More From the Consultancy Procurement Council – SAP Fieldglass on Managing External Labour

Back to the first “summit” of the Consultancy Procurement Council (CPC) which we attended recently. We gave an overview here, but today let’s dig into Mikael Lindmark’s session. He is with SAP Fieldglass and we said last time that a recent survey on the External workforce driven economy” suggested that 44% of total workforce spend now goes on the external workforce.

The study, surveyed 900 companies, with 50% over £5 billion turnover. Those who manage external labour effectively find it to be a driver of competitive advantage, says Lindmark. There were four forces identified in study.

The multi-channel workforce is on the rise. The picture is getting more complicated, with a diverse landscape. It is unlikely to be not enough to just have a single Managed Service Provider to handle all the requirements. And “talent doesn’t want to be employed” – within certain categories at least, skilled people want to be independent. Engineers within oil and gas, for instance, prefer to work on 6 month projects and move around – it is apparently almost impossible to recruit permanent staff.

It's about the core – external staff are working in every part of the business, including the core and critical roles, not just minor areas.  Getting this right and managing it properly is therefore key to running the business.

Cost is not the whole story – it is all about value. Even in a French logistics firm, about as competitive a market environment as you could imagine, it was about “the talent pool of drivers” according to Lindmark. Markets are tightening, and the reliance on external people means cost can’t be the whole picture. 68% of the survey respondents said the external workforce is important to delivering and improving products.

Visibility is everything – if you don’t have the right tools to get visibility of this spend, you can’t manage it. If you can’t measure, you can’t manage.

A question from a delegate at this point asked about how to get to grips with this whole area in a de-centralised environment.  There isn’t an easy or magic answer to this of course – Lindmark stressed that you need systems and tools so that “everyone acts in the same platform – buyer, procurement, supplying firm, individual”.   That is true but doesn’t really address that issue of how to persuade top management of the need for this approach if they are happy with a more de-centralised way of working. But that is one of procurement’s perennial challenges!

Ownership of the whole “contingent labour” spend area is another issue – is it HR, procurement or both? Lindmark is clear on this – it works best when the two functions work together, hat is the utopia! Interestingly, he observes that it used to be mainly procurement driving this, but now more driven by HR or perhaps 50:50. So we suspect that HR has realised that with so much focus on external resource, they need to get involved in that or see their traditional role decline.

The second part of the presentation was more around how Fieldglass works. It wasn’t a hard sell, but the main message was that more supply side firms are getting comfortable about being managed through the Fieldglass platform.

For instance, in response to a question from the audience about how much consulting spend goes through the Fieldglass platform, Lindmark said that “things are changing”. While firms have been  worried about commoditisation, the “big consulting firms are implementing Fieldglass internally, so they would have to be hypocritical not to support it in their clients’ organisations”, which was an interesting thought. But, he warned, if users look to bring in consulting spend as a pure “cost play” then that may not work so well – it has to focus on value.

More to come on the CPC summit …

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