With Flex, SAP Fieldglass Targets Barriers to Middle-Market VMS Adoption

SAP Fieldglass announced last week plans to release a new contingent workforce management solution for medium-sized businesses, taking aim at a market segment historically beyond the reach of VMS providers.

The solution, called SAP Fieldglass Flex, is a cloud-based tool designed to help organizations source, hire and manage external labor. Procurement groups could expect to use it to control costs, comply with contracted rates and gain visibility into detailed reporting and real-time data, according to the company’s website.

The release addresses two critical but underserved aspects of the middle-market. While companies are increasingly relying on freelancers and independent contractors as ways to drive business growth, the vendor management systems typically used to mitigate the complexities associated with contingent workers have been unaffordable for medium-sized companies or required onerous implementation.

"The dexterity offered by the external workforce plays a critical role in the growth of medium-sized businesses in the digital economy," SAP Fieldglass President Rob Brimm said in a press release. "With SAP Fieldglass Flex, mid-sized organizations now have a simple, best-in-class solution to help find, engage and manage external workers."   

The Untapped Middle

The criticality of middle-market companies is difficult to ignore. Despite by one measure comprising only 1% of the total number of commercially active firms in the U.S., they employ 53 million workers and contribute $9.3 trillion to the economy, according to according to the Middle Market Power Index from American Express and Dun & Bradstreet.

Middle market companies, defined as firms that have between $10 million and $999 million in revenue, also face different challenges when considering how to manage their contingent workforce.

Access to necessary technology is one noteworthy problem. Understanding the complex ecosystems of enterprise software, containing costs for new solutions and lacking the more robust IT support of larger companies has limited the reach of the VMS with these prospects, despite their potential usefulness.

What’s different about Flex is its emphasis on immediacy. The provider says the solution is “ready to use,” deploying a “wizard-based setup process” that allows companies to roll it out quickly and independently. Such features would seem to address for the first time a major barrier to VMS proliferation and adoption.

VMS Ecosystem

From a business perspective, Flex is also the logical and expected child of a fruitful marriage between SAP and Fieldglass.

SAP has said it maintains a customer base of some 250,000 small and mid-sized businesses, presumably served by the SAP cloud platform. By using SAP’s pre-existing technical infrastructure, Fieldglass has the opportunity to deliver Flex to a ready-made market.

“With Flex, Fieldglass is pursuing a market opportunity that has been much thought about in the VMS world, but not acted upon in any material way,” said Andrew Karpie, research director for services and labor procurement at Spend Matters. “One has to believe that were it not for SAP’s channel to a large number of SMBs, this move would probably not have been made were Fieldglass on its own.”  

The recently announced merger of Beeline and IQNavigtor — which Spend Matters covered extensively last week, including a transaction/valuation analysis and a brief offering customer, prospect and partner recommendations — will also affect Fieldglass’ prospects in this new market, although not in the near future, Karpie noted.

“Fieldglass will certainly have first mover advantage for some time, especially with the merger of Beeline and IQN, which are bound to have other priorities for a while. Still, being a first mover does not always lead to market dominance: young, fast followers (think of Microsoft, IBM and MSDOS) are often in a position to build a better mousetrap, address a market with more agility and exploit the shortcomings of incumbents.

“Because Flex is a simplified platform, it may not be that hard for others to build a competing solution. But whether or not Flex will get ambushed by new competitors further down the road is something we’ll all have to see.

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First Voice

  1. Don G King:

    It was only a matter of time before one of the big VMS players attempted to move into the middle market spend arena. However, they were not the first to enter the space. Clarity VMS offers a unique solution to the Middle Market combined with a distribution model unlike any other. VMS is just a software but when combined with field level deployment from experts in the staffing industry the ROI for middle market companies emerge.

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