When Rogue Spend is Good: The Case for Online Work Platforms (Part 2)

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In the first part of this two-part series, I made the case of why some forms of rogue spend — in particular, spend on labor and services through online platforms — could actually be good for an organization and, eventually, for contingent workforce management and services procurement practitioners. Now it’s time to make good on my promise to add some suggestions about how to think about what is happening and how to approach it.

What is Happening?

Fundamentally, it’s change that you cannot stop. This wave of technology-driven change is just as inevitable as that from computers, mobile phones and online-shopping marketplaces, and it is now seeping into your organization and will eventually start flooding your bilges. What’s more, Generations Y and Z (born after 1977) are surfing this wave, and colonization of organizations by digital natives is well underway.

So come to grips with it, procurement people. Resistance is futile.

Look, I don’t want to waste your and my time and reinvent the wheel here. Back in the summer we published our Spend Matters PRO research brief “Online Work Intermediation Platforms: The Opportunities and Challenges in Mid-2016.” Now, most of you have probably not read that report, because you are not PRO subscribers (something which hopefully will change soon). And for those who have not, here is an excerpt that will provide some of the details on what is happening at this time:

  • Many viable online work intermediation platforms (WIPs) exist today and can deliver several benefits:
    • Expanded access to needed workforce/skills, low transaction costs (sometimes direct labor costs)
    • Fast response and cycle times (even on-demand)
    • Short duration projects/tasks
  • Platforms can provide new sources of and ways of engaging contingent workforce/skills range of categories, including
    • Software development
    • Software testing
    • Field tech services
    • Data science
    • Scientific expertise
    • Business consulting
    • Finance and accounting
    • Legal
    • Creative design
    • Marketing
    • Content creations/writing
    • Media (e.g., photographers)
    • Translation/transcription
    • Data processing
    • Personal/executive assistance
    • Customer services
    • Clerical
    • Logistics/warehouse
    • Short-shift/on-call work (e.g., in retail, events, etc.)
  • A continuum of sourcing/engagement models are available today, ranging across:
    • Source/engage specific workers/skills: Can be done through an open marketplace or with a set of services that help to ensure fit/quality
    • Source/contract for specific service outputs under a service agreement or SOW (services can be based on work of preselected teams or on work that is generated from “crowds”)
  • Delivery of workers/skills or services can occur:
    • Online, remotely
    • At some physical location
  • Geographic options are expanded. Past geographic constraints on arranging work or services are loosened in significant ways. For example, a business can engage online developers in different countries, without an outsourcing agreement, or a business can engage and dispatch field tech services worker any place there are workers affiliated with the platform or the business via the platform
  • Platforms are data gold mines. Unlike traditional means of engaging and consuming contingent workforce and services, platforms automatically record a vast range and amount of detailed data across engagements, creating awesome possibilities for spend and other data analytics

Now this is not to say that online work/services platforms are going to change your organization’s labor and services landscape completely. This is far from the case. But what is emerging and will be expanding are new digital direct sourcing and buying channels which will bring many benefits, including access to new untapped talent populations, more efficient ways of consuming work and services and more visibility and control.

And, oh, by the way, did I mention cost savings? Analysis from several sources indicates that cost savings from digitally-enabled direct sourcing can start around 25% and go up from there.

That said, it’s not just margaritas and cerveza on a beach in Los Cabos. There are dangers; there are risks. In particular, there are compliance risks.

Though not present in all cases, they are present— at this point — in many, if not most. While this is a much-discussed potential weakness in most direct platform buying to date (thank you Uber), there are ways to shore this up.  Markets in general do not reward the flat-footed.  Accordingly, among platform players, addressing compliance is now a work-in-progress (one to which procurement can actually contribute--helping to solve the problem and not just throw the baby out with the bath water).

So if you think — as some believe about climate change — that online platforms for sourcing and buying labor and services are not happening, then stand forewarned. And at the very least, roll up your leggings.

How to Approach It?

Always being the bad guy kind of sucks, don’t you think? Wouldn’t it be nice to be the good guy for a change? Well here’s your chance.

Adoption and usage are happening and will be expanding because increasing numbers of managers in the organization find it valuable, it helps them do their business, and they are not going to let it go.

So, first of all, your job is not to stop it: it is to fix it and help your organization maximize the value that comes with it. In fact, you cannot stop it; you can only go along for the ride. And when you do, it’s a lot easier than the alternative, and it gives you the opportunity to help to establish a more viable, trackable and less risky buying process and value-add for your organization.

Second, get involved with current consumers in a non-threatening way. I have seen that in some large organizations, procurement and consumers in the business are making beautiful music together. However, in most organizations, this is not the case — consumers in the business are submerged under the covers and furtively carrying on. In these cases, what is needed is rapprochement achieved by extending a helping hand, not a big stick.

Finally, other kinds of enablement you can provide include the following:

  • After granting amnesty, you have to assist with legalization (for example, helping with strategic sourcing, service agreements/contracts, ensuring compliance). There may also be ways to help by educating consumers in the business on good procurement hygiene and best practices
  • Perhaps the most important way of helping is with the technology the organization will use to integrate these new platform sources. These direct-sourcing platforms cannot be islands. But with the technology and engineering capabilities — though perhaps not quite yet most of the existing (VMS) provider solutions — at our disposal today, it is certainly feasible to bring it all together and integrate enterprise processes, systems and data, on the one hand, and also support direct sourcing by consumers in the business, on the other. This particular role — perhaps the most helpful of all — is crucial, the lynchpin of enablement and compliance. One way to think of it is being very similar to procurement’s role in establishing e-procurement solutions and supplier networks in goods procurement.  However, this time around, by contrast, there is organizational experience and knowledge as a foundation — and, of course, better technology

Being the good guy also has its own benefits, besides elevating your self-esteem. Those benefits come from the unprecedented, extensive data that platforms invariably capture and make available. For contingent workforce management and services procurement specialists, that kind of data should look very juicy and can be helpful in all sorts of ways. Taking that into consideration, this becomes a case wherein, by helping others, you can also help yourself.

In closing, do you now agree with the idea that some kinds of rogue spend can be good--in particular, spend on digitally-enabled labor and service platforms ? If your answer is yes, then do you want to be one of the good guys? White hats are waiting to be worn.

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