The Contingent Workforce and Services Insider’s Hot List: February 2018

This is the first edition of Spend Matters’ new monthly feature, “The Contingent Workforce and Services Insider’s Hot List,” available to PLUS and PRO subscribers. While for many the mention of “contingent workforce and services” may elicit a barely suppressed yawn or a semi-glazed look, others know that what is true is often more than meets the eye. Beneath a spend category associated mainly with traditional temp staffing and under the surface of the obtuse, clinical label of “contingent workforce and services” (CW/S) lies a hotbed of innovation (I kid you not).

Technology, new economic realities, and supply- and demand-side transformation are giving rise to new alternatives for sourcing and consuming workforce and services within enterprises. Some of these developments are obviously relevant and potentially applicable in an enterprise context, others simply represent innovations in the environment that may, in some form or another, become relevant and applicable down the line.

In this series, we try to set the record straight, perhaps turn a few heads (or at least provoke a double-take) and even prevent some unwary practitioners from getting burned. In the depths of the evolving and expanding contingent workforce and services environment, events and developments, technology-based innovations and emerging sourcing and consumption models, may be brewing and may escape observation and require illumination. To shed some light, at the top of every month, we will summarize specific events and developments that have recently appeared on our radar, and we will offer brief commentary on the significance.

Now, welcome to the February edition of The Contingent Workforce and Services Insider’s Hot List!

Hot Off the Presses

ADP Acquires WorkMarket

As covered in our recent article, the payroll and human capital management provider ADP announced it is acquiring WorkMarket, a cloud-based workforce management solution, for an undisclosed amount. Since 2010, WorkMarket has raised $66 million in equity investment. While WorkMarket has been firmly anchored in the independent contract worker segment of the solution market, in the past couple of years it is has gone to market as a “broader enterprise workforce management solution,” which according the press release “allows companies to build and manage an integrated workforce across W-2 employees, 1099 contractors, vendors and other types of workers,” allowing businesses to “optimize how work gets done across any labor type.” What will happen as WorkMarket is subsumed by ADP is a matter of speculation.

What’s the significance?

• This is the first time that a major player like ADP has acquired a company like WorkMarket. Was this just a convenient tuck-in acquisition of a seven-year-old, cash guzzling startup that ADP could get on the cheap? Probably not. Rumor has it that WorkMarket got a pretty good valuation, and there seems to have been a niche carved out for it in ADP’s Added Value Services. So, at least in some form, the value of the kind of technology platform that WorkMarket built appears to have been validated.
• Will this be a milestone event that will mean a bit of heating up in what we have called the “enterprise-meets-gig economy” space, where a range of players including MBO Partners and the VMS Beeline line up? It very well could. There have been indications that there is some acceleration of the growth in enterprise interest in this space associated with independent contract/freelance workforce and the solutions and platforms that can enable its sourcing and engagement. Let’s see what happens in 2018.
• Nonetheless, understanding the real significance of this acquisition is going to take some time. As WorkMarket gets situated in ADP and future impacts in the solution market can be observed.
• If you are a Spend Matters PRO subscriber, you can read our in-depth analysis on the acquisition:
  • ADP’s Acquisition of WorkMarket: Just Moving Pieces Around on the Board or Starting a Whole New Game? (Part 1)
  • ADP’s Acquisition of WorkMarket: Just Moving Pieces Around on the Board or Starting a Whole New Game? (Part 2)

In the meantime, you can go to WorkMarket’s website to hopefully get a better grasp of what WorkMarket is and does.

Coupa’s Services Maestro

As covered in our recent article, Coupa recently announced the general availability release of its services procurement solution, Services Maestro. Services Maestro essentially provides services procurement capabilities integrated into the consumerized sourcing and buying experience familiar to Coupa’s customers. Coupa is well known as an innovative, leading solution provider in the goods procurement technology space, and its services focus has generally been limited to the travel spend category. Services Maestro is a first step into complex services (e.g., consulting, marketing). For the time being, the solution is focused on SOW sourcing, compliant execution and spend management, but Coupa says it plans to not only deepen the capabilities but eventually also expand the scope of Services Maestro to contingent workforce procurement.

