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Strategic Technology Planning: A New Imperative for Contingent Workforce and Services Procurement (Part 1)

07/13/2018 By

For many years now, planning for CW/S technology has been largely tactical, focusing almost exclusively on the capabilities and effectiveness of one VMS solution or another. Technology planning at a strategic level has been rare in CW/S procurement functions, in main part because it has not been necessary in a relatively static technology and supply chain environment. Need a core contingent workforce technology to manage processes, compliance, risk and cost? Adopt a VMS (or work through your MSP to get one). Seeking a specialized category solution? Work with the business owner (e.g., legal, telecom, facilities) to engage a vendor that meets everyone’s needs.

But in recent years, many aspects of the environment in which CW/S procurement executes its mission have begun to change significantly. Under these conditions, strategic planning becomes necessary. Because technology is now and will be presenting CW/S procurement functions with new opportunities to add value to their organizations in a variety of ways, allocating time and resources to conducting strategic technology planning is now an imperative. In most cases, this will mean starting from scratch. But foregoing strategic technology planning opens CW/S procurement to missed opportunities, core mission failure and possibly disruption.

In short: procurement, HR and IT organizations — not to mention line of business owners — need to work together to create their own CW/S technology information architecture through a strategic technology planning process. In Part 1 of this series, we build the case for strategic technology planning and provide an overview of what strategic technology planning means for a CW/S procurement function. In Part 2, we flesh out a targeted approach to CW/S procurement strategic technology planning and practical approaches for implementation within an organization.

‘The Future Has Arrived — It’s Just Not Evenly Distributed Yet’

VMS solutions have long been the go-to CW/S procurement technology tool for exerting programmatic cost and risk control. VMS solutions have provided a fairly standard set of functionality and features that was geared mainly to management of an organization’s sourcing and procurement of temp labor from staffing suppliers. While providers over a considerable time frame enhanced and augmented the staffing-related functionality and features, relatively little development occurred outside of this scope.

Only over the past several years has this started to change, as some VMS providers have begun to address the requirements for managing SOW/services, independent workforce and alternative and digitally transforming CW/S supply chains — while at the same time moving to cloud platforms and open services architectures. Moreover, we are seeing that some VMS providers have begun to leverage advanced technologies (like sophisticated mobile devices and networks, big data, matching algorithms, AI, machine learning, predictive analytics, microservices, etc.) in their solutions to deliver value to CW/S procurement and other end users across a number of dimensions, including:

  • Cost reduction
  • Risk abatement
  • Cycle time reduction
  • Increased visibility
  • Access to new supply sources
  • New consumption options
  • Increased business user value/satisfaction

The VMS solutions moving in these new directions are notable not only because they are extending — or even breaching — the traditional VMS category, but also because they represent a bellwether of a much broader and profound change or transformation in the CW/S procurement technology environment. Importantly, this is a change that not only lies ahead; it is already underway.

Spend Matters View on New Technology in CW/S Procurement

As indicated above, Spend Matters believes that digital technologies — and, more important, the solutions they make possible — are moving CW/S procurement into a future where the established paradigm, structure and processes will be changing in significant ways — at least for some organizations, which will then likely be regarded as best-in-class.

In two recent research reports, Spend Matters has delineated its view on new technology and CW/S procurement. We summarize here, with the understanding that both of these reports should be consulted for further detail.

In the first of these reports, The Impact of Disruptive Technologies and Solutions on Contingent Workforce and Services Procurement, we explain the dynamic that is being put in motion by what may be considered “the elephant in the CW/S room”:

