Looking for Justification for Lousy VMS Penetration (Part 2: Is There a Reason For This?)

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We recently shared some of the results of a multi-wave Spend Matters and the Institute Supply Management study exploring the state of services procurement technology adoption and best practices focused on contingent labor. To the best of our knowledge, the study was the widest one conducted on the topic to date with a sample size of more than 450 participants. A special thanks goes out to the Society for Human Resource Management (SHRM) that we worked with to drive participation in the second wave of the study research that took place earlier this year.

In the first post on the findings of our research, we explored the state of technology adoption specifically. We found that less that 50% of respondents were either using a specially designed solution from their MSP or a best-of-breed vendor management system (VMS) to manage contingent labor spending. The largest percentage of respondents are “kludging” an approach with ERP or e-procurement technology. This begs the question: Why?

We’ll start a list below on some of our hypotheses and hope others add to it. Chime in!

  • E-procurement vendors have done a good job marketing the services procurement capabilities of their solutions without backing it up with sufficient investment in product development to rival specialized solutions (Ariba was the first here and Coupa and others have followed) – resulting in customers biting on the capability and rolling out the solutions with limited scale
  • Most MSPs are not as strategic as consultancies at recommending optimal solutions in a manner that creates sustainable adoption outside of the immediate program charter itself; part of the challenge is that MSPs are not currently “selling” at the same level as consultancies advising on other areas of procurement technology within a company
  • The notion of supplier/staffing firm-funded models (still the dominant firm) limits the need for “skin in the game” upfront or on an ongoing basis to drive adoption. With suppliers most often paying the full fair to support the core VMS components, general adoption is slower than it should be (and adoption is often siloed within companies), and programs have a “fade” – almost a reverse ramp – to them after a period of time

What do you think? Post a comment or drop us a line.

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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