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Microsoft 365 Freelance Toolkit: Retooling How Enterprises Work (Part 1) [PRO]

The extent to which large enterprises are using independent contract workers, including online freelancers, has been a Spend Matters’ research interest for several years now. That interest has included the “what” and the “how” of what has been happening (including procurement’s role in the process).

In December 2018, when we covered Upwork’s partnership with Microsoft on the launch of the Microsoft 365 freelance toolkit, we recognized the event as one more step in the gradual alignment of enterprises and online freelancer marketplaces. But we barely skimmed the surface of what this toolkit actually is, how it came to be at Microsoft and how it could help other enterprises and their employees.

At that time, we reported that the Microsoft 365 freelance toolkit builds on Microsoft clients’ “existing technology investments and provides tools, templates and best practices that help enterprises launch, execute and manage freelance programs at scale.” And technology-wise, the toolkit consists of “built-in product features and integrations with Microsoft Power BI, Teams, SharePoint and Flow” that “guide enterprises through the freelance engagement process.”

This Spend Matters PRO series will take a closer look at the Microsoft 365 freelance toolkit, clarifying what it actually is, how it emerged and took shape, almost spontaneously, as a part of a bottom-up yet multidisciplinary process (which included HR, legal and even procurement as key players). The series will share insights into this two-year process based on our discussions with key managers at Microsoft and Upwork.

In Part 1, we draw on our discussion with Paul Estes, the Gig Economy strategy lead at Microsoft and the product lead of the Microsoft 365 freelance tool kit initiative. In Part 2, we talk with Chad Nesland, Microsoft’s director of strategic sourcing and the procurement lead in the initiative. And in Part 3, we incorporate our discussion with Eric Gilpin of Upwork Enterprise, Microsoft’s launch partner. We wrap up with our overall analysis of the Microsoft 365 freelance toolkit journey and potential implications for other large enterprises and their procurement organizations.

Services Procurement is Broken: Finding Fixes Beyond Contingent Workforce Management, E-procurement [PRO]

If you google the term “services procurement,” you’ll see an article from my colleague Andrew Karpie touching on the topic front and center. He talks about the need to transcend the traditional contingent labor-centric view of what is in fact a much larger scope dealing with the procurement of all services. Aggregate annual spend on complex services by U.S. organizations is on the order of $9 trillion to $10 trillion, while spend on temporary staffing is only on the order of $0.02 trillion. When looked at with a wider-angle lense, the scope of services spend is huge. But ...

This is where I’m going to carry the discussion forward. The problem that I’ll address is, to put it bluntly, the management of services spend is shockingly poor.

There are many reasons for this. The first is organizational.

A spend category like direct materials is fairly straightforward in terms of organizational reporting ultimately into the supply chain organization (and/or business unit). The same can be said for lab supplies managed alongside R&D or data center equipment managed alongside IT. But services are trickier, not only in their inherent complexity and variability, but also because of their organizational governance. For example, if I’m looking to bring in some DevOps contractors to supplant my IT outsourcing provider’s capabilities, do I use an IT category team, a contingent labor Center of Excellence or perhaps an IT Vendor Management Office to have the ITO vendor provision the resources?

Beyond the organizational governance issue, the bigger problem is the fragmented nature of managing (not just procuring) services and the underlying systems to manage them — even just in source-to-pay. Case in point: There is not a single source-to-pay solutions provider in the market that offers deep support for all enterprise spend on a platform with a single code base and a unified data model.

And this is 20 years after e-procurement systems started being developed. Let that sink in.

But before a few of the S2P suite vendors get their knickers in a twist over this statement, keep in mind that what I’m including with the term “deep support” is being able to track services work to the contingent worker level that temporary labor solutions (aka “VMS” solutions) and those solutions supporting independent contractors. These contingent labor procurement platforms for their part are only touching a portion of the spend, and the expansion of many of them into SOW-based spend isn’t necessarily something that firms want to use for all their contract-based spend given that modern S2P suites can do a reasonably good job of setting up SOWs against MSAs, modeling basic rate-based service catalogs, and then matching them to the downstream invoice-to-pay processes. The trick, however, is how to go beyond the basics and handle the real life requirements of complex services categories.

This transformation will require a new way to understand/frame services and a new class of architecture and platforms to meet these needs — while also making some practical moves with existing tools (e.g., using modern CLM platforms as a critical core to modeling the commercial details/attributes of these services). It will also require procurement to align more tightly with IT and to leverage an emerging ecosystem of platform providers and approaches that can help rise above the functional silos that manage services spend in disjointed ways.

Extracting maximum commercial value from services can only be done at an end-to-end process level, and procurement has an opportunity to help optimize the sourcing, consumption, settlement and ongoing management of these increasingly digital and externalized services (and their providers). By more easily extending the capabilities of digitally savvy suppliers into internal value chains with internal stakeholders, but also ultimately out to external customers, procurement can proactively be part of broader enterprise digital transformation activities.

