What is a VMS today? Spend Matters’ SolutionMap helps define it 

Vendor management system (VMS) solutions have been synonymous with contingent workforce technology for the past two decades, but the functions associated with it have been evolving.

It began as a fit-for-purpose software application for managing temporary staffing suppliers and temporary workers, but over the past 10 years, most of these solutions have added functionality or modules to manage contract services/SOW suppliers and service delivery engagements. In the past five years, some providers of these solutions have grappled with the VMS term and concept. Today, most providers of these types of solutions still refer to themselves as VMS solutions, although their solution footprints vary.

When Spend Matters introduced its first SolutionMap for Contingent Workforce and Services (CW/S) enterprise technology in Q2 2018, it decided to forgo the use of the term VMS in favor of developing separate SolutionMap rankings for distinct technology solutions that addressed three extended workforce categories: (1) Temp Staffing, (2) Contract Services/SOW and (3) Direct Sourcing of Workforce/Services (formerly named “Independent Contract Workers”). This was done in part to sidestep the growing variability of the meaning of the term VMS. But more importantly, it was done based on the belief that the three categories provided a more accurate way to analyze and compare solution capabilities (to be discussed further below).

This SolutionMap Insider brief examines the current status of VMS and how Spend Matters draws a tentative line around what constitutes a VMS solution today. It also provides a high-level view of the “VMS” capabilities and an anonymized analysis of corresponding SolutionMap scores. Lastly, it concludes with questions posed to practitioners and providers about the validity of the definition and concept of VMS presented in this brief.

Providers of VMS Today*

In the latest installment of Spend Matters’ PRO series “Five Scenarios for VMS 2025,” it was estimated that there are now about 25 actual VMS providers across the globe:

• The two dominant players are SAP Fieldglass and Beeline (in terms of market share).
• Coupa Contingent Workforce, or CCW. (Coupa acquired DCR Workforce in 2018, and it’s being integrated into Coupa’s business spend management platform.)
• VectorVMS (formerly PeopleFluent)
• A number of important VMS solutions are baked into MSPs; the most notable are ProUnlimited, Workforce Logiq (formerly ZeroChaos), Agile-1 and several other smaller providers serving more of the mid-market.
• A number of established VMS providers, like Provade (SmartERP) and 3Story (Hays), that serve fewer organizations than the above providers.
• A number of VMS solution providers are specialized in serving a national, regional or language-defined market (e.g., PixID in France; Netiv in the Netherlands; Connect-Expertise in Belgium, et al). Note: VMS is less penetrated in companies based outside of the U.S.
• At least a couple of new VMS solution providers — like Vndly, SimplifyVMS and Elevated Resources — have entered the market in the past few years.

*Among these providers, only Coupa has dropped the term VMS from its description of its CW/S solution set, Coupa Contingent Workforce.

Spend Matters believes that fewer than 2,000 separate organizations use a fit-for-purpose VMS solution today. And it bears mentioning that many buyer organizations across the globe are managing contingent workforce in a variety of ways, including making do with an ad hoc, significantly manual and spreadsheet-based process and/or relying on, in varying degrees, e-procurement, human capital management (HCM), and/or ERP systems.

VMS Solution Footprints

As noted above, actual solution footprints vary across VMS providers and can be broken down as follows:

While the actual footprints of capabilities/functionality offered by so-called VMS providers vary significantly, Spend Matters estimates that the overwhelming majority of provider revenues comes from the enablement of Temp Staffing and Contract Services/SOW. Accordingly, the Spend Matters view of a VMS solution today, in 2019, is that it must include the capabilities/functionality to manage Temp Staffing, and those should be coupled with at least minimal functionality to address Contract Services/SOW.

Spend Matters’ View on VMS

As noted above, Spend Matters’ CW/S enterprise technology SolutionMaps did not start from an assumption of what a VMS solution was. Instead, the starting point was a breakdown of lower-level capabilities that buyer organizations did or would require to manage their CW/S programs (as well as where they would likely be spending the majority of their own budget dollars on CW/S enterprise technology). Those basic categories captured capabilities/functionality that enabled management of:

• Temp Staffing: The core/fundamental and widely used set of capabilities of any solution called VMS account for the majority of spend under management and are the primary source of revenue for all VMS providers.
• Contract Services/SOW: A set of capabilities provided by many VMS providers, it is believed to be the second largest (and fastest growing) revenue category of mature VMS providers that offer it. That said, Contract Services/SOW spend under management by all VMS providers is only a miniscule fraction of all organizations’ spend in this category.
• Direct Sourcing of Workforce/Services: A set of capabilities that are provided by only a few VMS providers that tend to rely heavily on external technology FMS-like providers that plug into their platforms via APIs. This mode of sourcing is at a very seminal stage, but Spend Matters expects it to expand steadily in the coming years.

It should be noted that, when offered by/available from VMS providers, the degree of platform integration — architecturally and at a data level — can vary significantly. The extent of this integration is not currently captured in the CW/S Solution Scores; however, it can be discussed with Spend Matters as a part of the SolutionMap advisory service.

