Contingent Workforce Management software in the guise of modern Vendor Management System (‘VMS’) platforms are evolving. If your organization doesn’t have a VMS, or your incumbent system was installed before 2012, then you may be missing out. Read this article to judge for yourself.


An Intuit report published in 2020 suggests that roughly 25-30 percent of the US workforce is currently contingent, and more than 80 percent of large corporations plan to grow their use of flexible workers. To do that ‘economically’ you require a software platform. That’s where a Vendor Management System comes in.

Since it’s early beginnings pre-Y2K the VMS software market has broadly doubled in size every 2-years, but all of the latest analysis from industry analysts suggests that upward curve is getting forever steeper.

Amid the COVID-19 crisis, the global market for Vendor Management Software estimated at US$5. 1 Billion in the year 2020, is projected to reach a revised size of US$11.5 Billion by 2027, growing at a CAGR of 12.5% over the period 2020-2027.

Vendor Management System platforms built their success on automating and underpinning hiring and contingent workforce management processes, like Procure-to-Pay, Req-to-Check, etc. They were mechanistic data processing platforms; and, for a decade, these systems have performed a crucial role for large enterprises by providing the mechanical ‘gears and switches’ they needed to capitalize on indirect staffing sources. But that was then. In the new decade, workforce management is more virtual, more fragmented, more direct.

Against this backdrop of a new normal lies the fear of change and the challenges of dysfunctional decisioning structures of organizations resulting from operating in silos. Those already using some form of VMS, wonder if the step-up to a new generation of technology is really worth it.


The three constituent parts of a VMS become four


Originally a VMS existed to manage the activities of contingent workforce staffing vendors; to harmonize channels, cut excess costs, expose naughty billing practices, and make sure vendors took their responsibilities as Employers-of-Record seriously. Moving from spreadsheets to a VMS in the late 1990’s achieved the added benefit of streamlined procure-to-pay processes, and (fingers crossed) with tight integration to back-office HR and Financial systems. This then was the first major construct of what we now see today as a state-of-the-art VMS.


The next phase of the evolution of the VMS happened when VMS platforms ‘moved to the cloud.’ This happened in or around 2012 with the launch of mass cloud hosting platforms like AWS, Microsoft Azure and Google Cloud that served to democratize cloud computing deployments for businesses everywhere.

This step-up in digital technology possibilities coincided with growing demands from organizations to gain greater control and more economies from their contingent workforce management programs.

Systems began to develop enriched features such as simpler publishing of jobs, more effective candidate vetting, smarter ways of managing and segmenting vendor channels, improved reporting and data visualisation tools, more powerful timesheet and billing capabilities. More noticeably, platforms began to become mobil-first, recognising that the majority of contingent workers were processing data via their smartphones and tablet devices. While enhancements were significant, they were more ‘evolution, not revolution’.


The increasing popularity of gig working—further spurred on by the global pandemic that resulted in a sudden migration to home working—encouraged more companies to resource work via micro-task portals, employ contractual devices like Statement-of-Work contracts, and leverage social media to open up more channels to talent sources. These additional routes to talent have been added to the VMS feature-set to allow organizations to serve-themselves with the talent they need and further democratize talent sourcing.


By 2018, many practitioners in the workforce management industry could’ve been forgiven for thinking the VMS had reached its quintessential form. That was, of course, before technologists started talking about Hyper-Automation in 2019.

Registering the potential of the latest crop of digital technologies to ramp up the pace of automation in organizational data processing platforms—such as artificial intelligence, chatbots, blockchain, virtual reality and 3D visualisation—the very edge of ‘cutting edge’ VMS technology comes in the form of VMS solutions that adopt a hub and spoke cloud architecture.

This means any new best-of-breed app or technology building block can be swiftly conjoined to the existing talent ecosystem of a business thanks to the ‘glue ware-like’ characteristics of the VMS. Instead of trying to be all things to all organizations, the VMS model has evolved to become the switch-gear of a modern business, to envelope any new best-fit workforce management tools into a coherent digital operating landscape.


Some of the benefits of adopting a modern VMS include:

  • Know where the money goes with improved reporting transparency
  • Improve the quality of candidates through online testing
  • Optimize candidate hiring rates by leveraging market intelligence
  • Reduce compliance risk with AI-driven background and IC-compliance checks
  • Expose costly sourcing options by comparing job category-based market rates
  • Eradicate sunk back-office operational costs through human-in-the-loop automation
  • Reduce or remove recruitment costs
  • Cut unbudgeted overspend by managing contract financing and avoiding costly run-on contracts
  • Broadcasting opportunities to a wider catchment market to maximize the quality of applicants
  • Reduce or remove bias from hiring processes
  • Save on management time

Final thoughts

The humble VMS continues to be the technology stack used to supply the gears and levers that streamline unavoidable back-office administrative processes that underpin contingent workforce hiring, working with staffing vendors, and managing day-to-day workforce operations. But, today they go further than that. They enrich the supply of a modern flexible workforce, by unlocking new channels to talent. They encourage integrity in operational behaviors and polices. And they equip organizations to manage and optimize their resourcing plans against to ever-changing needs.

Can any mid-sized or fast growing organization hope to live without a VMS? Probably. To do so economically in order to stay relevant and competitive in the markets they serve? Probably not.

About SimplifyVMS

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.