The Evolution of the VMS: An Integration Hub For Coordinating External Sources of Talent?

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The vendor management system (VMS), which originally served as a software application to manage the lifecycle of contingent workforce procurement, is beginning to evolve, inside more advanced deployments, as a solution to orchestrate broader services procurement activity. While much of these steps so far have been in the direction of driving a broader adoption of statement of work (SOW) of work programs — including, on occasion, interfaces with other procurement and financial systems beyond that required of a core VMS.

I believe we’ll increasingly see the VMS serve as a hub for coordinating the sourcing and management of other sources of talent in the future. And this will, of course, come with an entirely new set of integration challenges.

Yet before looking into the future, where (and how) should procurement organizations begin to think about VMS integration as a topic to begin with — even for core integration scenarios into existing ERP/financial, procurement and other systems?

Here are a few tips on how to get started:

  • Take the time to fully understand different VMS integration approaches and models (see here and here). Show IT (and others) that you’ve more than just done your homework by developing a point-of-view on the topic of integration
  • Educate yourself (and the team) on how the cloud changes integration
  • Get IT and procurement on the same page. Start with exploring the benefits of VMS integration when you begin discussing the general benefits of a VMS with IT, HR and other stakeholders. You should start this process by identifying all resources in procurement, HR and IT (and potentially other functional stakeholders) that will need to be involved. Next, use all the skills and tools necessary to build your business case and drive alignment (including the “fear” example below)
  • Collectively build a business case regardless of where you are in finalizing a VMS selection — integration will matter regardless
  • Quantify both upside (benefits) and downside (manual costs from not integrating fully) via a pro/con approach to looking at integration
  • Don’t ignore the “fear factor” in selling the value of integration. Fear can involved the added time (required by IT and others) to oversee manual processes and data re-entry; it can also include showing compliance, data/security and other risk factors stemming from a lack of integration
  • Be prepared (with every conversation surrounding VMS integration) to talk about the business benefits of tightly coupling systems and data

Beyond the Basics: Additional Best Practices in VMS Integration

In developing a VMS integration approach, it’s important to keep in mind that there are often multiple scenarios (e.g., visibility into correct underlying master data, straight-through workflows/processing, etc.) that benefit from each integration. But even more important than this, there is a scale benefit to multiple integrations, which can lead to even more valuable scenarios based on the combination of underlying data assets. For example, enabling real-time connectivity into organization-wide price data (based on past rate card and bill/pay rate information) in combination with internal labor costs, external benchmark information and outcomes-based insights can help optimize for costs and outcomes, putting the VMS front and center in a total talent management approach to the broader workforce.

Ultimately, if you didn’t realize it already, analytics and data visibility is the endgame for VMS integration. Indeed, integration can be a Trojan horse to drive new types of analytics and business outcomes such as the example outline above.

But how do you get there? Here’s a quick checklist:

  • Tease this out the analytics value of integration with senior stakeholders and IT leaders. Show them “what’s possible”
  • Think big (from the start) and make the case, potentially in a phased approach, to prioritize VMS integrations at the core of an initial and expanded deployment
  • Consider how best to integrate real-time “speeds and feeds” to influence and fuel business decisions
  • Think about the value of control and orchestration through the VMS as a new type of data hub. After all, total talent management requires visibility, which requires integration at the core

And finally, think “outside” and beyond just staffing model considerations.

New Talent Sources Must Lead to New Integration Considerations

We must follow the talent — talent doesn’t just follow us.

How our companies source and manage talent is in the early stages of going through a silent revolution of sorts. Beyond working with managed services providers (MSPs) and staffing firms, procurement and HR organizations are increasingly embracing new ways of talent acquisition, often going direct to the source. And folks within the business itself are increasingly taking talent acquisition into their own hands as well, working with new intermediaries that increasingly pair business (or personal) requirements with those capable of delivering a service or specific outcome — and often cutting out formal procurement in the process.

Given these considerations, we should look at how the traditional VMS ecosystem will be disrupted. I believe the VMS of the future could become as important as a central integration hub to manage the external talent (and outcomes) universe as it is as an application-based enabler for contingent workforce and SOW/services procurement.

This raises a number of important topics. First and foremost is who in our organization will vet all of the new intermediaries and talent sources that procurement, HR and the business want to access? This is not just a question of performing background checks on the workers or vetting talent based on skills, certifications or other requirements. It’s also a cyber question as well, given the security of all of the external technologies that we now must interact with.

On some levels, this can make the VMS a new secure perimeter of sorts for those talent marketplaces, work intermediation platforms and other sources of freelancer and related talent sources. But the question remains: What exact role each organization will want a VMS to play in the process?

As you begin this exploration, it’s important to keep in mind a number of related topics:

  • What is your perspective on these new sources of talent (which the business is likely already using, without your blessing)?
  • What do they mean for VMS and broader services integration?
  • Can your VMS provider share experiences and recommendations based on other customers and their own activities integrating these new sources of talent?
  • Has anyone in the organization started to frame new talent sources as an integration/security question to IT and the business?

Here at Spend Matters, we bid you well on your VMS integration journey. If you have any tips, advice or lessons learned from your own integration experiences, we invite you to comment, below or drop us a line directly.

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