Making the Transition to MSP 2.0

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1 PERSPECTIVE ARTICLE Making the Transition to MSP 2.0 From Implementation Impressario to Innovation Incubator

2 Is Your MSP a Strategic Partner or a Tactical Solutions Provider? A discussion on the changing significance of managed services providers today. MSPs establish the foundational structure and governance that empower contingent workforce programs. They implement protocols, manage technology and mitigate risk. They drive measurable and impactful results. As programs mature, however, the MSP should evolve from tactician to strategist, partnering with their client to transform program excellence into competitive advantage. Milestones Managed Services Provider (MSP) programs are both widespread and mature. Staffing Industry Analysts (SIA) reports that 63 percent of respondents in its latest buyer survey use an MSP to manage their contingent workforce programs. More than 50 percent of those programs have been in place for more than three years. Total MSP/VMS (Vendor Management System) spend under management has reached $100 billion. The contingent workforce is increasing in size and importance (and competitiveness) within the overall workforce. Not only does it represent the fastest growing segment of the U.S. labor force since the end of the recession, Aberdeen Group predicts contingent labor will comprise more than 27 percent of the average organization s workforce by Given these compelling trends, it is critical that a maturing MSP make the leap from implementation impresario to innovator, continuing to uncover strategic opportunities to generate new and ongoing value for workforce management programs. Additionally, with a widespread talent shortage (especially in IT and health-related industries), there is an increased focus on leveraging your MSP for total talent acquisition and globalization purposes. MSP 2.0 Planning Roadmap/Timeline 3 years or longer, matches the organization s strategic plan We ve worked diligently to make sure our MSP knows what our strategic people plan is and how they will contribute. Signs of MSP Program Maturity Pioneering MSPs provided implementation of a program, VMS technology management and some risk mitigation. As they gain traction and experience, MSPs should expand their role to serve as global advisors, becoming more integrated in a total talent management strategy. The journey to program maturity represents a progression from tactical solutions to strategic talent advantage to transformational workforce performance. A forward-focused MSP partner should be uncovering opportunities for ongoing cost savings, leveraging workforce analytics and blueprinting timely strategic growth for both geographic reach and solution coverage. Once all the low-hanging fruit of the early-stage MSP is picked, i.e., immediate cost savings and process efficiencies/vms automation, today s provider should continue to bring value by exploring the maturity road map with a future design in mind, as workforce utilization evolves and your corporate strategies change. For example, a forward-focused MSP partner should be uncovering opportunities for ongoing cost savings, leveraging workforce analytics and blueprinting timely strategic growth for both geographic reach and solution coverage. According to Aberdeen Group s 2012 Contingent Workforce Management Report, best-in-class mature programs share the following two characteristics: 73 percent provide a higher likelihood of proactive strategic planning and budgeting for future projects. 63 percent use analytics to view contingent workforce spending in real-time to measure against corporate budgets. 2

3 At the beginning of an engagement, the focus is on implementation of the classic temporary workforce and securing high program adoption rates and cost savings/ containment. During this early stage (typically days post go-live), governance protocols are established, performance measures created and early metrics evaluated. Other critical path items may consist of establishing core policies, standard operating procedures (SOPs) and supply base studies for misclassification and early optimization. Program processes are then evaluated and adjusted, focusing on hiring manager engagement and satisfaction. Ongoing metrics or service level agreements (SLAs) and key performance indicators (KPIs) are agreed upon, in order to benchmark the MSP s results against previously established goals. So, once MSP programs have firmly established MSP 1.0 procurement protocols, policies and process standardization to mitigate risk and manage costs in contingent workforce management, what s next in terms of value generation? Top Priorities for Contingent Workforce Management Source: Aberdeen Group, August 2013 MSP 2.0 Talent Pools Skills Inventory Strategic capabilities gathered and analyzed at a group level Our MSP helps us make better business decisions because they inventory competencies of all our non-employee talent pools. For ease of comparison within this paper, an organization s initial partnership with an MSP is referred to as MSP 1.0; the MSP which continues to grow, add value and stretch the limits of the typical managed services engagement standard is referred to as MSP 2.0. Inaugural MSP or MSP 1.0 Many programs tend to get mired in a continuous cycle of improving operational performance. Not a bad place to be, but it represents a plateau that can stall forward momentum. Your MSP partner should continuously identify new opportunities for improvement, even within the first three months after the initial program is live. MSP 2.0 and Beyond Great starters sometimes run out of steam. Just as some people are great at getting new projects off the ground, some MSPs are implementation impresarios, but are challenged to take maturing programs to the next level. This is true of both internally run, as well as externally managed MSPs. Typically, the core objectives of MSP 1.0 during implementation are: Adoption and steady state satisfaction with key user groups Hard and soft savings identified Visibility into non-employee spend Quality processes and talent improvement MSP 2.0 Terminology Evolution Explore, Design (not measure or calculate ) Our MSP team is included in our strategic people planning when we design and explore new ideas. Compliance and risk mitigation activities introduced 3