What’s the significance?

• The term “services procurement” is frequently — and misleadingly — used to refer to both the procurement of traditional contingent workforce (staffing) and the procurement of complex services across a number of spend categories. VMS solutions have been, for all intents and purposes, the only providers of solutions in either of these two main categories.
• While the traditional contingent workforce procurement solution market has reached a mature state, the market for service procurement solutions is basically unpenetrated. Other than the marginal penetration of VMS solutions, the services solution market has been, for all intents and purposes, otherwise vacant — until now. And based on many factors, it seems likely that enterprise demand for such solutions will increase and the market could become a hotly contended one.
• How the occupation of the market will unfold is really unpredictable. One reason is that new technology solution providers can emerge in such a greenfield market. Services Maestro is an excellent example of that, and there is every reason to believe there will be more coming. Business demand for solutions to address services procurement will definitely be satisfied over time, but through an industry structure that is still unknown.

If you are a Spend Matters PRO subscriber, you can read our in-depth analysis of Coupa’s Services Maestro: Coupa’s GA Release of Services Maestro: What Is It and What Does It Mean Today?

You can go to Coupa’s Services Maestro page for some, but not too many, further details.

In Other News

Avature Contingent Workforce Solution

Avature, a well-established candidate relationship management (a new take on CRM) “announced the general availability of its contingent workforce solution, designed to allow companies to leverage the gig economy more efficiently,” according to a press release,

“The solution, in combination with Avature’s CRM, ATS and Internal Mobility solutions, allows organizations to fully integrate contingent workforce with existing talent acquisition and talent management practices. This allows customers to develop a total talent management (TTM) perspective of their organization.”

What’s the significance?

• The sourcing and management of contingent workforce is now starting to happen through solutions outside of VMS, in this case through a solution that has typically been used by enterprises and staffing firms for the category of employees.
• The convergence of managing contingent and “perm” employee workforce appears to be continuing, with HR potentially getting more involved in the management of contingent workforce— at the very least, of freelancers and other contract workers, although it’s still too early to tell.
• Businesses and their human capital management models continue to evolve toward total talent management (TTM), a trend that contingent workforce procurement folks should keep an eye on.

You can go to Avature’s contingent workforce solution page for some, but not too many, further details.

Freelancer Ltd

According to a ZDNet article, Freelancer,Ltd, the global, Australia-based, publicly traded “online freelancer” marketplace company, recently announced the release of Freelancer Enterprise. What the company somewhat hyperbolically refers to as “a vendor management system for managing virtual and local workforces” really appears to be the start, perhaps, of an answer to Upwork Enterprise, a technology and services solution that complement’s Upwork’s own global “online freelancer” marketplace and is meant to enable larger enterprises to leverage the talent in Upwork’s marketplace “on their own terms” (e.g., compliantly, consolidated invoicing and much more).

Freelancer Enterprise is at best an immature, bare-bones version of the now two-year-old Upwork Enterprise solution. Currently, Freelancer Enterprise appears as a loose assembly of various existing capabilities and services (e.g., online marketplace, API, compliance services, assistance with Freelancer vetting), which seems to provide what looks like the beginning of private talent pool capabilities. Compared with Upwork, there is, at least for the time being, much substance missing, thus leaving open the question of whether this is an earnest start of a competitive offering or, cynically viewed, a pure marketing, defensive feint. (We have a suspicion it is not the latter.)

What’s the significance?