Contingent workforce and services (CW/S) procurement has not been greatly influenced by the latest capabilities of information and communications technology (ICT). In fact, aside from the earlier rise of cloud/SaaS-based VMS models, compared to other procurement, HR and supply chain areas, we might go so far as to describe the sector as a backwater from an underlying technology innovation perspective. This is true despite what has been a proliferation of new technologies that, for a variety of reasons, have been appropriated en masse into applications and solutions across the whole economy. This includes the ubiquitous adoption of disruptive technologies such as mobile apps, networks/marketplaces, peer-to-peer connectivity, etc. across consumer and many business-to-business areas. The irony of this is telling, as many contingent workers treat their smartphone as their own “system of record,” requisition goods through Amazon (where they are staffed) and commute via peer-to-peer services such as Uber, yet procurement organizations generally run their contingent and services procurement activities based on technology architectures and inputs that are a decade (or more) old. Given the vast disruptions in technology models in recent years in other areas of the business and the potential for new applications and solutions — coupled with the necessity for CW/S procurement to add much more value to the enterprise — Spend Matters believes this imbalance is primed for “a correction.” And this correction will likely come as a result of “disruptive” technologies and solutions. But a disruption would not only bring an adoption of underlying disruptive technologies. It would also bring a transformation of CW/S procurement itself. This report provides an introduction and analysis of disruptive technologies and solutions and their impacts on the contingent workforce and services procurement sphere.

This report also identifies/explains disruptive technologies in considerable detail and where they are appearing in solutions — not only in some VMS solutions but also in an increasing number of new solutions. A major implication or conclusion is that new technology is changing the whole solution paradigm from a monolithic enterprise solution for CW/S management to platforms and connected ecosystems of different, more specialized CW/S solutions and services.

In the second Spend Matters report, Beyond VMS: The Creation of a New Technology Category for Contingent Workforce and Services, we began to define a new category for our subsequent research of emergent CW/S procurement technology solutions that encompass incumbent and new solutions that incorporate or are entirely based on advanced technologies and tend to straddle enterprise boundaries. We noted that these solutions are largely oriented to addressing the needs of enterprises by effectively intermediating (enabling and regulating) internal demand for and the external supply of work/services. But we also point out that platforms and other specific solutions are emerging to address more of the supply side needs.

This last point can be further drawn out to explain how technology is not just giving rise to new upstream platform-based suppliers (marketplaces, crowdsourcing, etc.), but is also becoming assimilated and leveraged by more traditional suppliers upstream, where talent acquisition and engagement occurs (e.g., traditional staffing supplier, Zenith Talent’s Crowdstaffing approach, traditional professional services firms, PwC’s Talent Exchange).

In effect, the potential area of impact for disruptive technologies and evolving and completely new technology-based solutions is broad, extending far beyond the technology solutions footprint taken for granted today. This includes “buying” capabilities and solutions (beyond VMS), an expanded range of upstream, increasingly digitally based or enabled supply alternatives, and finally the corresponding intermediation and valued-added services solutions that fill in the gaps and make operational, end-to-end CW/S supply chains possible.

From our perspective, there is ample evidence that new, advanced technologies are already impacting and will continue to expand the range and value of CW/S technology solutions. And unlike in the past years (as formal, systematic CW/S management programs were put into gear and taking hold), at this point in time, strategic technology planning must become a critical component to any CW/S procurement function and program that aspires to deliver maximum value to its organization starting three to five years out from today.

Strategic Technology Planning: A New Imperative

Based on the above, it would be hard to disagree that there is strong case for adopting strategic technology planning today as a core component and practice in CW/S procurement. But what would that actually mean?

To begin, what do we mean by strategic technology planning? One way to put it is that strategic technology planning as a specific type of strategic planning that lets an organization (i.e., CW/S procurement) know where it is now, where it wants or needs to be some time in the future, how technology can be leveraged as an enabler and what changes in resource allocation and investment must occur. That planning, however, must be based on intelligence about and analysis of market and technology trends, impacts and emerging solutions and options and opportunities.

Perhaps counterintuitively, developing a strategic internal assessment of where an organization’s management, functions and business end users need or want to be in the future with respect to the sourcing and consuming talent and services is as least as important as understanding breeding ground of transformational technologies and the new and evolving landscape of technology solutions. But how could this process possibly begin — and move to the next stages — in a buttoned-down, tactically fixed and time/resource constrained CW/S procurement function?

Spend Matters can provide some guidance to navigate the process. Stand by for Part 2 of this PRO series.