The Next Generation of VMS Technology. Underwritten by:

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1 The Next Generation of VMS Technology Underwritten by: Christopher J. Dwyer Research Director Ardent Partners February 2014

2 REPORT SPONSORSHIP 1 The views and opinions in this report represent those of Ardent Partners at the time of publication. Sponsoring companies have had no measurable influence on the content and research in this report. The contents of this research report are the exclusive property of Ardent Partners. Please direct any comments or questions regarding our research sponsorship policy to Ardent s Chief Research Officer, Andrew Bartolini at abartolini@ardentpartners.com and/or Sponsor: Provade, Inc., a Certified Women s Business Enterprise (WBE) and Minority Business Enterprise (MBE) based in Milwaukee, delivers the only enterprise Vendor Management System (VMS) for global contingent workforce spend management. Provade's leadership and applications have been named to the Staffing Industry Analysts' Staffing 100 and the TekTonic Awards. Provade s Software as a Service (SaaS) solution helps businesses achieve efficiency and measurable savings in their staffing, statement of work (SOW) and services spend. Leveraging best in class technology, Provade VMS delivers business process flexibility, robust analytics and complete integration with ERP systems, and is built upon Oracle-based technology and applications. For more information, visit Contact: Freddy Vaca SVP, Sales and Strategy freddy_vaca@provade.com

3 2 Ardent Partners research states that utilization of contingent labor is expected to grow by nearly 30% over the next three years. The stage is now set for enterprises across the globe to not only embrace the evolving scope of contract talent, but also reinvigorate the strategies and solutions necessary to effectively manage it. Vendor Management System (VMS) technology has proven to be a reliable offering for contingent workforce management over the past two decades and as this marketplace continues to expand into non-traditional workforce realms, these solutions are wellpositioned to help enterprises face new challenges. The Current State of Contingent Workforce Management The utilization of contingent labor (also known as contract talent or contract labor) is on the rise, with more and more enterprises across the globe turning to an alternative, temporary workforce to meet, organizational needs, goals and objectives. As the scope of contract talent engagement and management evolves into new arenas, companies require a platform that offers the ability to manage a wider swath of programmatic attributes and processes including spend, supplier, risk and talent management The contemporary viewpoint of contingent labor includes a variety of non-traditional workforce avenues that range from traditional to more complex. In fact, Ardent Partners recently developed the industry s first model (known as the Ardent Partners Contingent Workforce Management Framework) to effectively describe and define the key areas of modern contingent labor: Traditional temporary labor. The classic type of contingent labor, traditional temporary labor is typically sourced via staffing vendors, agencies and suppliers. Complex contingent labor. This category in the CWM Framework is comprised of SOWbased projects, professional services, consultants, and other recurring (or non-recurring) services. Independent contractors (ICs). ICs are individuals typically engaged directly by the enterprise and are sometimes known as the highest-level talent in a given field. The Framework also makes mention of emerging concepts not seen in the past, such as enterprise-workforce-as-a-service (ewaas) and total talent management. The many intricacies of Ardent's Contingent Workforce Management Framework dictate that enterprises across the globe institute a rigorous series of processes for managing the complexities of all aspects of modern contract talent management. With new and intricate aspects requiring the typical CWM program to expand (such as ewaas, online labor marketplaces and a stronger