• No matter the materially of Freelancer’s solution move, it is nonetheless an indicator of the trend and emergence of ”proprietary marketplace-adherent” solutions (e.g., Upwork, Contently) and “proprietary marketplace-independent solutions (e.g., ADP WorkMarket, Beeline Self-Sourcing) that link enterprise sourcing and online marketplace.
• These kinds of solutions definitely make sense in theory, but in practice, gaining traction and achieving breakthrough growth in the enterprise market has been “a journey.” There are signs, however, that the pace may be picking up (e.g.,, visible interest and progression at various large enterprises such as Procter & Gamble, major investment flowing into solutions and the arrival of Freelancer Enterprise). Many large enterprises are also making considerable use of crowdsourcing and other platforms. Accordingly, we think there is a real trend that should not be ignored.
• Freelancer has indicated that “70% of Fortune 500 companies use Freelancer.com to get work done.” This statistic, which has also been reported by a number of “online freelancer” marketplaces, refers almost exclusively to direct (often credit card or line item expense-based) usage by isolated individual and departments. This activity does not take place across a unifying enterprise platform that can aggregate demand to maximize economies of scale and minimize non-compliance. From our perspective, however, there is no doubt that an accepted, enterprise technology model and set of solutions will emerge. The only questions are when, how and in what form?

You can go to Freelancer’s Enterprise solution page for some, but not too many, further details.

Skyword

Per its recent press release, Skyword, an online marketing content services platform business, announced a $25 million round of private equity funding. (Since its founding in 2010, it has raised $61 million of funding.)

Skyword is not an online freelancer marketplace. One might conceive it as an online “stories-as a service” platform. Skyword does not enable its clients (which include some notably large enterprises) to access and engage individual freelancers. Rather, it enters into master services agreements (MSAs) with clients as a managed service and provides them marketing content over a period of time.

“The Skyword Platform makes it easy to produce, optimize, manage and promote content at any scale to create personalized, lasting relationships,” according to the company. It does this by leveraging its vetted, managed “community of thousands of freelance writers and videographers” as well as its internal editorial team and program managers that manage production and delivery of outputs.

What’s the significance?

• In a world of accelerating digitalization (of not just transactions but also supplier relationships and service delivery) procurement will be facing new kinds of platform-based suppliers.
• These platforms are not all online freelancer marketplaces but can take the form service providers contracted to deliver outputs or outcomes. This type of service provider combines an internal expert team and an advanced technology platform extending from its provider’s own community of freelancers directly to a client’s business end-users. An another example of such a provider is Applause in the software testing space.
• Of all the contingent workforce and services spend categories, the often intractable category of marketing is probably the one that is heating up the most in terms of digitalization, supplier transformation, direct platform buying and potential disruption. Other services platforms like Contently or online freelancer platforms like recently launched Calvary Freelancing and quite a few others are also in the mix. Bottom line: If you’re thinking of focusing on and diving into one spend category to see how the talent and services supply chain is being disrupted, this would be the one.

You can go to the Skyword website for some, but not too many, further details.

Here’s the Kicker

To close this edition, we want to briefly cover a few other hot spots.

Online Platforms for Work and Services: The Sky’s the Limit

Many types of online platforms continue to appear, and many attract significant investment. The variety must be experienced to be appreciated and understood. Below are two examples that just happened to land in my news feed in January.

Addressing a fairly conventional but highly specialized category, AV Junction was launched in December. AV Junction is a kind of online marketplace platform that allows businesses to engage AV (audio/visual) tech contractors to perform project work, on site, for businesses that need to have AV equipment installed or repaired.

The founder claims the “platform is supported in 25 countries.” (I’m not sure yet what that really means.) AV Junction looks like a up-start potential competitor to Field Nation and WorkMarket (the part with a field tech contractor marketplace).

But while those platforms support all kinds of field tech contractors, AV Junction has carve out the juiciest segment of them all — AV. And while Field Nation and WorkMarket only address the U.S. market, AV Junction maybe going out of the gate with an eye on the U.S. and Europe.

Finally, it seems like AV may be only a technology play for the market, whereas the others have built their own contractor marketplaces. If nothing else, AV Junction shows us how these workforce markets can be sliced and diced in many ways at a rapid pace. To learn more, you can visit the AV Junction website or check out this article.

A more exotic, but extremely interesting species, is a platform called Voices.com — simply put, an online marketplace that connects businesses with voice-over talent. Since its founding in late 2005, it has attracted over $21 million in investment ($18 million of it in a 2017 round led by Morgan Stanley).

