The first step when implementing any new technology within an organization is to present a formal business case to stakeholders. Whatever the technology -- whether it is a document storage system, anti-virus software or, a vendor management system (VMS) -- this step should not be skipped.
A compelling business case should adequately capture the quantifiable and unquantifiable characteristics of a proposed project. While it sounds like a large undertaking, there are certain elements that all solid business cases share:
- Objectives & Value
- Technology & Program Requirements
- Cost & Benefit Analysis
- Lessons Learned
When ACS, a provider of business process outsourcing and IT outsourcing services for commercial and government organizations worldwide, was considering a VMS in 2010, we knew it was essential to consider the viewpoints of each stakeholder. By doing so, we were able to present a case that answered their questions before they could even ask them. We ended up choosing a tool to manage our contract workforce that included four main areas: contingent labor, statements of work (SOWs), diversity suppliers and independent contractors. Here is how we built our business case.
First, it's vital to understand what your main objective is, what you expect the technology to do for you. ACS' main objective in deploying a VMS solution was to acquire and manage all of our contract workers through one application.
The value in taking this approach was simple -- we could create a single place and process for our hiring managers to acquire contract labor. By driving the managers to one place to get any and all contract workers, we could better ensure that job orders would be filled quickly, within market rates and with quality contractors. Having all workers within one tool allows for reporting across all contract labor categories, enabling us to monitor overtime and tenure. This also allows us to compare bill rates across worker types.
Another objective outlined in our business case was to achieve vendor neutrality. For the previous five years, ACS had acquired its temporary labor via a vendor-on-premises (VOP) model. With this approach, we depended on one supplier to fill open positions, but couldn't always ensure they were doing so at the lowest rate.
By moving to a vendor-neutral model and introducing competition, we began to enjoy better pricing, quicker submittals and higher-quality candidates. By monitoring the number and quality of suppliers, we could increase the volume of work for each supplier, putting them in a position to offer volume discounts. To do this, we installed a supplier rationalization process to determine which suppliers best fit our needs and could offer the largest discount.
When determining how best to improve a labor program, it is important to consider both short- and long-term requirements of the technology solution. In ACS' case, the top requirements were international experience, ability to address all four contract labor categories (contingent, SOW, diversity and independent) and a user-friendly interface.
We knew we would be expanding our use of the VMS solution to include international workers in roughly 12 to 18 months. So, while the need wasn't immediate, international experience was an important component in the decision-making process. The user interface was important as well. In order for the solution to be the preferred mechanism for acquiring workers, it needed to be easy for hiring managers to learn and use.
Costs and Benefits
This step is perhaps the most important in presenting a new technology to stakeholders. In our specific case, it was critical to prove that implementing this new solution wouldn't cost ACS money or cause additional headaches but still would produce cost savings.
Something to keep in mind during this process is that each group of stakeholders has different needs, and, regardless of company size or industry, these needs are relatively the same. Procurement is most often concerned about cost, including hard and soft cost savings. HR will focus on how the solution impacts compliance and risk mitigation. Legal departments will be concerned with how the solution affects its compliance efforts, based on their unique rules and policies. The executive team's goal is to satisfy existing customers and ultimately grow the business. Last, the supplier community wants more headcount and higher margins. This was the case for us.
When developing the business case for a VMS solution, we took all of these needs and goals into consideration and addressed each of these issues head on. By knowing what is important to each group of stakeholders ahead of time, we could more easily address each of their concerns and ultimately secure approval.
All of the VMS solutions in the market today come with a variety of bells and whistles. The bottom line is simple: the program must work for the end users. Without quality candidates, none of those bells and whistles -- flashy reporting tools or fancy workflows -- will make the program successful. The first step is to clearly define the program's objectives and goals, and make all other decisions with that knowledge.
By systematically developing our business case with these elements in mind, we were able not only to get approval but also turn our stakeholders into champions of the program. One of our main objectives was to manage four distinct areas of our labor program through one application. While we haven't yet migrated all workers to the solution, we have been able to address each category successfully. One feature that stands out is the ability for a hiring manager with a diversity need to check a 'diversity' box, and the tool automatically changes the supplier list to fit those needs.
Our two main technology requirements were international experience and a user-friendly interface. Our VMS provider supplied both. In addition, it had experience managing spend in more than 63 countries and we have received positive feedback from both our hiring managers and suppliers on the ease of use of the tool.
It has been just over one year since installing the tool, and we have quadrupled the contract labor spend flowing through the program as compared to our previous solution. User participation has grown beyond our goals. Cost savings through rate compliance and volume discounts has surpassed the estimates that we originally presented to the stakeholders. We have been able to show the stakeholders that the implementation of the new contract labor program has met our needs and surpassed our goals.
Chris Slay is the procurement manager for contract labor at ACS. He can be reached at Chris.Slay@acs-inc.com.