4 3 focus on talent management), it is critical to develop a strategy and utilize solutions that can support nextgeneration contingent workforce management capabilities. The Evolution of VMS Technology As noted in the sidebar to the right, the very foundation of VMS technology was founded years ago on the premise of the eprocurement platform. Originally a more specific solution for managing staffing suppliers, agencies and vendors with a closer, automated eye, this offering has evolved into a solution that can handle the rigors of presentday contingent workforce management, including: Supplier management Spend management Risk management (specific to labor requirements and laws), and; Project management (for projects that utilize contract talent, services, contractors, etc.). While these capabilities form the basis of a viable solution for managing the Contingent Workforce Management Framework s main labor categories and their relative complexities, the next generation of Vendor Management VMS Defined Founded on the premise of eprocurement technology, Vendor Management System (VMS) systems were initially designed as a catch-all, automated platform used to manage the wide variety of staffing suppliers that fit into the average CWM program. These solutions have evolved over the years into platforms that offer the ability to manage spend, supplier, cost and risk aspects of an enterprise's contingent workforce. Leading VMS solutions also offer robust business intelligence, analytical and compliance capabilities, as well as extensions via mobile applications and mobileoptimized web portals. System technology must address three areas that Ardent Partners believes will comprise the future of contingent workforce management: (1) the intricacies of complex contingent labor, (2) the value of intelligence and stakeholder collaboration, and (3) the ability to support mobile solutions. The Next Generation of VMS Technology, Part I: Managing Complex Contingent Labor Complex contingent labor is perhaps the most sophisticated aspect of the Contingent Workforce Management Framework. This category of the Framework relies on a delicate balance of processes for managing statement-of-work (SOW)-based projects and labor, as well as both professional and non-professional services. These subcategories of contingent labor have strong links to other functions within the organization, such as HR, IT, and finance (in addition to procurement s role in managing this CWM Framework attribute). Capabilities to manage this aspect of the CWM Framework are crucial in addressing the role of VMS technology in the long-term future of contingent workforce management. As enterprises

5 4 continue to find new sources and methods to engage and employ its contingent workforce, VMSenabled capabilities for managing complex contingent labor will become even more important than they are in today s market. A critical component of capturing (and effectively managing) complex contingent labor, such as SOW and services, is via the advent of automated spend management and supplier management capabilities. Ardent Partners has discovered that users of VMS technology are generally betterequipped to handle the precision of complex contingent labor management (Figure 1). Figure 1: Complex Contingent Labor Management Capabilities, VMS Users vs. Non-VMS Users As these components of contingent workforce management continue to grow in the years ahead, enterprises that build a multifaceted strategy fully-leveraging the hearty spend and supplier management capabilities of the VMS platform will be well-positioned. The Next Generation of VMS Technology, Part II: Enabling Collaboration and Visibility Ardent Partner s 2013 State of Contingent Workforce Management research study found that organizations are focused on two key aspects for the 2014 CWM programs: reducing costs and driving total visibility across all areas of contingent workforce management. These two classic pressures have been in place for years yet still pop up as viable challenges. Why? The answer is simple: contract talent is evolving and taking new forms, weeding into nearly every division of the

6 5 average enterprise. Aspects such as costs, performance, delivery dates, milestones and quality / effectiveness are critical items in the greater CWM purview, and enterprises require technology that can address these needs. Analytics, reporting and business intelligence are critical components of Ardent's Contingent Workforce Management Framework, playing an important role in the management of all three categories (traditional temporary labor, complex contingent labor and independent contractors) and driving information across a wide spectrum of CWM channels. Ardent s research has found that users of VMS technology are more likely to be equipped with analytical tools than their peers who are not currently leveraging this type of CWM technology, including superior drill-down analytical capabilities and more agile analytics, These drill-down and agile analytic capabilities can allow for multifunctional utilization of the VMS platform, driving superior levels of collaboration between groups like procurement, HR, and finance. The Next Generation of VMS Technology, Part III: Portable Power and Talent Management There may be no greater indicator of the future of the contingent workforce management technology industry than the advent of mobile applications and portals. Mobility has been creeping into the business world over the last half-decade by presenting busy executives with access to enterprise systems, such as accounts payable and expense management, via their smartphones or tablets. While the path to mobility in CWM has been longer, the next generation of Vendor Management System technology will rely on mobility. As the contingent workforce continues its rapid growth, those executives tasked with managing CWM programs will require access to real-time information on a 24/7 basis. Those VMS platforms that offer mobile applications and / or access will become increasingly valuable to their users. Beyond information, other mobile capabilities, such as requisition development, resume review and tracking and candidate selection, will be available in the next-gen VMS platforms. Summary and Recommendations The current scope of contingent workforce management dictates that enterprises sharpen their spend and supplier management strategies and blend talent management capabilities into CWM programs. The following actions are recommended for all organizations with a contingent workforce: Utilize Ardent's Contingent Workforce Management Framework as a means of developing strong CWM capabilities (such as supplier management and talent management competencies).

