Spend Matters recently caught up with a number of VMS providers on an informal basis to gauge recent growth in 2011 and to dig below the adoption and revenue numbers to surface what's behind the excellent growth last year. While we'll save some of the more specific observations for posts on individual providers, several elements appear to contribute to the positive momentum as a whole. Collectively, we believe that these dynamics will pave the way for a very strong 2012, despite challenges in Europe, which are likely to slow the general hiring of contingent workers as potential recession situations take hold.
Without further ado, here are a number of elements contributing to general VMS strength, adoption and growth rate that outstrips the general spend management sector (inclusive of eProcurement, e-invoicing, e-sourcing, etc.):
- Organizations that came online with VMS solutions earlier in 2011 or 2010 are finally beginning to scale volumes (and given revenues that are, at least 80-90% of the time by our informal metrics, tied to volume, are rising as a result of this growth)
- Companies are getting past the single functional silo as the predominate user of VMS solutions. Whereas in the past functions like IT or facilities might have been the dominant user of a toolset, organizational expansion is growing
- Procurement is getting more actively involved (not just from a reporting responsibility) and is bringing services procurement into the P2P fold, focusing on driving overall spend under management and realizing that often the largest untapped opportunities are in categories that previously did not flow through indirect (eProcurement) or direct purchasing systems
- Business and technical VMS Integration use cases (beyond just capturing spend to drive savings) for compliance purposes are playing an increasing role in driving companies to prioritize and mandate VMS usage across as large a portfolio of services spend they can capture
- SOW and project-based adoption is growing. Granted, it's growing haphazardly and can have tremendous variation between companies, but it's rising in general and larger organizations with select advanced services procurement roll-outs are putting exceptional numbers through their systems (eight, nine and even ten figures annually, when complex categories are counted)
Of course this list of five reasons just scratches the surface. We look forward to hearing your observations and taking a deeper dive on VMS and broader services procurement technology this year. In the meantime, check out our recent research in the area: