PART 1: THE WHAT, WHO, AND WHY OF MSP BY JENNIFER SPICHER

Transcription

1 THE FUNDAMENTAL S OF MANAGED SERVICE PROVIDER (MSP) PROGR AMS PART 1 OF 3 PART 1: THE WHAT, WHO, AND WHY OF MSP BY JENNIFER SPICHER

2 CONTENTS p3 Introduction p4 Why an MSP is Important p6 What Is an MSP? p10 Who Does an MSP Manage? p12 Conclusion 2

3 THIS IS THE FIRST OF A THREE-PART SERIES DESIGNED TO OUTLINE KEY COMPONENTS OF A MANAGED SERVICE PROVIDER (MSP) PROGRAM IN SUPPORT OF A COMPANY S MORE COMPREHENSIVE STRATEGY FOR TALENT SUPPLY CHAIN MANAGEMENT. Two of the major stakeholders most often engaged in this strategy are Procurement and Human Resources our experience indicates that when these two groups work together effectively, an MSP program delivers significantly higher value than without this vital collaboration. This series addresses common questions about MSP programs, and provides a framework that allows for informed decision making. The series will explore three key areas: JENNIFER SPICHER Explains what an MSP can do for your company and why it s important Demonstrates how multiple sourcing models can integrate with MSP strategy Articulates the business case for MSP and helps to determine your readiness The following covers the first of those three areas The What, Who, and Why of MSP. Be sure to read parts two and three for additional observations on achieving effective talent management through MSP solutions. This information should prove valuable to procurement and human resources professionals as they plan and prepare for the future. It also presents real value to stakeholders, whose operations may be impacted by the MSP program and leadership from many other areas, including finance, IT, or operational functions that may ask: What strategies can we deploy to access qualified talent while managing the cost, technical competency, and risk inherent in utilizing external labor? 3

4 WHY AN MSP IS IMPORTANT KEY MSP BENEFITS While cost savings can be a great advantage to companies that deploy an MSP solution many clients report that other key benefits such as greater access to talent, improved quality of workers, and mitigation of risk, are more critical drivers in their longterm strategies. For years, companies have partnered with their staffing providers to help reduce temporary labor costs. They have known that leading staffing firms had developed the capability to leverage their global footprint, to consolidate suppliers, and improve pricing. But today, Managed Service Provider (MSP) discussions have replaced that dialog. In fact, 86 percent of best-in-class contingent labor management programs now utilize an MSP program. And the results are impressive organizations using an MSP achieve a 67 percent higher rate of cost savings on contingent labor spend, and 60 percent higher frequency of temporary workers meeting or exceeding objectives. You are probably familiar with the term MSP to define the management of contingent talent and staffing suppliers, primarily in the temporary employee space. The first generation of MSP programs focused on cost savings and optimizing the supply base primarily in the IT labor category with less concern and focus on access to talent. It wasn t until recently that contingent labor management and Contingent Workforce Outsourcing (CWO) programs started to expand beyond temporary employees to include other outsourced talent and labor categories such as ICs, SOW providers, alumni, retirees, and others. 4

5 Contract labor usage is increasing today, as more and more companies are using contingent workers, outsourced project work, and Independent Contractors (ICs) to fill critical roles for added flexibility, scalability, and to remain competitive. Organizations want a broader, more holistic view of their talent supply and demand, and a view of how that aligns with their ability to meet business objectives. Thus an evolution in MSP program scopes is shifting towards Talent Supply Chain Management (TSCM): the proactive management and optimization of all talent supply to meet the talent demands and achieve the business strategy of companies. The key to this definition is that it includes the management and optimization of all talent input channels to allow companies to better meet their strategic objectives. Basically companies are looking for access to quality talent in a timely manner optimally managed with minimized cost and risk and they re willing to use all forms of talent to achieve their business strategy. A HOLISTIC VIEW OF TALENT Talent Supply Chain Management is a proactive approach to securing and optimizing talent supply and services through all input channels to meet the human capital needs of companies. This enables them to better produce, distribute and deliver their goods and services and meet their strategic objectives. 5

