We're excited to announce the availability of the fourth paper in our Compass Research Series on services procurement: The Managed Services Connection -- The Evolving Role of MSPs in Services Procurement. Co-authored with Ted Weyn and Kimberly Smokey of HCM Works, the research brief analyzes the rise and importance of managed services providers (MSPs) for both contingent and non-contingent services procurement, including SOW-type management engagements. The paper traces the evolution of the current services environment to help companies build a business case for using MSPs correctly. We examine MSP selection criteria, pricing models, business approaches, SOW involvement, and vendor managed system (VMS) selection. It also includes a shortlist of MSP providers and specialists to consider. Last, we offer key suggestions and takeaways on how to best leverage MSPs for companies considering rolling out or enhancing services procurement programs.
Among other criteria Spend Matters and HCM Works recommend companies consider in selecting how best to leverage MSPs, we jointly suggest in the paper that organizations:
- Select an MSP partner before a VMS, unless they are going to be the same.
- Ask yourself, what are we really outsourcing? Process management? Transactional management? Strategy & Compliance? Full BPO? They are all very different and the answer will dictate what type of MSP to consider.
- Identify a model, MSP and/or VMS that can grow beyond contingent labor. Contingent Labor MSP's have continued to demonstrate value. Why not leverage these approaches across the entire enterprise of indirect services?
One topic we investigate in the research brief is how MSPs can improve overall services procurement approaches, taking the burden off both procurement and HR. Here we suggest that under ideal circumstances, no two companies should evaluate an MSP in the same way, as no two organizations will ever have the exact same contingent and SOW spend profile. But it is possible to create a list of useful domains to consider during the evaluation process, dividing the effort into both procurement and HR focus areas. From a procurement (and contract management) perspective, key factors to consider include: supply risk, financial viability, SLA metrics/specifications, liquidated damages, insurance coverage, customer data protection processes, technology firewalls, record retention/data destruction processes, intellectual property, etc. HR areas are often "softer" in nature -- yet just as critical.
HR evaluation criteria should include: diversity program administration, drug policy, EEOC policy, recruiting practices, background check approaches, testing processes, etc. Second factors that organizations should consider in MSP evaluation include: category/industry specific requirements, geographic considerations, rules/regulation, company policy, technology/VMS solutions (and/or partnerships) and more deeply defined SLA and KPI metrics requirements.
If you're curious to learn more about how your organization can leverage MSPs to enhance your services procurement results and probing to learn more about evaluation criteria, pricing and overall approaches in the market, we promise that it will be worth the time to register and read the paper. To the best of our knowledge, we have not seen any other analysis of this area that take a deep, procurement-centric look at the evolving roll of MSPs (incidentally, the only traditional industry analyst firm outside of the staffing area that covers the subject, but on a somewhat high level, is Forrester). After reading the paper, we would welcome your feedback about whether or not this is a subject that we should continue to investigate in detail on a regular basis or whether our services procurement time is best spent focused on VMS platforms, category sourcing and management strategies.
- Jason Busch