person who greets you on reception has a name badge of the company you’re visiting but probably doesn’t work for them. What makes this possible are a few ‘perfect storm’ characteristics of the word of work in 2020, namely:
Here are three good reasons why your enterprise needs to think about its digital platforms:
1. The Internet and Mobile Computing supported willingly by search engines like Google and Bing, makes it possible for a world of workers to find job opportunities anywhere on the planet. According to April 2019 data from Statistica, the global mobile population amounted to 4 billion unique users.
2. The low-cost of international travel and expanding economic blocks operating common employment laws, have made emigration simpler (in fact more than 20 flights took off while you read this article—and that’s just from Atlanta’s Hartsfield-Jackson International Airport, the world’s busiest airport).
3. Fewer life-long job prospects have forced many individuals to entertain a life of gig and freelance contract work. In truth, most jobs don’t last a decade. According to research conducted by the U.S. Bureau of Labor Statistics in 2020, the median number of years that wage and salary workers had been with their current employer was 4.1 years.
4. The English language has become progressively more dominant as the language of business, opening doors to millions of people around the world to seek international work opportunities. The British Council suggests that English is spoken at a useful level by some 1.75 billion people worldwide—that’s one in every four.
For many, learning English is the golden ticket to an international career. In a 2012 survey by the Economist Intelligence Unit, nearly 70% of executives said their workforce will need to master English to realise corporate expansion plans, and a quarter said that more than 50% of their total workforce will need English ability.
5. New digital technologies have provided the glue to bind the job seekers, solvers and intermediaries together. The last decade has seen a mammoth shift in the number of digital technologies evolving and becoming democratized; all made possible thanks to the tech industries’ enduring thirst for profit through innovation. Examples include cloud computing, the Internet of Things, big data, blockchain, Robotic-Process-Automation, 3D visualisation, software robots, machine-learning and its bigger brother artificial intelligence.
Enter stage-left ‘VMS software’
The unlikely hero of the digital talent industry has become the humble Vendor Management System, or ‘VMS.’ Originally, the role and purpose of a VMS was to automation and bring governance over staffing suppliers.
When use of contractors and freelancers started to evolve in the early 2000’s it became increasingly challenging for larger companies to manage their supply-chain. The nature of the talent industry is that no single staffing vendor has exclusive access to the best talent. In short, if you want to find the best-fit-talent at the right time, price-tag and place, then you need to spread your net far and wide.
When Vendor Management Systems were invented, their role was to displace spreadsheets to improve the management of indirect staffing vendors. Now they have become talent portals for managing a flexible workforce.
Large enterprise found that the real-world impact was a large number of staffing agencies needed to be contracted at any one time to fulfil their talent needs. The humble spreadsheet proved itself to be ‘challenged’ by the demands being placed on it to record supplier rates, terms, insurances, candidates, payments, etc.—and the Vendor Management System was born.
The VMS from Y2K to 2020
Compare a new VMS platform born post the cloud computing revolution (i.e. 2010 onwards) to those products that aspired to displace spreadsheets back in the day, and it won’t surprise you they don’t comparable. While the VMS had humble origins, it’s grown to become a sophisticated beast, able to equip large enterprise with everything it needs to source, vet, manage and pay a contingent workforce.
Some of the differences you can expect to see:
Support for Direct Sourcing of talent
The assumption used to be that a VMS was wall about sourcing contingent workers from indirect staffing vendors. Today, there are many more ways to find talent. One of the latest is to equip businesses to leverage their social media presence to advertise jobs and projects directly. This can substantively reduce the cost of acquiring talent by removing vendor costs. According to the SIA’s “Workforce Solutions Buyer Survey 2019” report, 26% of U.S. companies use direct sourcing today and 41% plan to seriously consider it within the next two years. In one example given by Staffing Industry Analysts (SIA), one international investment bank, which had previously relied on agency supplied temporary workers for over 85 percent of its temporary hires, eventually took on more than 60 percent of the temporary hiring and 25 percent of full-time hires. This delivered a cost saving of over US$2.5 million.
Expanded contracting options
When contingent hires were taken on, the pre-Y2K assumption was that they’d be employed on a contract set across a specific hourly contract period or term. Today, companies want to get jobs done by the task, project, or hour. Supporting all of these options—and contract structures like gig-working micro-task management and Statement-of-Work (SoW) are assumed must-haves of any next-get VMS solution.
Adoption of a best-of-breed ethos
At one time, VMS solutions tried to be everything to everyone. Whenever software vendors came across a new requirement, they’d chase back to the office and try to code a better version in-house. In contrast, modern VMS solutions are happy to embrace ‘not made here’ SaaS platforms and tools that yield further value to their customers. Seamlessly integrating with these third party tools to make them more useful, not trying to displace them, has become the modus operandi of modern VMS solutions.
An effort to remove the human-in-the-loop
Adoption of software robots (so-called ‘Robotic Process Automation’), chat-bot, AI and machine learning technologies have broadened the choice of tools organizations can use to remove the human from back-office administrative processes. The assumption was that a VMS solution should equip roles like hiring managers, background check administrators and program managers, etc. to be more productive. Now the first question is, ‘Does the human need to be in the loop, or can we implement a machine-to-machine interchange of data?’ Factoring out human activities ‘designed-in’ to ageing VMS solutions is almost impossible to achieve economically. To remove the human-from-the-loop, you need to design a software platform that assumes ‘machine-first-processing’ is the go-to option.
A system for flexible workforce designed for you
While the list of features modern VMS solutions offer is impressive (if not a little overwhelming), they are essentially still doing the same job they always did—to find, vet, onboard, manage and pay contingent hires. What’s changed is the expectation of user organizations, the permanence of contingent talent as a component of talent strategies, the opportunities of digital technology to get jobs done better, and the environmental factors that are influencing how the world of work now works.
If you see a flexible workforce as a permanent component of your workforce strategy, then you will need a VMS. When you do, find out when it was originally created. If it’s pre-2010, then you risk missing out on system features designed to harness the cloud and built for the digital age.
Maybe the take-away lesson is—always read the label.
The digital tech that runs flexible working for businesses around the world.
Simplify is a technology company operating in the contingent workforce and service procurement market. Our savvy team of technologists create unique and agile solutions that enable human resource, procurement, and talent sourcing professionals to maximize profitability, optimize their non-employee labor programs, and gain visibility into their extended workforces. To find out more, get in touch.
About the Author
Ian Tomlin is a management consultant and writer on the subject of enterprise computing and organizational design. He serves on the SimplifyVMS Management Team. Ian has written several books on the subject of digital transformation, cloud computing, social operating systems, codeless applications development, business intelligence, data science, office security, customer data platforms, vendor management systems, Managed Service Provisioning (MSP), customer experience, and organizational design. He can be reached via LinkedIn or Twitter.