VMS CEO Interview Series: Provade’s Edward Jackson
In the wake of SAP’s announced acquisition of Fieldglass, we thought it would be useful for our readers to hear a number of ideas and commentary straight from the leaders of some of the largest vendor management system (VMS) providers. We’ve asked the same questions of each company executive. Our first chat is with Provade’s Edward Jackson (EJ) and we feature his thoughts and commentary below.
EJ, thanks for kicking things off!
Spend Matters: Broadly speaking, how do you think the Fieldglass acquisition is most likely to impact customers and the broader sector?
EJ: It certainly adds more visibility and credibility to the space assuming the transaction amount as speculated by most (10X+ revenue). It’s also a sign that bigger players are taking note of the services procurement and VMS market. That said, I still think the space is significantly nascent in that 95 percent of corporate addressable spend is not going through a VMS tool yet ($140B processed for 2013 out of estimated $3.3T of spend). That’s a huge opportunity.
Spend Matters: Does it make sense to bring together other aspects of procurement, recruitment process outsourcing, human capital management, etc.? Or are they separate things?
EJ: It definitely makes sense. My belief is that some 50 percent of traditional pay (i.e., employee work) companies perform today should/will go to a third party. In fact, I believe the right workforce engagement model is one where 25 percent of the total workforce of the modern enterprise is truly the traditional employee' with the company logo on their check and the remainder of the workforce is outsourced either as temp (non-strategic), SOW (strategic but one time) or SLA/BPO (strategic but not core).
Spend Matters: What does the future of the VMS hold? What innovations -- from you guys, Fieldglass or others -- can we expect?
EJ: I think the current model needs to be reevaluated. Certainly, Fieldglass is a success to its investors/shareholders. I also think SAP will do just fine the next two years upselling Fieldglass to its existing customers. That said, VMS adoption to date is a modest success at best if you consider the $2B invested in the space over the past two decades and under 5 percent of the spend actually runs through such. So, the future to me is that the ideal model is still yet to be realized. And by ideal, I mean the model that gets 80 percent of the spend in throughput. The jury is still out on that and I would challenge that traditional VMS in status quo will be the end winning model.
Spend Matters: Do you think we'll see the rise of freelancer marketplace models remain separate, usurp or join forces with buyer-centric services procurement tools?
EJ: Great question and highly insightful. Yes, there will be a rise of freelancer market places. I would put this category as an immediate adjacent dynamic to VMS growth. I won’t go as far as to state that freelancer (online staffing as it is called in the industry) will necessarily replace VMS. However, I believe it may have a more rapid growth/mass adoption vis-à-vis VMS in the coming five years.
Spend Matters: If you were to start something brand new in this sector, what pain points would you target which are not being addressed today (or at least not as much as they should)?
EJ: If we were to start something new, we would focus on the supplier and how to help them. VMS is quite constrained to the (req to check) process. Some think that total talent management is the next wave, but it is fairly ambiguous what that means or that anyone in the enterprise really has the authority and ability to manage such. So, our thoughts are:
- The mid market has been left on the sidelines when it comes to VMS
- The supplier might actually be more important than the buyer
At least as a software vendor we speculate such. OK, OK, I have had one too many F2000 procurement contract discussions and I am jaded but, truly, there is merit in asking that question!
Spend Matters What are Provade's priorities throughout the remainder of 2014 and into 2015?
EJ: As for looking ahead, here’s our focus:
- Continued focus on Mobile – it’s where the users are going.
- Focusing and supporting the Oracle stack and customers - with Fieldglass becoming part of SAP/Ariba, that’s a good opportunity for us
- To continue in our position of strength
- New models (watch this space!)
Spend Matters would like to thank EJ for sharing his thoughts. Stay tuned as this interview series with VMS leaders continues!