The Services and Indirect Spend Category

ADP and the Future of Work (Part 2) — Innovation R&D, Acquisitions [PRO]

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In Part 1 of this PRO series, we laid out ADP’s business characteristics, its market and financial strength, and its increased investment in innovation R&D as a backdrop and foundation for its pursuit of its future of work strategy. In this second part of the series, we examine the significant technology developments and recent strategic acquisitions that make up key execution components of the strategy. Part 3 will bring the pieces together to describe this strategy and what it may mean in a broader industry context.

ADP and the Future of Work (Part 1) — The Foundation [PRO]

Spend Matters’ coverage of ADP — the global payroll, human capital management (HCM) solution and HR managed services provider — had been infrequent since mid-2015, when ADP sold its procure-to-pay business to Oildex. That made sense since Spend Matters tends to focus on technology and innovation from the procurement perspective, and (given ADP’s traditional focus on internal employees), there was not even much of a link to the contingent workforce area.

But that changed in early 2018, when ADP acquired the freelancer management system (FMS) WorkMarket, and it soon became clear that something larger was brewing at ADP. In fact, we have since looked more closely and found that the company is not only executing a strategy to address needs related to the growing freelancer or independent contract workforce (ICW) — but it also is making a great leap forward in rolling-out a leading-edge core technology platform for its payroll and HCM solutions and services, something that will no doubt play a role in the company’s freelancer/ICW, agile total workforce and overall future of work strategy.

The future of workforce sourcing, engagement, management and compensation is that of human capital management as well as payment “platforms” and digital ecosystems that bring together businesses (large and small), ecosystem technology and services partners and, last but not least, workers of different generations, localities, economic strata and types of work arrangements. That includes dynamic arrangements: part-time or temporary employment, on-demand intermittent gigs or moonlighting, and freelance/independent contract worker engagements.

In this three-part PRO brief, we will provide a refresh on ADP and how it is strategically addressing the “future of work” head-on. Part 1 will provide a summary overview of ADP and how the company has been strategically investing in innovation and technology to address the future of work. Part 2 will identify and discuss significant technology developments and recent strategic acquisitions, key execution components of ADP’s future of work strategy. Finally, Part 3 will bring many of the pieces together to form a picture (or more accurately, a sketch) of how ADP is moving forward to address a future of workforce management that is increasingly digital and decentralized, and where the needs and expectations of client businesses AND workers are already diverging from those that were stable for decades.

Upwork Enterprise: What Makes It Great (Independent Contract Workforce Analysis)

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Upwork, the well-known, global online freelancer marketplace, is increasingly becoming known for its Upwork Enterprise solution, a combination of technology and managed services designed to enable enterprises to source and engage freelance talent. Upwork Enterprise was recently evaluated in Spend Matters’ SolutionMap framework with the Independent Contract Workforce (ICW) enterprise solution category. The ICW solution segment is the most dynamic part of the contingent and workforce and services (CW/S) procurement technology market, which also includes the Temp Staffing (Vendor Management Systems/VMS) and Contract Services/Statement of Work solution segments.

Today’s ICW enterprise solutions — many originating, like Upwork, as online marketplaces — have their roots (or at least their impetus) in the so-called gig, freelance and peer-to-peer “economies” (the new world of Uber and Airbnb versus the establishment world of enterprise software applications inhabited for decades by providers like SAP and Oracle). Some of these “gig economy” solution providers have been clawing their way into larger enterprises with new technology platforms to allow those organizations to scale up their use of freelancers sourced through online platforms. This is what Upwork has been doing with Upwork Enterprise, which goes go market now as a combined managed services and technology solution (analogous, up to a point, of traditional managed service providers with their own VMS technology).

In the ICW solution segment, Upwork Enterprise is a unique solution that provides a set of functionality and services that organizations of any size can use to source, engage and pay remote, online freelancers and agencies from Upwork’s global marketplace. It provides clients with robust capabilities that includes management of SOW projects and the organization of preferred providers (freelancers/agencies) in private talent pools. And the value of the platform also is being amplified by a growing set of managed services and solution offerings.

Where does Upwork Enterprise fit into the burgeoning ICW market? As of September 2018, the Spend Matters SolutionMap contains functional and customer satisfaction benchmarks on over 50 providers within the procurement technology landscape, including six providers within the ICW segment. But where does Upwork Enterprise stand out most and help “set the bar” in for the ICW segment? And why should this matter for procurement and HR organizations? Let’s delve into the SolutionMap benchmark to find out where Upwork Enterprise is great.

