Five Scenarios for VMS 2025 — An Introduction

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I’ve been thinking quite a bit about the future of the vendor management system (VMS) in the services procurement world — including the potential for growing overlap with source-to-pay technologies. My thinking is in part shaped from a result of increasing integrations between SAP Fieldglass and SAP Ariba, Coupa’s absorption and integration of DCR Workforce and increasing “fringe” services procurement capabilities offered by source-to-pay suite providers (e.g., Ivalua).

Why does this matter? This future state, VMS 2025, is critical for procurement organizations as they have the power to define how these technologies serve them rather than the other way around (which is the dominate scenario today).

But before we explore what the future might hold for procurement, let’s define what a VMS is or at least has been in the past (we know the concept of a VMS is evolving).

As part of Spend Matters SolutionMaps for contingent workforce and services (CW/S) enterprise technology, we think of VMS as the solution for managing temporary staffing suppliers and workers. That is, within the Temporary Staffing map — rather than Contract Services/Statement of Work or the Independent Contract Workforce maps.

Here’s how we define the temporary staffing technology solution area:

“These solutions address enterprise needs to manage temporary staffing supplier relationships and the sourcing and engagement of temp workers. They provide capabilities to support supplier management; worker requisitioning and candidate submission; candidate evaluation, selection, compliance and on-boarding; worker engagement tracking; change order management; and invoice/payment processing facilitation.”

“Temp Staffing solutions typically act as systems-of-record and accumulate significant amounts of data that can be used for spend analysis, supplier management, other business intelligence and more sophisticated analytics. They generally provide dashboards for supplier, workforce and financial management, standard and ad-hoc reporting and capability to use third-party BI tools. Today these solutions are offered as a part of VMS suites; however, they can be and often are provisioned separately.”

Make sense? At its temporary staffing core, a VMS is essentially a set of highly specialized source-to-pay capabilities designed entirely to manage the sourcing-consumption lifecycle of temporary workers. In many cases, an intermediary like a managed services provider (MSP) has deep interaction and management oversight of the VMS on a daily basis. To this point, MSPs can either bring their own VMS or they can leverage a third-party, software-only VMS.

Now that we’ve defined the VMS, I’ll introduce five scenarios for VMS 2025 that I’ve been thinking about along with my colleagues Andrew Karpie and Nick Heinzmann, who serve as our primary analysts covering this market (I parachute in from time to time).

In five subsequent posts in this series I’ll flesh out and explore each scenario. Note, these scenarios are not mutually exclusive (or clearly exhaustive for that matter). But hopefully they can encourage an industry dialogue about the future of the VMS.

  • The status quo, a largely independent VMS ecosystem, continues and new technologies (e.g., artificial intelligence) lead to a better overall VMS experience and even “MSP bot-type” services.
  • Integrated VMS and procure-to-pay technology suites gain momentum.
  • Managed services providers (MSPs) rule the day as offerings evolve and increasingly leverage software as a competitive advantage (a market that could include new entrants as well).
  • Talent management and human capital strike back — people are not widgets, and the VMS must operate in an increasingly dual HR-and-procurement universe in which value and outcomes become as important as price and timesheets.
  • Temporary staffing (and hence the VMS) loses its influence as the core technology “anchor” that companies “buy first” when tackling services procurement.

If you’re curious about where these scenarios came from, they emanate from the thousands of hours we’ve spent doing demos and interacting with the latest services procurement technologies as part of our Spend Matters PRO and SolutionMap coverage — and talking with procurement organizations, consultants, MSPs and other influencers who are deeply involved in the services procurement ecosystem.

Join us in this dialogue. And let us know what you think about our services procurement technology coverage as we all prepare for these — and possibly other — scenarios.

This is your industry to shape!

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