Linking a Combined MSP and VMS with Pure Vendor Neutrality: Advantages and Lessons Learned

pressmaster/Adobe Stock

When it comes to managing your contingent workforce, many practitioners are already aware that using a combined managed service provider (MSP) and vendor management system (VMS) can bring several benefits, especially when coupled with a purely vendor-neutral provider.

Yet with this increased awareness comes a more crowded market. Discerning a combined MSP/VMS from a standalone VMS is simple, but identifying a truly vendor neutral provider is often easier said than done. Here’s how to tell the difference along with the benefits and lessons learned.

Defining Purely Vendor Neutral

Pure vendor neutrality only exists when the MSP or VMS provider has no affiliation whatsoever with a staffing agency.

 “The vendor neutral, combined MSP/VMS solution can benefit many different kinds of organizations,” said Andrew Karpie, research director of services and labor procurement at Spend Matters. “But it can be especially valuable for several kinds of companies that use a contingent workforce and are committed to a formal program — or are just embarking on one. In such organizations, limited resources and expertise make the option of a cost-effective bundled solution and experienced service provider very compelling.

Karpie added, “Vendor neutrality is also crucial for such organizations, because it ensures there will be no conflicts of interests in establishing the supply base and that supplier management will yield maximum savings and service performance. In these cases, this type of solution will likely be the optimal choice.”

“Our clients will tell you that the vendor-neutral approach consistently delivers the highest quality talent at market-driven competitive rates,” said Andrew Popler, executive vice president of business development at PRO Unlimited. “Suppliers embrace the vendor-neutral MSP model and are never hesitant to present their best candidates for consideration. The results achieved by adopting this approach are advantageous for all program stakeholders.”

Indeed, screening for pure vendor neutrality yields several benefits in the long run. When no one staffing firm is unfairly prioritized, true supplier optimization is possible, giving the business the best cost and highest-performing talent.

Creating a competitive environment for sourcing labor, while ensuring a level playing field, enables rather than impedes the use of lower cost, direct sourcing options such as independent contractors and freelancers. Finally, pure vendor neutrality means the solution provider is beholden to no one other than the client, which is the never case when the MSP can compete to fill requisitions.

Lesson Learned: Watch out for “labeled” vendor neutrality, where an MSP may not be owned by a staffing firm, but tightly affiliated, leading to hidden rules that negate the vendor neutrality of the program.

Better Together: The Combined MSP/VMS

The clearest benefits of a combined MSP/VMS are efficiency and cost-effectiveness. Instead of adding yet another solution to the list of technology that practitioners need to oversee, a combined offering provides a one-stop shop for users of all kinds. For either a labor category manager or internal business user, a combined MSP/VMS becomes a single, go-to resource for everyone’s staffing needs.

At the same time, fully integrating an MSP with a VMS maximizes use of the latter’s functionality, a shortcoming in many independent VMS implementations. If an organization is going to pay for a VMS, it might as well extract as much value from the solution as possible. Full utilization of a VMS can also lead to superior cost efficiency down the line.

A tightly coupled MSP can also help an organization achieve greater agility and fit with a VMS, both at implementation and over time. A standalone VMS runs the risk of becoming just a mere tool; a combined approach can offer a broader scope of data analytics and value-added services. Plus, over the long haul, such an offering provides clients more influence on the product roadmap and ensures real staffing and business needs are addressed in future versions of the solution.

Lesson Learned: Superior cost efficiency, greater agility and pure simplicity from a combined solution start at implementation and increase over time — wins that cannot be achieved when an MSP and VMS are used separately.

Voices (6)

  1. Jason Busch:

    Brian,

    We can take the innovation and shareholder question offline — it’s one I would ask you to put your corporate development hat and not marketing hat on to be honest (I know you’ve got both in spades!)

    But the other question is one of the market need. I would argue some MSPs (with VMS) are outpacing some native VMS vendors in organic growth now (some, not all) and spend under management. Their technology may not be as good as a stand alone VMS, but something is working for them. So ipso facto, there must be some “buying personas” which desire both from one. If you are one of the top two VMS providers (which you are) you are likely hearing from customers who value technology and decoupling. But given the fact that dollars speak, there is clearly a segment of the market that feels differently and maybe you’re not selling to them or talking to them.

    I can tell you from my vantage point in all procurement areas, the underlying technology at the feature function and stack level is mattering less and less in many selections — it’s about usability, metrics, adoption and implementable ROI. And want a case of a “bundled” company that gets it? GEP is a case in point in terms of massive growth over the past 3 years … it’s the package, not the components (and certainly not the modules — it refuses to position software as ‘modules’). There’s a segment of the market (a growing segment) that loves just that. Solutions, solutions, solutions.

