Freelancer Management Systems: The Origin and Destiny of a Species

This article traces the origins of freelancer management systems (FMS) over their brief history and reviews the concept behind them. It will be followed by a Spend Matters PRO research brief discussing possible destinies of FMS and the emergence of competitors in a more expansive digital ecosystem, now developing to support direct engagement between increasingly talent-strapped enterprise business users and the growing population of independent workers.

A Brief History of FMS

The concept of an FMS is quite new. It’s hard to find any evidence of this term or the concept designated by it prior to the end of 2013. Over the first 3 quarters of 2014, a number of technology providers pushed FMS into the marketplace, and by late 2014 the analyst community had picked it up as a hot topic.

Clearly, however, FMS is a vendor-driven solution concept. The leading providers promoting and using FMS as a moniker were Elance (now Upwork), OnForce (now owned by Beeline), and Work Market (which actually filed applications for patents and trademark protection of “freelance management system” and its core “proprietary freelance management framework").  An October 2014 Work Market press release about its patents and trademark applications neatly describes Work Market’s own definition of what it considers FMS to be. Prior to those applications, both Elance and OnForce had been using the term FMS to designate somewhat similar – though in various respects different – solution offerings.

How this will all play out legally, is unknown. Upwork and Onforce continue to refer to themselves as FMS, and other platform intermediaries, including MBO Partners and Field Nation, have been doing the same. Staffing Industry Analysts has taken up the task of trying to track FMS as a category of solutions and recently published its second landscape report (Freelancer Management Systems (FMS) Differentiators and Competitive Landscape), offering comparative feature analysis of a core group of several FMS solution providers.

At this point, it seems safe to proceed on the assumption that there are technology solutions that have speciated as FMS.

What is an FMS?

While these systems have yet to become standardized and are continuously evolving , from what I can gather, the term FMS can be used to describe a technology-based platform through which a given enterprise’s business users (hiring managers) can directly source, manage the engagement of and pay non-employee workers affiliated with the given enterprise.

From my perspective, FMS is a form of work intermediation platform (WIP) – as Spend Matters has discussed at length – numbering some 300 platforms today, characterized by extreme diversity and ongoing evolution. And FMS has recently emerged as more or less similar solution offerings of different technology solutions providers. These solution offerings are provisioned to individual enterprises via a multi-tenant software platform in which each individual enterprise’s business users and its population of affiliated freelance workers can connect, engage, arrange and get work done and paid for.

One of the key functions of an FMS platform is to digitally host the dynamic profiles of a pool of freelance workers who have been qualified in different ways – including skills vetting, background checking, on-platform performance ratings and more – to meet the enterprise’s criteria of affiliation or inclusion into the enterprise’s talent pool. Enabled and controlled by the platform, business users and independent workers can then establish work arrangements directly.

While business users can source workers from the established talent pool, how and from where workers are sourced into the talent pool remains a bit of an open question for the FMS model. Most suggest that businesses begin by rounding-up all their currently engaged or known freelance workers and getting them digitally hosted on the platform. Some FMS solution providers also maintain open freelancer marketplaces – Upwork being the most formidable, by many orders of magnitude – from which workers can be sourced into the talent pool, if they meet the enterprise criteria of affiliation. FMS solution providers also promote the concepts of hosting alumni  (rehiring previously contracted workers); silver medalists (quality candidates turned down for permanent positions); students and interns; and other such categories of workers as different ways to leverage FMS to efficiently access non-employee talent.

An FMS integrally supports payment capabilities—often a range of different ones through integration with third parties. In addition, an FMS provides some approach, simple to extensive,  to ensure correct worker classification (for some FMSs, this is even to the point of serving as employer of record when needed).

Perhaps the most impressive function FMS serves is as a data capture and analytics platform. Because the whole work arrangement from source to pay occurs through the FMS platform, remarkable amounts of data,and relationships among them, can be captured and leveraged analytically. In a workforce technology setting, the data and analytics that FMS can theoretically provide is probably unprecedented.

Surely, if you were to line up several of the self-proclaimed FMS solutions side-by-side and stepped back to take a careful look, you might think you was looking at different kind of animals. Compare, for example, Upwork Enterprise and Onforce, 2 FMS players that evolved from completely different business and labor market environments,global online freelance marketplace and field services technician dispatch. However, if you looked for the above outlined similarities, you would begin to see – just as a one sees in real animals – the unifying fundamental characteristics that make them recognizable as a species.

So What’s Next?

It does seem clear that a new species of technology-based platform solutions has emerged. However, new members of the species may be appearing on the scene, and, amid competition and cooperation among FMS platforms themselves and possibly other species in adjacent ecosystems, mutation and evolution is also occurring. Therefore, the destiny of FMS as a species is, in reality, uncertain. Moreover, there may also be other species that are emerging and evolving to take part in or even dominate the now developing digital ecosystem that will serve to support the direct engagement between enterprise business users and independent talent.

I will take up these questions in a subsequent PRO research brief, bringing a broader perspective to the ongoing development of this expanding digital ecosystem, identifying key features and developments of what is emerging across the broader landscape and attempting to frame a picture that will help services procurement and contingent workforce managers adopt a more strategic view of what may really be happening in this critical space.

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Voices (3)

  1. Wen:

    Hello, Andrew,
    I am really like this article.
    I am a publisher, focusing on scholarly journal publishing. All journal editors get headache for assigning submissions for peer-review, as it is very difficult to find good qualified reviewers who have time to review articles.
    I intend to startup a FMS platform to connect publishers/editors (employers) and reviewers(freelancers).
    I believe it cost too much time and money to create an in-house FMS byself. So I prefer to buy a completed program or service. Can you tell me who provide FMS programs, similar to Upwork, Work Market? Or, how can I find the vendors list for FMS?
    Thank you very much.

  2. Jay Lash:

    As a pioneer in this space you know how much it has evolved in such a short time frame. There is still a long way for it to evolve to the degree of other talent management systems like ATS, VMS or HRIS. What is more interesting is all the different versions these platforms are taking from the same framework. It is all about access to talent directly from user manager to freelancer. The least friction or middlemen, the more attractive usable and cost effective this will become. Will the VMS see this as an alternative supply chain. Will the MSP’s find value in partnering with many platforms to round out their offerings and capture more spend like the SOW space. Or will HR get in the game and begin taking freelance talent seriously as part of their Human Capital Strategies. I look forward to your research. Being involved in this FMS movement is exciting for us all.

    1. Andrew Karpie:

      Jay, Good to hear from you. Agree 100% with your observations and the questions that you ask here. It is exciting, and it very much early days and and open book. I am one who believes that an “alternative” (“different”) supply chain is taking shape sooner rather than later. I don’t see it as initially disruptive to what is in place now…. but procurement and other players like VMS/MSPs need to start to realize that their businesses need these new access channels to labor/talent services … and start to support them. I am actually starting to see evidence of this happening. Hope we talk soon. Andrew

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