“What Makes It Great” is a recurring column that shares insights from each quarterly SolutionMap report for SolutionMap Insider subscribers. Based on both our rigorous evaluation process and customer reference reviews, each brief offers quick facts on the provider, describes where it excels, provides hard data on where it beats the SolutionMap benchmark and concludes with a checklist for ideal customer scenarios in which procurement, finance and supply chain organizations should consider it.

Upwork Is Now A Publicly Traded Company: The World of Work Is Indeed Changing

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Upwork, the world’s largest online freelancer marketplace provider, went public today on the Nasdaq exchange. The IPO has been anticipated since Upwork announced its Form S-1 filing with the Securities and Exchange Commission (SEC) in early September. The opening share price today was set at $15, above the price range of $12–$14 noted in last week’s amended S-1. The proceeds of the sale of 12.48 million shares were $187 million, well above the $100 million anticipated in the S-1.

Upwork Is Going Public: What It Means for Contingent Workforce Procurement and Human Resources Executives [PRO]

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Upwork’s prospective initial public offering constitutes a significant marker in the steadily evolving contingent workforce and services procurement and the overall human capital management space, where enterprise executives and line-managers are dealing with seriously imbalanced supply and demand, increasing requirements for workforce flexibility and agility, and a parade of new, non-traditional, technology-driven solutions to the problem of “getting the work done.” This is true in a number of ways and at a number of levels.

In September, Upwork, the largest global online freelancer marketplace and the provider of Upwork Enterprise, announced an IPO plan to list its common stock as an emerging growth company on the Nasdaq Global Market.

Its SEC filings revealed a $10 to $12 per-share-price range. Net proceeds from the IPO (after repayment of $16 million in notes) could range, as reported by the California-based company, between $64 million and $74 million and would be used for working capital and other general corporate purposes, including product development, general and administrative matters, and capital expenditures. Based on the filings, Upwork’s IPO valuation could range from $1 billion to over $1.25 billion (about 5X revenue).

Spend Matters has closely covered Upwork developments for several years. And the Upwork Enterprise solution was recently evaluated and recommended within Spend Matters SolutionMaps for Contingent Workforce and Services (CW/S) enterprise technology solutions (specifically, in the category of solutions that address independent contract worker (ICW) sourcing, engagement, management and payment).

While this PRO report will draw a number of key points from the trove of new, previously insider-only information about Upwork, readers can access all of those details with one click in the amended Form S-1 filed with the SEC. The purpose of this PRO brief is more to analyze what this event means for executives in contingent workforce and services procurement and HR, many of whom may not be up to speed on changes taking place in the CW/S space — in particular, new types of platform intermediaries that have the potential to substantially enhance an enterprise’s workforce sourcing effectiveness and efficiency, engagement flexibility and structural agility.

The Contingent Workforce and Services Insider’s Hot List: October 2018 [Plus+]

Welcome to the October 2018 edition of Spend Matters’ monthly feature, “The Contingent Workforce and Services (CW/S) Insider’s Hot List,” available to Plus and PRO subscribers. For those new to the Hot List, each edition covers the prior month’s important and sometimes just plain interesting technology and innovation developments within the CW/S space. Over the last several months, this space has seen both significant change and inertia co-exist, yet the change is not slowing down — quite the contrary.

The September Hot List covered a broad range of developments, ranging from the Ernst & Young acquisition of U.K.-based alternative legal services provider (ALSP) Riverview Law, to the partnership of Jaggaer with Science Exchange, a marketplace for outsourced R&D, all the way to some of the latest blockchain-based work intermediation intermediation platforms, such as Moonlighting. In the meantime, other developments continued percolate around the innovative edge of the defined CW/S space. Altogether these developments reflect an industry that is undergoing widespread transformation.

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How Procurement Best Practices Are Stifling Innovation — And What to Do About It

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Many companies have discovered that best practices for managing professional services spend have imposed financial discipline but have come at the expense of innovation and organizational agility. Now, growing interest in agile development methodologies — in which small, cross-functional teams are empowered to work independently on complex problems — is prompting procurement officers to wonder whether the on-demand talent marketplace could help them regain ground at a lower price point. After all, the push for agility is driven by a need for companies to respond more quickly to opportunities and threats by nimbly adjusting the assets — including human ones — they put against each one.

