In this article, we examine how a modern vendor management app can improve the performance of your indirect staffing vendor management program.

Every business needs a vendor management app to thrive in the gig economy

Take yourself back a decade. Most companies assumed the best way to get jobs done was to employ someone to do it. A great deal has changed since then—artificial intelligence, the trend towards the use of software robots (often described as ‘Robotic Process Automation’), and not forgetting the rise of the Gig Economy.

We see today headlines that tell the story of a growing gig working culture; that every third person you meet has a side hustle, the pace of baby boomer exits from the business world is accelerating, more of us want to work from home at least twice a week, and the latest generations of workers, the millennials and Gen-Z, are not keen to replace the baby boomers on the treadmill of office work-life. Millennials have seen first-hand that corporate loyalty doesn’t necessarily bring rewards or even long term security in today’s economic environment. They want a different deal, one that focuses on well-being, personal development, a role that allows them to use their social media tools to always stay connected with friends, and have a say in the direction of the employer they serve.

To harness this new gig workforce, the instrumentation used to source and manage workers hired on-demand needs to change. While the talent technology domain is a developing feast, the start point that every business needs to support its talent strategy is the right Vendor Management System (VMS); known to represent the current state-of-the-art. But dig into the detail and you suddenly realize that not every VMS is the same.

All vendor management apps  begin in the same place, but end up somewhere else

The purpose of your vendor management app is to manage the indirect staffing supply chain and, as the term suggests, its primary role is to manage vendors and the hires they source. Unlike other forms of software, a VMS serves many departments—Human Resources, Finance, Procurement, third-party suppliers, etc.—and serves a broad gamut of stakeholder roles including hiring managers, candidates and contractors.

The natural consequence of having to serve so many stakeholder groups is that VMS system architects face a thankless task of trying to please everyone. But that’s not how software development works. Almost inevitably, as vendor management apps mature, demands from the loudest stakeholder audience come to dominate.

In the case of some of the best-known vendor management apps, this organic evolutionary path is further influenced by acquisitions and mergers. When SAP bought FieldGlass, industry watchers saw a drift of FieldGlass features away from the cutting edge and more towards the procurement function, where SAP dominates. And with its focus on Spend Management, Coupa’s VMS product development is a similar story. Similarly, the recent acquisition of VMS vendor VINDLY by HRM provider Workdayhas got market analysts predicting a shift of the VINDLY product suite focal point towards HR needs.

Finding the right VMS for your business begins by knowing what you’re asking of it

No organization is a greenfield when it comes to enterprise IT. Inevitably, the systems choices made in the past influence the next successive purchase. Therefore, for an organization committed to SAP will inevitably lean towards SAP FieldGlass. It also means a VMS procurement driven by the procurement team is more likely to find the Coupa and FieldGlass VMS offerings more inviting at first glance; attracted as they will be by the spend management legacy and strengths of these solutions for procurement teams. But these knee-jerk instincts might fall short of an effective procurement strategy.

The best way to select a vendor management app is to adopt a well-rounded view of how the organization as a whole can benefit from software to manage hiring. The shadow of that review should stretch way beyond any given department or stakeholder group.

Your first step should be to round out your talent strategy ambitions

For an organization committed to getting talent sourcing fit for purpose in the gig economy, the scope of VMS functionality must steer beyond the needs of siloed HR and procurement ambitions.

Talent strategies now must combine full-time and contracted workers. The best way to do this is to start at the ‘other end’ of the problem, by dissecting the list of jobs to be done and working out the best way—be it human, machine, digital marketplace or outsourced supplier—to get the job done. Such an approach requires ONE decision making authority and process, which is why talent practitioners are thinking in terms of Total Talent Management (‘TTM’) teams and strategies led by a blend of HR and procurement roles.

Having done this work, you’re going to find a large number of tasks can today be performed through micro-task portals, or by creating Statement of Work contracts to outsource projects in their entirety. A further chunk of jobs will be best served by sourcing on-demand talent, and by far the cheapest and most effective way to achieve this is through a Direct Sourcing approach. Surprisingly, remarkably few legacy vendor management apps offer all these options out of the box (and that’s partly because their R&D roadmaps have been side-tracked to focus on HR and procurement priorities!).

You need to check under the hood to find best VMS

One of the more fundamental characteristics of the latest tranche of Vendor Management tools (that’s well hidden) lies in the move by some to cloud glueware architectures. In the old model of software architecture, VMS vendors would create a Software-as-a-Service (SaaS) app. These stand-alone apps often took years to configure and embed into business systems and processes. In contrast, the new glueware architectures of modern private cloud VMS solutions are formed around a plug-and-play ethos. Such architectures make data integration with third-party systems simpler. Additionally, best of breed SaaS tools—for candidate vetting, market-rate insights, right to work credentials checks, etc.,—can be more easily ‘glued in.’