    Check out our SolutionMap personas for P2P (we’re doing VMS and services procurement later in the year) on Monday and you’ll get the notion of different buying needs for different market segments … and think about how it applies to services procurement as well. A lot of us put a ton of thought into the “persona” approach to buying technology. I think we largely got it right after 50 tries behind the scenes. And that would explain your market as well — and the point that “you can be right” here and Andrew / Nick can also be right at the same time.

    In any event, have a great weekend and don’t take this too personally! I’m sure we can argue all these points in good time … and everyone can all be right at the same time, for different reasons, as well.

    1. Brian Hoffmeyer:

      Hi Jason –

      We’ll definitely take the innovation conversation offline and we’ll show it to you at our client conference.

      I really like what you said here: “it’s about usability, metrics, adoption and implementable ROI” We agree completely and this is a focus for us.

      Thanks,

      Brian

      1. Jason Busch:

        Deal! Sounds like a plan.

  2. Brian Hoffmeyer:

    Wow. There is a lot to say on the original article and on Jason’s responses.

    I will address the latter first. I specifically want to address this quote from Jason’s first comment: ” IQN was closest to doing something on the platform (PaaS) side, but the true investment required to implement this vision at scale is likely to be put on the back burner compared with the plug/chug PE synergy moves that will drive nearer-term shareholder returns.”

    As Jason and SpendMatters knows – as evidenced by articles written and interviews published – this is incorrect. IQN’s PaaS strategy has become Beeline’s (as a corporation) and we are applying it to both of our VMS platforms – Beeline VMS and IQN VMS. You’ll certainly see it in play – with innovation in spades – at our upcoming conference.

    Regarding a combined VMS/MSP solution in general. That’s not what the market wants. Very few major deals go this way and, as far as cost efficiencies go, well, that’s what good partnerships are for. I can’t tell you how many times we’ve heard quotes that indicate the partnership/implementation/ongoing operations are so good that the client can’t “tell where the VMS ends and the MSP begins” (and vice versa).

  3. Jason Busch:

    And two final thoughts for the morning before I sign off on this.

    First, the primary current economics of the industry do not support innovation from a procurement-driven perspective. Until buyers truly have a “stake in the game” by paying for software, what incentive do they have to get the most out of a VMS from a feature/capability perspective?

    Second, some of us here at Spend Matters (Pierre, Michael, me, etc.) think the real innovation in contingent workforce needs to come from sourcing … in Michael’s words “it’s eye opening what you can save” if you can truly analyze the supply market by deconstructing it (and bids) against internal requirements using optimization approaches. Don’t know what we’re talking about? Call Trade Extensions, Jaegger, BravoSolution, Keelvar, etc. and they can explain. Or Call McKinsey, ATK or another consultancy that knows how to apply optimization to supply markets.

    So if you are a procurement organization and you care about innovation in the VMS area, take charge of your own destiny and don’t complain unless you’re paying for something directly (because you are absolutely are paying indirectly).

    And don’t forget about strategic sourcing and optimization applied to contingent labor … the savings potential is huge. And there IS innovation in this area.

    And (I promise only one more “and” …) don’t ask an old-school MSP about optimization applied to contingent labor (SOW is another question) unless they’ve brought it up to you already. You don’t want to a guinea pig for something new to them that, if it works, will hurt their own margin (and it will work). That is, unless you’ve aligned incentives around savings.

  4. Jason Busch:

    This is sure to stoke some controversy!

    What fun … I don’t entirely agree with your arguments (as your colleagues) on the combined VMS / MSP front. I think the argument in favor of this, however, is not just driving outcomes (rather than adoption) but also the fact that the VMS (outside of specialized SOW tools) has been a backwater of innovation relative to eProcurement, CLM and other areas of the market in recent years. Innovation = nada (on a comparative basis to other procurement and even services procurement technologies). IQN was closest to doing something on the platform (PaaS) side, but the true investment required to implement this vision at scale is likely to be put on the back burner compared with the plug/chug PE synergy moves that will drive nearer-term shareholder returns. And FG doesn’t need radical innovation to grow within the SAP umbrella given the success it’s having. But hopefully like Ariba did this year, it doubles down at some point on charting a future tech-enabled course for the market.

    Regardless, strike the two largest vendors on the need to drive true tech innovation to meet their primary business objectives.

    So my view is that until a provider truly drives new innovation on the standalone VMS front, you make a compelling case — again, one I can (and do) argue with, but a case nonetheless. However, once innovation hits again (and it will) I suspect that your points will fall down … and I don’t believe most MSPs understand technology very well from a transformative perspective (especially outside of the administrative role they usually drive).

    So the next round goes to the VMS … but the question is: folks we already know or a new crop of vendors?

    My chips are on new entrants unless SAP really gets the Hana stack, PaaS and network play (in combination) right more quickly than we think they will … but they’ve got potential regardless.

    Let the fireworks on this begin!

Discuss this:

Your email address will not be published. Required fields are marked *