At this juncture, given the preponderance of spend under management, revenue and extent of functionality offered/utilized, Spend Matters proposes a view of VMS as a solution that offers capabilities/functionality for managing Temp Staffing and Contract Services/SOW. Therefore, as to what follows, effectively:

Temp Staffing + Contract Services/SOW = VMS.

So, based on Spend Matters’ proposed definition/concept of VMS, what does Spend Matters SolutionMap scoring data tell us about how VMS provider functionality stacks up?

SolutionMap Analysis of VMS

This analysis attempts to provide a more comprehensive view of what constitutes most VMS solutions and a look at the sub-category averages as well the extent of variation across the providers/solutions scored in the SolutionMaps. Variation or variance means the range between the lowest and the highest vendor scores for a given sub-category.

Currently, five providers — Beeline, Elevated Resources, Coupa, VectorVMS and VNDLY — have submitted complete information on the functionality they offer in both the Temp Staffing and Contract Services/SOW solution categories. While not all of these providers are represented in the Q3 2019 Contract Services/SOW SolutionMap graphics and Solution Score calculations, they were suppressed for reasons independent of their functionality and their scores. In other words, Spend Matters has scored all of the functionality of all of the vendors in both the Temp Staffing and Contract Services/SOW solution categories, based on the providers’ submitted information, rigorous solution demos and analyst judgment.

As part of the SolutionMap process, a score was assigned by Spend Matters’ analysts to every capability/functionality element for each provider within these three SolutionMap categories:

• Temp Staffing — 63 elements
• Contract Services/SOW — 63 elements
• Common Requirements (Capabilities) — 75 elements

These elements were aggregated and scores averaged into a total of 28 sub-categories — 13 within Temp Staffing, 10 in Contract Services/SOW and five in Common Requirements (Capabilities) — listed below:

For each provider, an average score for each sub-category is based on the individual underlying element scores. So for example, the average scores (by provider) of the sub-category “Candidate Evaluation/Selection” within Temp Staffing, were the result of underlying scores of these functionality elements:

Plotted in the chart below are, specifically, the Minimum, Average and Maximum scores for each sub-category within the SolutionMap categories of Temp Staffing, Contract Services/SOW and Common Requirements (Capabilities).

Note: Spend Matters’ solution functionality scoring is based on a scale of 0-5. Find the detailed description of the scoring scale in the Q3 2019 Release Notes right here.

What the Chart Shows: Takeaways

In general, after accounting for outlier scores in the Treasury Management and Worker Evaluation roll-up categories (each of which has only one element), variation within Temp Staffing is consistently less than it is in Contract Services/SOW. This makes sense because Temp Staffing is a much more mature solution category, and one would expect individual solutions would differ less than in the Contract Services/SOW SolutionMap category. And as it turns out, the sub-category average scores within Contract Services/SOW are consistently lower than those in Temp Staffing; and the corresponding variances are considerably larger on a comparative basis.

Among the sub-category average scores in the Common Requirements (Capabilities) category, one finds three of the largest variances. The large variance in the subcategory scores of Algorithmic/AI-driven Activities reflects the fact that while some providers/solutions have progressed in leveraging algorithmic/AI-driven capabilities, other providers/solutions are lagging. That said, the subcategory variance of Reporting/Business Intelligence is relatively small, because visibility into data, reporting, etc. is a fundamental requirement of a VMS. By contrast, the variance in Technology is larger because, while all solutions are SaaS, or cloud-based, there is a mix of technology vintages.

The second large variance, in the Services subcategory, is attributable to some providers offering only standard software implementation and support services, while others provide a very broad range of value-added services. Likewise, in the Globalization/Localization subcategory the score variance is extremely large because one provider offers the most robust capabilities, while one has no capabilities to support clients outside of the U.S.

When considering these average scores and the score variances of the different subcategories, bear in mind that:

• One cannot assume that there is any correlation between maximum and minimum scores at the roll-up level and specific providers. There is considerable variation at the element level, where a provider may score relatively high on one element and relatively low on another element.
• A best fit between a given provider/solution and given client organization cannot be determined by client scores alone, because every client has different needs, preferences and nuances of both. Client references are also crucial, cross-platform integration can be important and other considerations come into play.

In other words, for solution shoppers, to understand the specific, underlying (element-level) strengths and weaknesses of different VMS solution providers and which providers/solutions offer the best all-around fit for an organization, it is necessary to go deeper into the SolutionMap data and services.

Questions for Practitioners and Providers

This brief was intended to serve several purposes:

• To break down and analyze the concept and current reality of VMS
• To construct a proposed view of what should be considered a VMS in 2019
• To map this view to the Spend Matters SolutionMap Solution Score data and provide a high-level analysis of the scoring of the five current SolutionMap participants that meet the proposed definition of VMS

While intended to be a serious analysis of an evolving (and therefore now-ambiguous) solution category, it was a kind of hypothetical exercise as well. That being the case, it makes sense to poll contingent workforce management practitioners and solution providers on the subject and ask:

• Does the proposed Spend Matters definition/conceptualization make sense? Why or why not?
• What is your vision of what VMS will be in five years?

Spend Matters is interested to know your thoughts — please leave a comment below, or reach out to us at akarpie [at] spendmatters [dot] com.