April 10, 2013

Transforming Workforce Management with MSPs and Advanced Supplier Management

A recent Deloitte report on Human Capital Trends notes that the combination of globalization, competition and the connected workforce has made the goal of finding the right talent an increasingly strategic issue.  Based on these types of findings, HICX recognizes a trend has taken shape that is transforming workforce management with MSPs and the use of advanced supplier management.

In an increasingly flexible and global economy, organizations have clearly adopted the contingent model as a part of everyday business to lower costs and stay competitive.  For instance, based on research conducted by the Aberdeen Group in 2012, 26% of an average organization’s workforce is considered contingent or temporary in some sense. This same report goes on to note that almost 50% of the surveyed organizations manage their workforce strategy under a common group or blended approach, demonstrating how the needs of HR and Procurement are becoming conflated when it comes to looking for talent.

So the question becomes, as part of their supplier management strategy, how can organizations combine their business and talent strategies to help them stay ahead of the curve in today’s highly competitive talent marketplace?

One strategy is the adoption on-premise or SaaS based systems designed for managing contingent workforce known as Vendor Management Systems (VMS). These types of “best-of-breed” systems are designed to govern the process of vacancy management, time-sheets and billing and the various administrative flows that need to exist between employer, contracting partner and contracted individuals. VMS providers also claim full transactional support for contingent workers, from issuing requirements to off-boarding workers and most have also adapted themselves to customer needs by going beyond agency contractors to manage outsourced, SOW and/or contract workers. Another approach is often used in parallel with a VMS system is a vendor-on-premise or VOP.  VOP services provide companies an exclusive, long-term general contractor relationship with a temporary help company. The designated VOP may enter other relationships with other temporary help suppliers, or relationships specified by the customer.

As organizations are looking to blend their workforce with internal/external resources, relying on these approaches can be a challenge.  For instance, when used in conjunction with Applicant Tracking Systems (ATS) or Talent Management Systems (TMS) for recruitment needs, managing VMS systems can become a burden of supplier management in both large and mid-sized companies alike. Moreover, a majority of these HR focused systems have limited capacity to support the complexities of contingent labor nor the ability to integrate with a VMS systems, which have traditionally been a Procurement-centered effort.

Furthermore, complex global enterprises have varied system and process requirements across multiple locations and business/organizational units, that increasingly require the ability to manage the contingent workforce with robust processes, strategies and solutions in a standardized and centralized system.  This  enables greater visibility into talent pools, spending,  compliance, and provides an ability to address specific customer needs. What this means is that global programs cannot be implemented as cookie-cutter solutions, since they increasingly need to take legal and cultural differences into consideration.

Since managing VMS and the various activities surrounding the onboarding and management of a contingent/temp labor has become a process and IT resource drain for most organizations, and due to this increased complexity due to a global workforce, many experts are now seeing the trend that organizations are focusing more on outsourcing workforce management to Managed Service Providers (MSPs).

For many, a common understanding of MSPs is focused on information technology (IT) services providers that manage and assumes responsibility for providing a defined set of services to their clients, either proactively or as they (not the client) determine that the services are needed. However, MSPs include a number of other outsourcing activities including, HR, finance, production support, and lifecycle build or maintenance activities represented in a number of different industries

Hence, in going back to the theme of last week’s blog posting – Adding a Third Element to Supplier Management, the MSP example, demonstrates how organizations are increasingly going to “neutral” parties to offer their customers both a supplier management and a talent strategy, all while ensuring an efficient operation in leveraging their own direct supplier relationships and the “economies of scale” that come with pre-negotiated relationships with suppliers.

Using a MSP for workforce management can significantly help customers with managing against contracts, and for centralizing the onboarding of contingent personnel to ensure brand consistency in corporate core values, internal and regulatory compliance policies, supplier based systems, and the support mechanisms that can be extended to support the corporate culture to contingent workers coming onboard. Moreover, MSPs may use several different VMS systems in their arsenal as part of their strategy in finding talent, but need to manage these systems collectively as part of a wider supplier management objective both internally, and for their clients.  Wider leverage with relationships and expertise also provides a better means for MSPs to extend their services into managing statement of work (SOW) projects and independent contractors.

As part of this trend towards MSPs, HICX Solutions is playing an active role in this transition from stand-alone VMS implementations to the MSP/VMS models.  Based on direct client experience, HICX is helping MSP providers manage the complex supplier processes that are required from multiple customers by providing for the integration and automation of several of the MSP’s VMS platforms that are managing various customer projects. Moreover, by leveraging advanced supply based technologies like those provided by HICX, MSPs are able to better consolidate the collection of supplier master data from multiple systems, automate supplier registration, improve supplier visibility, improve compliance and set the overall foundation to further develop their client/supplier relationships based on specific customer needs.

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