6 WHAT IS AN MSP? Many MSP programs are broadening categories of contingent labor management to include temporary staff and full-time employees as well as ICs, SOW providers, and alumni/retiree talent pools. Overview There are three key components to a contingent labor workforce management program: MSP Program Management delivered by MSP firms VMS (Vendor Management System) Technology delivered by technology firms Sourcing Models the supplier engagement strategy Below is a graphic illustrating how the three elements, MSP, VMS, and Sourcing Models interrelate. An MSP firm deploys VMS technology to execute the client s sourcing models, which are used to interface with suppliers optimizing the search for talent. MSP Program Management VMS Technology Sourcing Models Sole Source Primary Supplier Structured Tiers Vendor Neutral Hybrid 6

7 MSP Programs According to Staffing Industry Analysts, the MSP is a firm that takes on primary responsibility for managing an organization s contingent labor program. Typical responsibilities include overall program management, reporting and tracking, supplier selection and management, order distribution, and consolidated billing. WHAT EXACTLY DOES THE MSP DO? The MSP is an outsourced provider who measures their performance against Service Level Agreements (SLAs), typically consisting of time-to-fill, fill rate, rate card compliance, and quality metrics. The MSP leverages their knowledge of the staffing industry and interfaces with two key stakeholder communities Suppliers and Hiring Managers to optimize the client s processes and sourcing models in the most effective manner. What makes today s MSP solution different than earlier staffing programs is the inclusion of a much broader range of labor categories, skill sets, geographies and services designed to include all applicable sourcing models. What makes today s MSP solution different than earlier staffing programs is the inclusion of a much broader range of labor categories, skill sets, geographies and services designed to include all applicable sourcing models. 7

8 WHAT IS AN MSP? Leveraging an MSP helps companies improve access to quality talent as part of their overall workforce strategy. Typical components within an MSP program include: Requisition review with hiring managers to ensure accuracy, clarity, and compliance to policy Candidate pre-screening so that hiring managers only review the best candidates Continuous review of open positions and supplier engagement to ensure adequate submittal activity Process management through the interviewing and on-boarding process Supplier management to ensure adequate quality, quantity, and cost Reporting and data analytics Best practice sharing and benchmarking Vendor Management Systems (VMS) Vendor Management Systems enable companies to automate workflow. According to Staffing Industry Analysts, VMS technology is an Internet-enabled, often Web-based application that acts as a mechanism for business to manage and procure staffing services (temporary help and, in some cases, permanent placement services) as well as outside contract or contingent labor. Typical features of a VMS include order distribution, consolidated billing and significant enhancements in delivering actionable data and reporting capabilities. 8

9 Sourcing Models Staffing Industry Analysts describe a sourcing model as the method with which a company identifies, selects, receives, and pays for contingent workers and related services. Below is a list of the four most frequent sourcing models deployed to manage contingent labor: Sole-Source (Master Vendor) requirements are serviced via a single supplier that may subcontract some jobs Primary Supplier requirements are distributed to a select handful of pre-identified suppliers Structured Tiers requirements are distributed to a specific group of suppliers in a formalized order Vendor Neutral also called Competitive (Open) Bid model, suppliers bid on individual requirements based on quality, price and availability allowing the best supplier with the best candidate to fill each position A common sourcing alternative gaining prominence within MSP programs is the combination of the master vendor and vendor neutral models. This approach allows for lower skill categories to be sole-sourced while enabling the advantage of a competitive-bid model for higher skill sets. (SIA refers to this as a Hybrid model.) 9

10 WHO DOES AN MSP MANAGE? External labor that is not part of an HRIS system can generate limited information in fact it makes them invisible. To really understand who an MSP can manage, consider the makeup of today s external labor workforce. If it has a heartbeat, works in our facility, and doesn t wear an employee badge, it s contingent and needs to be in the MSP program. The above words were spoken by the CEO of a life sciences organization implementing an MSP program. He had just been told the company had several thousand people working within their facilities who were not employees. Because this external labor was not part of their HRIS system the company had limited information in fact they were virtually invisible. To really understand who an MSP can manage, consider the makeup of today s external labor workforce: Temporary employees across all disciplines and skill levels Independent Contractors (IC) / Freelancers Service Providers / Statement of Work consultants / Project workers Alumni, retirees, and interns The MSP program brings visibility to this hidden workforce, and a wealth of opportunity for optimization. Most companies start their search for external labor assuming a workforce classification, such as: I need a temp, or I know a consultant who can do this job. 10

