There appears to be more than anecdotal evidence that the VMS penetration rate curve has been more or less flat for a number of years now. This could suggest a number of possible causes, including:
- Tapping out the market of companies with sufficiently mature contingent workforce program
- Approaching the lower bound on company and spend size to justify VMS
- Uphill sales outside of North America and Europe
- Shortcomings in VMS solutions that have become more evident over time
These are just some plausible ideas about causes and could be way off. (We have no analytical support.) But the flat penetration rate curve seems better substantiated.
In his recent article, Digital Talent Frontier of 2016, my Silicon Valley colleague and notable staffing industry innovator Sunil Bagai recently coined the apt term “VMS 3.0.” In 2015 and more recently, we’ve started to see some stirrings among the top (spend-based) tier of VMS providers.
Could these be indications of an impending renaissance of VMS?
Most recently — and what partly prompted this article — IQN announced that it has achieved some major strategic milestones in 2015 and has big plans for 2016, including releasing new platform extensions, such as:
- A new workforce management intelligence suite (powered by IQN Atom, the company’s artificial intelligence analytics engine)
- A new talent pools solution that will provide access to prescreened pools of workers who are available directly to customers
- A new talent searching solution that will streamline developing searches for talent identifying the right job titles that match the right skillsets
In 2016, IQN seems well positioned to continue to execute its open platform and partner integration ecosystem strategy. It appears to us that IQN’s strategy of becoming more of a non-employee workforce sourcing and talent acquisition and engagement platform — not simply a vendor management system — encompasses enabling the full lifecycle of engaging non-employee workforce from sourcing to onboarding (and of course, as previously all the way through offboarding, though in the future, workers could be off-boarded into talent pools).
Beeline has already been making highly significant, innovative moves, starting with its unprecedented acquisition of a freelancer management system (FMS), OnForce, in 2014 and then, in mid-2015, its launch of OnForce Sourcing as a VMS plugin. You can read Beeline’s further explanation of OnForce Sourcing on Spend Matters site in How to Source Skilled Talent Directly through Your VMS. We’re expecting to be seeing more innovative developments from Beeline in 2016 as it continues to expand its own partner network and direct sourcing ecosystem.
Fieldglass, after its acquisition by SAP, in 2014, appears to be on a slightly different journey as it continues to become more integrated into the enormous SAP ecosystem. Fieldglass has shown considerable interest in addressing customer requirements for self-sourcing of independent workers, but it is also clearly emphasizing its ongoing integration with SuccessFactors and perhaps even more importantly its integration with SAP’s e-procurement solution, Ariba, where it may very well become the main services procurement solution in the Ariba procurement suite. As such, Fieldglass’ hallmark new moves involve addressing the gradual emergence of total talent management (TTM) and the also unprecedented integration of a VMS into an e-procurement solution. (Note: In addition to the first mentioned, the latter has been extensively analyzed in several briefs, including SAP and Fieldglass – Where Does Services Procurement Fit into a Morphing Cloud?)
In addition to these sorts of developments occurring in the largest three providers, we can see that there are also stirrings occurring in other providers, including DCR, Pro Unlimited, ZeroChaos and others to be discussed further on another day, perhaps.
Now back to the original question: Are we seeing indications of an impending VMS renaissance? We think we are, at least for some VMS players — and, in fact, for some the renaissance is already underway. For all that is going on in the contingent workforce space at this time, driven by new technology and the need for more cost-effective and up-to-date ways of engaging and procuring the non-employee workforce, such changes and developments are probably happening none too soon.
Perhaps this all raises another question: What will become of the VMS players that don’t develop and evolve in response to the changing environment? One future scenario is probably clear enough.