VMS and Contingent/Non-Contingent Services Spending Growth: Observations and Implications

The market for vendor management systems (VMS) and platforms and overall contingent and non-contingent services procurement enablement continues to reach new levels of interest (but not necessarily overall adoption, which I'll get to in a minute). Earlier this morning, Fieldglass announced very solid customer acquisition growth in 2010 through the end of July, with "more than 30 new companies" signing on to use their VMS. This announcement further reinforces growth I'm seeing in the general market with Fieldglass competitors, many of whom are having strong years as well. In no particular order, here are a few anecdotal observations on how this market is evolving I think are worth considering:

  • Procurement organizations continue to appear to be taking greater control over contingent and non-contingent spending and are turning to VMS solutions to help drive and automate their own programs (almost always in tandem with MSPs, but not in all cases). However, those running services procurement within procurement organizations come, in many cases, from an HR or other departmental background (not procurement), despite their reporting structure.
  • Best of breed is winning this market (e.g., Fieldglass, IQNavigator, Beeline, Provade, ProcureStaff, Peopleclick Authoria); Ariba and the ERPs are almost nowhere to be found, even in suite deals. Despite having a decent basic solution, Ariba is rarely considered for companies doing VMS evaluations unless VMS is treated as part of an eProcurement selection (which is rare in the case of programs achieving any level of overall traction and support).
  • Despite general platform adoption, the penetration opportunity is still huge, and incentives between companies, VMS providers and MSPs are aligned to achieve it (e.g., revenue models based on volume percentages paid, almost always by suppliers). Still, few companies succeed in building VMS volume across contingent and non-contingent outside of a handful of targeted functional areas, geographies, etc.

If you're curious to learn more about the evolution of the VMS and how services procurement programs can drive value and savings, check out our 2010 Spend Matters Compass research in this area. All of it is completely free and available for instant download today:

Selecting Services Procurement Technology – Options, Approaches, and Philosophy

Services Spend -- Beyond Contingent Labor: Achieving And Implementing Savings Across Previously Unmanaged Categories

Making Procurement a Services Spend Ally: Tips and Tactics for Winning over Business Stakeholders and Spend Owners

The Managed Services Connection -- The Evolving Role of MSPs in Services Procurement

Jason Busch

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