11 With an MSP, companies think differently. MSP clients start by asking: what is the skill we need, then consult with their MSP for a recommendation on the appropriate workforce classifications to source the skill. An MSP program is much more than managing temporary employees it is a holistic approach to sourcing and managing external labor. An MSP program is much more than managing temporary employees it is a holistic approach to sourcing and managing external labor. Temporary Staff C O R P O R A T E S T R A T E G I C Operations Human Resources WORKFORCE ANALYTICS STRATEGIC WORKFORCE PLANNING Talent Supply Chain Management Independent Contractors/ Freelancers Service Providers (SOW) P L A N Procurement Alumni, Retirees and Interns Full Time Employees 11

12 CONCLUSION MSP is a solution that can deliver visibility to the hidden workforce, and offer a wealth of opportunity to optimize it. Some key points in the fundamentals of the MSP solution include: 1. Collaboration between HR, Procurement, and Operational leadership, to build an MSP strategy will likely deliver a best-in-class program yielding significantly higher value percent of best-in-class organizations have an MSP program which delivers significantly higher savings, regulatory compliance, and contingent labor quality. 3. A contingent labor strategy consists of three components: MSP + VMS + Sourcing Models. 4. VMS is software that enables the efficient operation of an MSP program. It automates the process workflow while providing effective internal controls, visibility, and program integrity. 5. There are five common sourcing models to procure labor: Sole Source, Primary Supplier, Structured Tiers, Vendor Neutral (aka Competitive Bid), and Hybrid. 6. An MSP deploys VMS technology to optimize the client s processes and sourcing models, gaining control over a wide range of services from temporary labor to contractor, consulting, and services spend. 7. Who an MSP manages is much broader than most realize. Just remember: If it has a heartbeat and doesn t wear a company badge, it should be in the MSP program. 12

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14 REFERENCES Aberdeen Group, Contingent Workforce Management: The Next-Generation Guidebook to Managing the Modern Contingent Workforce Umbrella May 2012 Kelly Services, Supply Chain Management Lessons for Workforce Management Industry 2012 Staffing Industry Analysts, 2011 Contingent Buyer Survey: Vendor Bidding Models and Staffing Agency Rate Structures March 2012 Staffing Industry Analysts, Managed Service Provider (MSP) Contingent Workforce Lexicon of Terms (SIA) 2011/2012 Wikipedia.com, 14

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16 ABOUT THE AUTHOR JENNIFER SPICHER is Vice President & Americas Practice Lead, Contingent Workforce Outsourcing Solutions with Kelly Outsourcing and Consulting Group (KellyOCG). She joined KellyOCG in 2009 to help accelerate the company s growth in strategic accounts. Ms. Spicher is responsible for solutions design and architecture, implementation and overall program delivery, as well as customer satisfaction for client programs. She has a wealth of experience and demonstrated accomplishments in the human capital industry, which has fueled her ability to consult with clients, understand their needs, and recommend customized solutions to align with their workforce strategy. Jen was named a 2013 Pro to Know by Supply & Demand Chain Executive magazine. ABOUT KELLYOCG KellyOCG is the Outsourcing and Consulting Group of workforce solutions provider, Kelly Services, Inc. KellyOCG is a global leader in innovative talent management solutions in the areas of Recruitment Process Outsourcing (RPO), Business Process Outsourcing (BPO), Contingent Workforce Outsourcing (CWO), including Independent Contractor Solutions, Human Resources Consulting, Career Transition and Executive Coaching, and Executive Search. KellyOCG was named to the International Association of Outsourcing Professionals 2012 Global Outsourcing 100 list, an annual ranking of the world s best outsourcing service providers and advisors. Further information about KellyOCG may be found at kellyocg.com. kellyocg.com All trademarks are property of their respective owners Kelly Services, Inc. Y0167A