To Deliver Superior Field Services Outcomes, Businesses Should Look to the Freelance Economy

Managing a modern-day field service function presents numerous challenges to business leaders. Consistently getting the right person for a service request to the right place at the right time has only become more difficult in today’s hyper-competitive, on-demand business environment. To meet these challenges, businesses have increasingly looked to augment their current W-2 field service employees by engaging third-party vendors. But while diversifying beyond full-time technicians is a reasonable start, businesses should not stop at merely outsourcing field services functions to external partners.

Highlights from ADP Analyst Day: It’s Not All Permanent, It’s Also Contingent

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Spend Matters attended ADP Analyst Day last week, held at the ADP Innovation Lab in New York City. At more than $13 billion in annual revenue, ADP is the largest provider of payroll services and one of the largest providers of human capital management (HCM) solutions in the world. Over the past six decades, ADP built its business on the basis of the permanent W2 employee workforce. But as we all know, nothing is permanent — particularly in workforce, where for businesses and workers things are becoming increasingly contingent. And ADP, which acquired WorkMarket earlier this year, is clearly rising to meet the changes in the market, on both the business and worker side. As you might expect, this is not a casual undertaking for ADP but a studied, strategic initiative now moving into gear.

Project Management and Market Analysis Rank Among Most In-Demand Consulting Skills

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Business Talent Group recently released its inaugural Skills Index on the consulting skills that are the most in demand by Fortune 1000 companies, and project management, market analysis and growth strategy top the list. With skills scarcities affecting many big global companies, it’s a good time for consultants to market specialties such as these through the high-end gig economy, according to the study. The Skills Index further detailed the top three most in-demand consultant skills by industry. Market analysis, project management and strategic planning are the most sought-after in the financial services industry, while supply chain is the No. 1 in-demand skill for the consumer goods industry. Market analysis and project management come in second and third.

Coupa’s DCR Acquisition: Analyzing the Move (Part 2) — Strategic Context and Differences Between Labor and Goods Ecosystems [PRO]

Even discounting the technological capabilities DCR Workforce brings customers, Coupa’s recent acquisition of the VMS provider is a watershed event for the procurement software market. Specifically, it signals to the market a coming together of technology offerings for services procurement and indirect source-to-pay solutions.

As we observed in our previous brief in this series, SAP Ariba and SAP Fieldglass did not have a compelling reason in the immediate years following SAP’s acquisition of both companies to “work as one” in developing, positioning and selling the joint value proposition of one source-to-pay portal for buyers and suppliers that spanned indirect and services spend in a single go-to-market effort. In contrast, Coupa is on a different track — one that SAP is now starting to follow, as well — in uniting these two disparate solution areas and business functions inside companies.

But humans are not SKUs, which is one topic among many that we’ll discuss as we explore the context of Coupa’s strategic acquisition in this research brief. We’ll also explain the key sector differences between the services procurement/VMS market and indirect-centric procure-to-pay and source-to-pay solutions.

Just coming up to speed? In the first two components of this series covering Coupa’s recent acquisition of DCR Workforce, we provided an overview of the acquisition itself and a review of the DCR solution set.

We also shared our view on some of the strengths and weaknesses of the DCR solution prior to the acquisition, along with an overview of the broader competitive landscape that will be relevant as DCR now becomes “Coupa Contingent Workforce.”

In this section of the series, Part 1 explored the history and context of services procurement and indirect procurement from the perspective of both Coupa and the broader market. It also provided context based on the differences between how SAP pursued the market initially with Ariba and Fieldglass following its acquisition of both vendors.

What’s Up with Contingent Workforce Programs and MSPs: A Chat with EverHive’s Brandon Moreno

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The old way of sourcing and managing contingent workforce and services is on its way out, that much is certain. Compared with the first MSP offerings from the 1990s, the number of options for engaging external workers and their work outputs has expanded considerably, making the task of choosing the right kind of program or solution partner for a business all the more difficult. To get a sense of where the industry has been and where it might be going, we sat down with Brandon Moreno, president of EverHive, for a quick Q&A on the state of contingent workforce programs and MSPs.