Projected age of retirement
for current workers.

Data that is false or fabricated.

The best data scientists turn
distilled information into pure gold.

Too much churn and
companies lose the cream.

Guatemala has the largest CW
compared to population in Americas.

1 in 3
# of working Americans in
the contingent workforce.

As some jobs become out of date,
others emerge.

In a conformity string, we call attributes
that impact cost and availability of
qualified job candidates "pieces of work".

Projected growth office/clerical
staffing 2013.

Companies implementing proper
measures during offboarding.

Singapore was world's top CW
productivity market 2014.

Data Scientist: the most wanted
job by employers on LinkedIn
in 2014.

Belgium has the highest tax burden in EU.

Ratio of robots to employees in Korea,
highest level in the world.

Employers who find paying
freelancers cumbersome.

The big star in our universe is Data Centauri.

% of American workforce projected
to be freelance by 2020.

Predictive analysis is only as
insightful as the analysts.

Data should never be sugar coded.

A good strategy stretches without
changing its basic shape.

Average length of unemployment
of managerial candidates.

# of workers with tenuous
ties to employers.

% of senior HR officers identifying
talent management as top HR issue.


To find answers, we formulate questions.
Then question the questions.

< 20
% of private sector workers receiving
employer sponsored health insurance
by 2025.

CW population at average
large company.

France has the highest
tax burden in EMEA.

% of Fortune 100 who’ve
implemented a VMS.

Shortage of US managers able to
analyze big data and make decisions
based on findings.

Amount NHS spends on
temp staffing.

Independent contractors can
be reclassified by Irish courts.

CWS 3.0: August 1, 2014

By Jason Ezratty

If the history of vendor management systems were to be played out in a movie, the opening scene would consist of a young, scrappy VMS being chased by angry, well-dressed staffing companies who want VMS off their turf.

Later, we would see staffing companies reluctantly tolerating the VMS, who has won the favor of the more powerful buyers. Still, it would be clear that despite their tolerance, the now less-profitable staffing companies would be all too pleased to see VMS vanish forever. Other factors in the movie would foreshadow a more glorious ending for the VMS, acting as core component of the total talent management landscape, thoroughly integrating human resources-finance-security-procurement-accounts payable with workflows and data.

While this movie does not yet have an ending, I sense we are entering the denouement — that part of the story where things come together. The VMS was built to automate competitive bidding among U.S. staffing suppliers as a reaction to the buying frenzy prompted by the Y2K  bug and dot-com fever. Savings were delivered to buyers on a supplier- funded implementation while getting transparency and automated compliance controls along the way. The benefits were rich enough and the barrier to entry sufficiently lowered that VMS was filling a need. Now, the VMS is being asked to do much, much more, and to carry the usability, robustness and data-leveraged intelligence that the more brand name corporate software experiences deliver. Is VMS ready to step up to these ever higher expectations, across a global user base, complete with multiple languages, currencies, and highly diverse compliance standards?

The Forgotten Stakeholder

Too often we talk about the VMS in a vacuum, underrepresenting the staffing companies that provide the primary input. I believe this is because of the many and complicated demands of the buyer, the VMS is expected to accommodate a great variety of different circumstances. Accordingly, little time is left to address the needs of the supplier.

Frankly, many staffing companies are still offended by the VMS. The VMS promises supply chain efficiency across multiple channels of non- employee talent acquisition. Staffing companies are the recruitment engines matching available talent with buyer needs, and then the legal employer of the selected workers. Overall, temporary worker spend is still about three times bigger than project SOW spend currently going through VMS systems. Clearly a critical link in the supply chain, the staffing agency, while footing the bill for the vast majority of VMS installs, is largely a forgotten stakeholder when VMS product managers consider which users to serve with which features in the next release.

In a sense, it is the early American story, taxation without representation, but in this case the staffing companies are far bigger and more profitable than the VMS and MSP companies that stand between them and their customers. However, lest we forget the staffing company was the original character in our movie, able to extract premium value out of relationship-selling tactics until the VMS put a spot- light on the price points and provided an alternative transactional medium to going to football games together. And now, there are other, larger forces entering the scene as size and strategic importance of incorporating non-employee workforce channels into an overall strategic workforce plan increases. Those buyers who master this balance of total work- force orchestration will be more competitive and have access to quality talent. It is too core to productivity and spending efficiency to not have such an impact.

The enormity of spend and headcount at play in the contingent workforce management (CWM) industry, now close to $100 billion in total spend under management, imparts tremendous responsibility upon the systems and services charged with ensuring their stability and performance. However, from a financial standpoint we must remember that spend under management is different than revenue — i.e. watching after someone else’s money is entirely different than counting in billions when referring to one’s own money. Sure, most MSPs have a multibillion dollar staffing parent, but on its own the MSP company or VMS company taken strictly within a CWM context typically rings in at an order of magnitude or two smaller.