In this SpendMatters PRO analysis, we’ll dive into the challenges of segmenting external business services (e.g., understanding the interplay between digital-dominant and labor-dominant services) and how to look beyond the traditional contingent labor approaches (hint: Segmenting the market based on the presence of a statement-of-work is clearly not sufficient).

Later in this series, we’ll dive deeper into a new commercial framework for services and then map the resulting business requirements to technology requirements and associated vendor/solution types that transcend the source-to-pay market (e.g., enterprise CLM, ITSM, low-code platforms, etc.).

Coupa, Services and Coupa Contingent Workforce: A Progress Report (Part 2) [PRO]

In this two-part PRO series, Spend Matters provides a review and analysis of Coupa’s recent evolution in addressing the category of services spend, including Coupa Contingent Workforce. In Part 1, we provided an overview of where Coupa is at with the integration and leveraging of DCR Workforce.

First, we revisited the Coupa “services procurement” background/context leading up to the DCR acquisition last year. We also recounted our September 2018 briefing, in which Coupa discussed the acquisition and what to expect as far as integration (or “unification”) of the acquisition over the coming months. Additionally, we discussed what we learned from our most recent January 2019 briefing by Coupa on the current state of the integration.

Based on this analysis, we concluded that, six months in after the acquisition, Coupa’s integration at the organizational and product levels appeared to be on course. The priorities seemed reasonable even given the unique dynamics of the VMS market — and the plan, based on Coupa’s history of stamping out post-merger integrations, seemed on track.

But beyond this, what has happened to the DCR product under the Coupa umbrella? And how is it fitting into the changing world of services procurement — and potentially even help to shape it? In Part 2 of this research series, we will provide our own observations on where Coupa seems to be going, in terms of the contingent workforce technology solution segment and its increasing overlap with other procurement technology solutions.

The Contingent Workforce and Services (CW/S) Insider’s Hot List: February 2019 [Plus +]

Welcome to the February 2019 edition of Spend Matters’ monthly Hot List, a look at the contingent workforce and services (CW/S) that’s available to PLUS and PRO subscribers. For those new to the Hot List, each edition covers the prior month’s important or interesting technology and innovation developments in the CW/S space.

Perhaps overcome by the polar vortex, for many, January turned out to have been a frigid month. But the CW/S space continued to percolate, with a number of developments and changes and a few new third-party reports that offered insights into various aspects of this evolving space.

Field Nation: Vendor Snapshot (Part 2) — Product Strengths and Weaknesses [PRO]

In the first of this three-part Spend Matters PRO series, we introduced you to Field Nation, a digital platform that enables companies and their managers to conduct “on-demand” sourcing, engagement, dispatch, management and payment of technical field services contractors, services providers and, recently, employees.

For a number of years, Field Nation has been providing what was basically a many-to-many online spot-buy marketplace. But last year, the company launched an enterprise-level, blended-workforce sourcing and management platform solution called Field Nation ONE, and that is the focus of this product evaluation.

Among other enterprise technology solutions that address independent contract workers (ICWs) and are featured in the Spend Matters ICW SolutionMap, Field Nation ONE stands out with laser-like focus in the field services vertical and its integrated proprietary marketplace of roughly 15,000 field service contractors in the U.S. and Canada. But while Field Nation ONE is an enterprise, S2P solution addressing the ICW work category, it is nonetheless a specialized one and needs to be evaluated on that basis. It also bears noting that Field Nation ONE is at the very beginning of its product maturity curve.

Part 1 of this Spend Matters PRO series provided company background and a detailed solution overview, plus a set of solution-fit considerations. In Part 2, we now cover what we see as the strengths and weaknesses of the solution as well as a rating of UI/UX. Part 3 will provide competitor and SWOT analyses, and insider evaluation and selection considerations.

5 Areas for Services Procurement Professionals to Watch in 2019

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As we start off 2019, more procurement professionals may want to be on their toes with respect to the changing contingent workforce and services environment. With that in mind — and recognizing the wicked challenge of making even short-term predictions in this space — we are not offering predictions per se but rather commentary on several broader trends. No promises, no New Year resolutions. Instead, we’d like to point to some areas we will be (and perhaps you should be) watching in 2019. To avoid being caught flat-footed as new developments and opportunities arise, practitioners need to keep their eye on five areas in particular.

Sourcing and Engaging the Independent/Freelance Workforce — An Emerging Ecosystem? (Part 1) [PRO]

Coworks

It’s time for a Spend Matters PRO series to catch up on what happened to the gap that we identified several years ago between enterprise managers and independent/freelance workers.

In November 2015, we pointed out a barely noticed “white space” between the enterprise demand for independent/freelance workforce* and the supply of those workers. By that we meant that while enterprises, with the support of VMS technology and often MSPs, were able to source and manage contingent workforce from staffing suppliers and contracted services providers, they generally lacked the capabilities to systematically source and manage independent/freelance workers.