One could look at Voices.com as a kind of online shopping catalog for voices in many languages and flavors. Search, sample (voice), select/purchase (engage the voice artist for your project). But the proof is in the pudding. For example, thinking of myself, I decided to shop for the voice of an angry old man supplied by someone who spoke North American English and had experience doing cartoons.  This what I came up with:

Now, granted, your procurement organization may not need to purchase voiceovers. But your marketing department might. Or if you are a media company, there could be many who would have that need. At the very least, Voices.com could be thought-provoking. Check out the company website, or better yet shop online free for your favorite voice.

Rumors of VMS’ Death May be Highly Exaggerated

Since it may not be possible to a say what a VMS is or would be today, rather than thinking about the death of VMS, perhaps it is better to think about the evolution of the species. Notwithstanding that some providers have made exaggerated claims of being a VMS (for example, Freelancer above), and others have said that they will become a VMS (I won’t name names), there may be one that fits the bill or is serious about doing so.

Vndly, founded last summer, describes itself as “a next-generation vendor management SaaS platform designed for procurement executives, talent acquisition teams, suppliers and managed service providers (MSPs) to collaborate on the corporation’s contingent workforce needs.” Vndly is starting from the ground up with new technology (including AI) and apparently learning about pain-points in the marketplace.

If nothing else, there appears to be a pretty good blueprint. But I think there’s more than that. I’ve been in touch with the company a couple of times since last year, and I’ve seen some bits and pieces of a software application in progress. I’m also going to be getting an update soon (so maybe more info in the March edition of the Insider’s Hot List). In the meantime, you may want to check out Vndly’s website.

It Would Not Be Complete If We Did Not Bring Up Blockchain

Last up for this month’s Hot List is the unavoidable topic of blockchain. There are at least two blockchain startups that are taking aim at the problem of sourcing and engaging workforce in a way that is agile, based on facts (distributed ledger) and disintermediated (no middleman).

One of those is Chronobank, which we covered last year in the article Blockchain as a Labor Intermediary? Chronobank is Working on It. As described in the article, Chronobank.io is aiming at “making a fundamental difference in the way people find and are rewarded for their labor, decentralizing the process and moving it outside the framework of traditional financial institutions.” Chronobank.io is focused on short-term work in labor categories like “e-commerce, cleaning, warehousing, industrial, building and various forms of freelancing.” Read our article for a bit more info, or check out the Chronobank website.

I came across the second one, Jobeum, in an article late last year covering Jobeum’s partnership with Chronobank. Jobeum sees itself as a kind of “LinkedIn on blockchain.” Its aim is overcoming problems associated with a professional network, like LinkedIn, that also serves a talent recruiting platform. In its own customary blockchain-startup “white paper,” Jobeum elaborates on its identity and mission:

Jobeum is an Ethereum-based network for business professionals. Blockchain is used to keep records about employment, education, completed projects etc. The records within a profile will be cross-validated by the community and later we’re going to partner with universities and companies so that certificates (diplomas) and validated employment records for people will be stored in the blockchain. Users will be able to specify which portions of their profiles should be public and what should be kept private. Another goal of Jobeum is to make interactions among candidates and recruiters beneficial for both parties by incentivizing micro actions in the recruitment process via micro-payments in JobTokens. JobToken (JBT) is a utility token that fuels Jobeum transactions: responding to a recruiter’s request, opening private parts of their profile to a requestor (a recruiter), passing a test to confirm a skill, referring a good candidate, etc.

Interesting. And I think you can see where this is going. If not, check out the Jobeum website.  Either way, the takeaway here,  at least as I see it from my vantage point, is that contingent workforce and services procurement has blockchain in its future, sometime, somehow.

That brings the February installment of “The Contingent Workforce and Services Insider’s Hot List” to a close. We’ll be back with more on March 1st. In the meantime, remember: when you’re hot you’re hot, when you’re not you’re not.