After the Acquisition

All changed earlier this year when VMS market leader Fieldglass was acquired by SAP for nearly $1 billion. That’s a nice valuation for a company with $27.4 billion in VMS spend under management in 2012, each transaction of which generates revenue in the form of a fee typically ranging from 0.25 percent to 2.50 percent, depending on the type of labor, program spend volume, and the country a given transaction pertains to.

The CWM industry is abuzz trying to come to terms with the effects this acquisition might bring. One thing is clear: The acquisition will affect, to varying degrees, each of the characters on the CWM scene. The immediate, visceral reaction seemed to be severe, that Fieldglass/SAP combined would create sufficient gravitational effect to consume or out-compete the rest. I’ve heard it all: “Beeline is likely to be sold ASAP, Adecco will want to dump it now …” or, “IQN is in trouble now …” In my opinion, these statements show a misunderstanding of what differentiates one VMS company from the next and why customers choose the way they do.

Indeed, Fieldglass deserves to be called a market leader when adding 2 million new users speaking 15 different languages accessing its systems in 2013. True, such size and growth requires a degree of excellence that others have not been tested for. But IQNavigator and Beeline, too, have some impressive chips stacked before them. IQNavigator has been investing, not retreating, as evidenced by its newly assembled management team of seasoned software executives and its purchase of ProcureStaff. And it would be foolish to count Beeline out of the race given its stellar brand appreciation and big visible accounts it continues to win. So no, SAP buying Fieldglass does not automatically answer the question of which VMS will buyers turn to in the future. However, there is no question that Fieldglass being under SAP will be a selling catalyst, strengthening an already strong competitive appeal.

For example, one of the biggest political obstacles to the VMS footprint is the CIO’s office, doing its duty to leverage the ERP, finance, HRIS, e-procurement and AP systems investments. The SAP platform is the most likely for a VMS to run into these days; and, given the sometimes $500 million investments into these installations, it’s no wonder that a CIO will take such a dogmatic stance about decommissioning non-SAP applications in favor of SAP-based modules or configuration extensions of an existing platform. There’s no shortage of consultants and programmers happy to charge exorbitantly for their advice and coding, all of which has created an economy of its own.

Now, instead of squelching a VMS implementation, declaring it third-party and seemingly similar to existing SAP modules and Ariba functionality, the CIO has a genuine VMS to choose from within the SAP portfolio. Given the Fieldglass acquisition, it can justifiably give the impression that Fieldglass is a de facto finalist in any RFP — having the biggest footprint, strongest brand, and now, in line with the SAP overlords.

Big Stakes, Big Names

On the other hand, others out there remain steadfast to compete, seeing the SAP acquisition as a call to build the next-generation VMS, with a range of ideas on how to take fresh approaches. However good the ideas, and no matter how much I believe in the courageous souls claiming to be willing to commit the next several years of their lives at giving a start-up a go, I believe the timing is wrong to give a start-up a go. I believe this next phase of competition on the VMS landscape will only involve bigger guns for bigger stakes, requiring a level of capital raising that becomes unrealistic for a newcomer starting from scratch, especially given the number of established VMS companies getting acquired.

Finding That Niche

Beyond the top three market-leading competitors — Fieldglass, IQNavigator and Beeline — VMS companies are in a tricky position. At this point, it seems highly improbable that anyone outside of the top three can make a legitimate attempt at leading the market in the near future. Too much would need to change for that to happen considering the ever- expanding number of countries multinational corporations are demanding, and the increasingly complex human capital sourcing, onboarding and management scenarios the modern VMS must be able to morph into. Instead of competing to be the best and biggest VMS in the world, some are thinking about specialization, to attempt to be the biggest and best in niche market sector — be it a particular industry, size of program, skill category, or some other way of defining a segment of the market that is under- served by those who approach the entire market at large, claiming to be all things VMS to all CWM program scenarios.

Finally, we consider how the character of the VMS plays into the movie about the fate of the staffing company, too. Perhaps something other than the VMS, like online staffing, becomes the greater disruptor that staffing companies must contend with. Staffing companies have been under the thumb of commoditization across many skill categories. The time is now to innovate, or fossilize.

If the nature and form of the staffing industry evolves, so too must the VMS. Therefore, VMS providers might want to consider paying more attention to the vocal minority of suppliers that have come to embrace the VMS, those that predict market conditions to be one that will likely include the VMS and have restructured their sales and recruitment infrastructures accordingly. These suppliers are the real standouts, and they are winning. Supplier score cards commonly show these relative newcomers as top performing. If only the VMS companies took them more seriously, and actually equipped them with better tools and data.

View on the Staffing Industry Analysts website