We also observed the emergence of FMS, the freelancer management system, at that time, but we were clear that it was just “a part of a much larger set of developments, encompassing a range of new —  and incumbent — solution and service providers that increasingly leverage advanced technology, digitized information and innovative approaches to sourcing and managing independent/freelance workers.” We further asserted that the independent/freelancer workforce white space would start filling with various providers of solutions and service providers.

We also speculated that — due to state-of-the-art cloud stack, APIs, services architecture and other technology that would be underlying their solutions — these providers would start to become components of a comprehensive digitally enabled and digitally connected ecosystem. By that we meant an ecosystem (and nested ecosystems) that could evolve and be reconfigured more rapidly to serve the unique needs and preferences of different enterprises and, just as importantly, the unmet preferences and needs of the independent/freelance workers whom enterprises would engage in many new ways (some previously not possible).

Now, three years later, we can ask what has actually happened and to what extent the white space between enterprise managers and independent/freelance workers has been filled to:

— Provide enterprises with the required capabilities to source, manage and maximize the value of this independent/freelance population.
— Provide independent/freelance workers with the access to the opportunity pathways and the support/services they require to function as viable “operators.”

In Part 1 of this PRO series, we assess the current state of the independent/freelancer workforce and whether it is overhyped. In Parts 2 and 3, we will focus on the extent to which digitally enabled sourcing channels and work intermediation platforms have effectively bridged the gaps. In other words, to what extent has the white space been filled? And what is the current state of the digitally enabled ecosystem?

FMS and Beyond: Filling in the ‘White Space’ of Sourcing and Engaging the Independent Workforce (Part 1) [Plus +]

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Editor's note: This Spend Matters Plus brief is a refresh of our 2015 series on engaging the independent workforce, which originally ran on Spend Matters PRO. 

Freelancer management system (FMS) is a vendor-driven term and concept that achieved buzzword status in staffing and contingent workforce management circles within just a year of its inception. It is a real and important technology solution development, one that has focused attention on an important expanding gap between talent-hungry enterprises and a fast growing, business-critical segment of the modern global workforce. While FMS is one catalyst of this focus and a way of beginning to bridge this gap — a procurement “white space,” if you will — it is also a part of a much larger set of developments, encompassing a range of incumbent and new services and solutions players as well as new technology infrastructures that will unfold and take shape in the coming years.

In Part 1 of this Spend Matters Plus series, we cover how a procurement white space has appeared between enterprises and an important growing labor population: the independent workforce. We also provide an understanding of what this independent workforce is and why it is important. In Part 2, we begin to identify the broad range of incumbent and new services and solutions players that are bringing together different approaches to connecting supply and demand in this emerging contingent workforce 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.

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

Welcome to the September 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 August Hot List reported that July was a particularly sweltering month (in terms of innovation, of course). The news of Beeline’s acquisition by New Mountain Capital soaked in, rumors of a possible Upwork IPO made their way through the industry, co-founder of Elance and former CEO of Upwork became the Chairman and CEO of Snag (formerly Snag-a-job). And those were just a few.

Now, Labor Day has passed. Gone are the dog days of summer, so let’s welcome September by reviewing what happened in August.

Beeline’s Acquisition by New Mountain Capital: Transaction Analysis and Competitive Impacts [PRO]

Beeline, well known in the contingent workforce and services sector as one of the top two global VMS solution providers, recently announced it is being acquired by New Mountain Capital (NMC), a private equity firm. NMC, which is focused on developing and growing companies in defensive growth industries, is now completing the last formal steps in its acquisition of Beeline from private equity firm GTCR. Spend Matters covered the acquisition announcement and followed up on the news with a subsequent interview of Beeline CEO Doug Leeby, who expressed enthusiasm about the deal and confidence in the new owner.

The acquisition comes at an interesting point in the evolution of the contingent workforce and services (CW/S) software market.  On the one hand, solution buying by enterprises continues to follow a customary pattern — we need a VMS or an MSP/VMS and a supplier-funded model — resulting in a commodified, competitive market. In such an environment, some VMS providers have focused on achieving economies of scale, exploiting solution adjacencies (e.g., SOW) and investing in new technologies (e.g., data analytics, artificial intelligence) to enhance solution value and differentiate their offerings.

At the same time, changing conditions on both demand and supply sides of the labor market (e.g., skill shortages, cost of talent, independent workforce, online platforms) have started to stimulate responses among CW/S intermediaries and software providers. Moreover, the application of state-of-the-art and leading-edge technologies is enabling incumbent and new providers to offer new types of solutions that may (or may not) address emerging business needs in the short term or the long term. In such an environment, having the capacity to invest — and a balanced but agile investment strategy — would appear to be critical to future success.

In this Spend Matters PRO brief, we add context to and take a closer look at the Beeline-NMC deal, which seems promising. We also offer our perspective on what the deal may mean for Beeline and the competitive markets it serves, in both short and long terms.