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The 4 Main Categories of Contingent Workforce/Services Procurement Solutions: The World According to Spend Matters

01/10/2018 By

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In the recent Spend Matters Landscape Definition and Overview: Contingent Workforce and Services, we introduced four high-level categories encompassing a broad range and growing number of CW/S solutions. Going forward, these solutions — and others to appear in coming years — will be the subject of RFX processes, extensive evaluations and the eventual buy decisions of CW/S procurement executives across many large to medium-sized enterprises. We believe that comparing solutions within each of these categories will support better understanding and decision-making. Accordingly, in 2018, Spend Matters will be introducing the CW/S SolutionMap, featuring each of the four categories. Each SolutionMap consists of solution profiles and comparisons based on extensive research, collection of detailed RFP-level attributes and extreme vetting of solutions.

The purpose of this brief article is to proactively bring these four categories into sharper focus for both Spend Matters subscribers and for the solution providers that may be included and analyzed in the upcoming SolutionMap.

4 Main CW/S Categories: The Why and What

Much is changing in the world of CW/S procurement and solutions. New CW/S intermediaries and procurement solutions are emerging, established ones are evolving and multi-provider, digitally connected ecosystems are taking shape. In this context, traditional solution categories are inadequate to describe and analyze CW/S procurement solutions. Accordingly, Spend Matters is pursuing a different approach with four broad categories of solutions:

  1. Contingent Workforce Management Technology. An increasingly diverse group of enterprise solutions that addresses business needs to source, engage and manage contingent workers from/through a range of different supply sources.
  2. SOW/Services Management Technology. Today, a relatively limited group of enterprise solutions that represent an early developmental stage of solutions to address the source-to-pay procurement lifecycle of a broad range of services (an increasingly important spend category, already many times the size of contingent workforce).
  3. Digital Platforms Providing Workers/Services. A growing and hyper-diverse population of CW/S sourcing/supply solutions: non-traditional, technology-based platform intermediaries from which contingent workers and services can be sourced, consumed and paid for.
  4. Outsourced Supporting Services. A relatively stable (though in some areas evolving) group of external providers of services that address a range of enterprise CW/S procurement requirements, including contingent workforce program management, worker classification and compliance vetting, and agent-of-record/employer-of-record payment/payrolling.

A few notes on the above:

  • Categories 1 and 2 are essentially enterprise solutions that frequently straddle the enterprise boundary. These solutions are utilized by business people in the enterprise, and they also extend to external suppliers and ecosystem service providers. (Category 1 examples: VMS, enterprise independent workforce management solutions; category 2 examples: CLM, VMS).
  • Category 3 and 4 solutions consist of suppliers and service providers external to the enterprise (Category 3 example: Online freelancer marketplaces or crowdsourcing platforms; category 4 example: MSPs or compliance AOR/EOR service providers).
  • A solution always consists of some measure of technology and some measure of services. Whether it is largely a technology solution with limited client support services (e.g., a VMS), at one extreme, or a largely a service solution with business process support technology (e.g., an MSP), at the other extreme, a solution = technology + services.
  • A solution provider may provide a solution or set of solutions that fall within more than one of the four categories. Examples: A VMS provider with solutions falling within both the Contingent Workforce and SOW/Services categories; an MSP provider that also provides its own VMS bundled with its services; an online talent marketplace that also provides a solution for enterprises to manage that marketplace talent and SOW engagements.

Next Up: CW/S SolutionMap

As mentioned above, in 2018, Spend Matters will be launching the CW/S SolutionMap composed of four different solution categories. Solution providers with sufficiently mature solutions that can meet some sufficiently cohesive subset of the category’s business requirements will be invited to participate in the detailed and exacting research process and eventually appear as one of the solutions in the SolutionMap.

Within a given category, say Contingent Workforce Management, solutions may vary significantly in scope, ranging from a purported comprehensive solution (e.g., a VMS) to a specialized segment solution (e.g., an independent workforce management/direct sourcing solution). The score/rank of a given solution will depend upon what the buyer needs or is looking for. Solution ratings and comparative positions will therefore vary depending upon the buyer perspective.

In the SolutionMap framework, there are multiple buyer personas, and there is a unique SolutionMap ranking of providers for each persona. Accordingly, a given solution could score very high in the SolutionMap connected to one persona, but relatively low in the SolutionMap connected with another persona. As such, while a SolutionMap category such as Contingent Workforce Management may be broad and encompass a range of different types of solutions, a solution that may not even appear on the SolutionMap of one persona might be elevated and brought into focus in the SolutionMap rankings of another persona.

Categories 1 and 2 of the CW/S SolutionMap are planned to start rolling out in the second quarter of this year. Outreach and invitations to providers is expected to start in February. If there are any questions, please contact the Spend Matters SolutionMap team. In the meantime, delve into a more complete discussion of the four categories in the free download report, Landscape Definition and Overview: Contingent Workforce and Services.