7 6 Prepare for the future of the contingent workforce management industry by understanding new / varied labor sources and the technologies that can address these options. Ensure that talent management capabilities, such as social media engagement and access to already-known talent pools, are firmly-integrated into the CWM program. Identify compliance or risk gaps in management of independent contractors to ensure that relationships meet guidelines and regulatory laws. The following actions are recommended for current VMS users: Understand that Vendor Management System (VMS) technology is not a one-shot, cure-all answer to managing the contemporary contingent workforce management program. A broader strategy, complete with stakeholder buy-in and a blend of workforce and spend management strategies, is needed to effectively utilize the key functionalities of a VMS platform. If available, turn on the capabilities for mobile applications and business intelligence / analytics Loop talent management strategies and capabilities into how the VMS is currently used across the enterprise. Ensure that other key stakeholders, such as HR, finance, IT and operations, are leveraging the VMS technology to support greater collaborative efforts and approaches and drive better results

8 ABOUT ARDENT PARTNERS 7 Ardent Partners is a Boston-based research and advisory firm focused on defining and advancing, the accounts payable, procurement, and supply management strategies, processes, and technologies that drive business value and accelerate organizational transformation within the enterprise. Ardent also publishes the CPO Rising and Payables Place websites. Register for access to Ardent Partners research at ardentpartners.com/newsletter-registration/. ABOUT THE AUTHOR Christopher J. Dwyer, Research Director and VP of Operations, Ardent Partners Christopher J. Dwyer is considered a premier thought leader in the world of supply management and a renowned expert in contingent workforce management, travel and expense management, and meetings/events management. He evangelizes the evolution of complex spend management and has written hundreds of research reports and interviewed, advised, and benchmarked thousands of end-user professionals and executives in regards to their complex spend management operations over the last eight years. Christopher joins Ardent from the Aberdeen Group, where he spent more than seven years tracking the progression of complex category spend management strategies and solutions while helping to educate the global market. At Aberdeen, Christopher led Aberdeen s Global Supply Management practice and oversaw and contributed to the company s coverage of procurement, strategic sourcing, spend analysis, epayables (accounts payable automation) and supplier management. Christopher was recently named an Analyst Superstar by HRO Today magazine for his work in the contingent workforce management industry, and was also recognized by Supply and Demand Chain Executive Magazine as a Pro to Know. Christopher leads Ardent s coverage of complex spend management, including the evolution of contingent workforce management, T&E expense management, and all other complex categories of spend and provides research and advice so that end-user organizations can enhance their capabilities and competencies and make the smart decisions that will ultimately improve their performance. He welcomes your comments at cdwyer@ardentpartners.com, on LinkedIn ( or Twitter (@cjd_ardent). Industry Standard Fine Print: The information contained herein has been obtained from sources believed to be reliable. Ardent Partners, Ltd. disclaims all warranties as to the accuracy, completeness or adequacy of such information. Ardent Partners, Ltd. shall have no liability for errors, omissions, or inadequacies in the information contained herein or for interpretations thereof. The contents expressed herein represent Ardent Partners best analysis at the time and are subject to change without notice Ardent Partners, Ltd. All rights reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. Solution providers and consultancies should take special note that Ardent Partners reserves the right to seek legal remedies including injunctions, impoundment, destruction, damages, and fees for any copyright infringement (which includes but is not limited to usage of any Ardent Partners content in company collateral, presentations, and websites) in accordance with the laws of the Commonwealth of Massachusetts and the United States.