4 The initial job of every MSP is to ensure the solution delivers expected benefits and satisfaction levels are met. The original RFP for a centralized contingent workforce program outlines clear objectives for the program, and the contract between the client and the MSP defines minimal service levels. Typical SLA Metrics Placement Timing Rate Compliance Initial Placement Quality Retention Rate On-Time Fill Percentage On-boarding Compliance Short Listing Effectiveness Client Program Satisfaction (1 year survey) Second-Tier Minority Spend The MSP begins implementation with those goals in mind. It pursues compliance with established KPIs and SLAs, savings targets, legislative mandates and company policies. Achieving program goals, however, requires a good deal of down-in-the-trenches execution. Early on, quarterly updates tend to get bogged down in a review of operational efficiencies, a restatement of issues, challenges and risks, and a report card on supplier optimization. Avoiding the Innovation Plateau After a year or two, every MSP program should reach a steady state. Your MSP partner should be doing more than reporting progress at quarterly business reviews. While an MSP should always work to improve the current state, sometimes too much focus on operational oversight rather than strategic progression can lead to programs that grow stagnant. The MSP that is too headsdown, handling today s tactical challenges, cannot stay on top of industry advances. This is especially true of internally managed programs. In our experience, companies using this model miss out on both MSP 1.0 and 2.0 benefits. They are too isolated to stretch beyond tactical operational excellence to reach strategic excellence. The MSP brings experience and a continuously expanding body of knowledge that can rarely be duplicated by programs managed in-house. Insourced MSP programs start with industry best practices but can grow insular, losing touch with industry advances as workforce strategies continue to evolve in line with the metamorphosis of the workforce itself. It may be uncommon for an MSP to proactively uncover blemishes that suggest the need for a phase 2 program, but your MSP should be a trusted advisor that serves as a vanguard, spearheading transformational initiatives that completely reconfigure the value proposition of a contingent workforce program. If your MSP is not a source for leading strategic initiatives that will help you win the talent wars, consider a change. Many companies are investigating second-generation programs as their original providers, while adequate in the initial stages of program implementation, are now resting on their laurels, neither expanding the program nor delivering new and innovative ideas. Restating MSP Program Objectives Managing a dynamic workforce acquisition program requires, at a minimum, a restatement of goals and an adjustment to current service levels, SOPs, rate management and supply base. Beyond that, a value-based MSP must do more. It should track what the industry is doing how the economy dictates the availability of top talent new trends in workforce management. MSP 2.0 Data Inputs Wide range of internal and external data sources demographics, business strategies, global trends, etc. Our MSP uses a wide range of data inputs to help us know the most optimal way to engage talent. The list is extensive. Can your MSP deliver new competitive advantage in the marketplace through contingent workforce analytics and innovative solutions for direct hire, SOW, IC? How about business process outsourcing and consulting engagements? 4

5 The Evolution from Tactician to Strategist to Transformation Driver: MSP 2.0 Today, leading-edge MSPs partner with forward-thinking companies to introduce innovative practices and new strategic initiatives designed to ensure continuing value generation. They can serve as guide and facilitator as you explore the opportunities inherent in total talent management. And there are opportunities aplenty to improve talent acquisition and workforce management programs. When Aberdeen Group took a close look at the current state of contingent labor management strategies and solutions earlier this year, it found that only about 27 percent of companies are actively engaged in a total non-employee talent management strategy that includes traditional staff augmentation, statement of work/ services procurement, independent contractors and consultants. In contrast to the more tactical objectives of MSP 1.0, we are suggesting that MSP 2.0 pursue a more strategic approach, characterized by exploration, dynamic design and transformation by: Aligning a changing talent strategy and overall client goals for - Globalization - Total talent management and workforce mix modeling - Synergy between HR, procurement and business units Optimizing technology Integrating predictive contingent workforce analytics (CWA) Enhancing solution and strategic growth Maximizing risk mitigation, i.e., ID management and enhanced on/off-boarding Analyzing the true costs of output Reviewing new models for pricing Question the return on your investment in relation to your current MSP. What may have worked for your company three years ago may need resuscitation or at least a bit of renegotiation. MSP 2.0 programs evolve the solution to meet new and changing organizational needs, economic forecasts and talent trends, strategy alignment and globalization. They assess and recommend program efficiencies and consider VMS technology maturity. They introduce innovative services through a focus on strategy, planning and longterm optimization. They showcase your company brand and identify your company as a choice destination for the contingent workforce. When your MSP is a true consultant and strategic partner rather than a tactical solutions provider, you open up opportunities for greater overall value generation, increasing your ability to successfully win the global war for talent. MSP 2.0 Talent Outputs Enterprise HR/people strategies Our MSP is aligned with our overarching people strategy and anticipates our future talent needs. Since 1998, Bartech has been providing managed services provider solutions. In order to expand our client portfolio with new engagements and deliver new value to current clients, we have driven our own programs to evolve from implementation excellence to the introduction of new standards for innovative and strategic solutions. Forecasting the future state of workforce management is a tough assignment, but as a strategic partner, we know that sustained client value is only possible when we creatively transform a tactical req to check service offering into a long-term, total talent management solution. About Bartech Bartech is an industry-leading professional services firm, delivering workforce and enterprise staffing solutions to Global 1000 firms. Managing more than $2.5 billion in annualized spend, Bartech helps clients improve their market position through greater efficiency, transparency and reduced operational risks. With a 36-year proven track record, Bartech continues to receive top industry recognition for its global solutions. Learn more at. 5

6 Established in 1977, Bartech is an industry-leading professional services firm delivering workforce and enterprise staffing solutions to global firms. Today we bill $2.5 billion in revenue for clients worldwide who trust us to design, execute and manage sophisticated workforce management solutions, large-scale staffing engagements and strategic business process outsourcing (BPO) and consulting engagements Franklin Road, Suite 600 Southfield, MI Bartech

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