Tied to Old Ways, Penetration of VMS Solutions Remains Lousy (Part 1: Why?)


Spend Matters is relatively new at diving deep into the world of services procurement technology. We have been meaning to cover it in-depth all along, and now, with fewer resource constraints, we have a great opportunity to expand our research, analysis and blog even more on the topic. Thanks to the ramping input and coverage by Contributing Analyst Andrew Karpie, as well as the continued work from Pierre Mitchell, Peter Smith (who wrote a book on the subject) and myself, we’ve reached the point where we can say “we’re getting there.”

But services procurement technology is a massive area, and one that we (and others) have only paid cursory attention to. Those who participate actively in the ecosystem, either through membership organizations and events providers like Staffing Industry Analysts or VMS Accelerators, tend to be a rather self-selecting bunch. But when you ask the broader procurement ecosystem what their precise adoption levels are in the area, the state of adoption looks lousy.

Spend Matters and the Institute for Supply Management (ISM) recently wrapped up an over 6-month-long study with over 450 respondents voicing their opinion about the opportunities and challenges of managing services procurement. The study was carried out in 2 waves – one in 2014 and one in 2015, the latter with the support of the Society for Human Resource Management.

On a recent webinar, Pierre Mitchell and ISM’s Paul Lee shared the results of the first wave of findings. One of the first questions we asked participants was what types of technology they were using to manage services spend. Coming in first (at 35%) was ERP or e-procurement application/suite that is adapted to support contingent labor services procurement.

The second most-used approach was “homegrown solutions.” Twenty percent said they used their MSP’s proprietary vendor management system (VMS) and 13% a generic “services procurement application.” Only 22% used a standalone best-of-breed VMS, which was either funded via a MSP, staffing/supplier paid model (15%) or funded by the organization itself (8%).

Without mincing words, these numbers for best-of-breed solution adoption is pathetic, especially considering that data was for respondents who provided some type of response to this question (so the adoption given the broader sample size is likely even lower).

This begs the question: Why? Stay tuned as we offer up some thoughts on the topic.

Download the results (and our analysis) from the first wave of this research conducted in 2014 here: Applying Supply Chain Rigor to Contingent Workforce Management

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