SI Review: September 2011

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Straight Talk from the Customer

Don’t Fight Your MSP

A small player goes national after embracing program

Consider this scenario: Your small to midsize staffing firm has carved a nice niche in a Fortune 500 company by providing resources at a local level. Through hard work and perseverance, you have managed to be a top supplier for a given location, and that suits you well. Then one day, your favorite customer says it is adopting a managed services program and all your work will need to be billed through the MSP.

Join or Fight?

Panic sets in — no more sales interaction with managers, the dreaded MSP fee, tighter controls around margins, audits, etc. The way you see it, you have two options: join the MSP and figure out how to be successful in that model, or fight it through back channels.

Initially, most suppliers choose the latter option, and will do everything they can to try to gain an exception or bypass procurement and the MSP to continue the success they had at the given location. Let’s assume you do that, too, and manage to maintain your headcount by going around the MSP. You might feel like you dodged a bullet, but that is far from the case.

If the program is managed properly, the customer will know which suppliers are using the program to drive business and which are throwing random resumes to see what sticks. Suppliers that dodge the program face being dropped. Those that embrace the MSP actually stand the chance to increase their business.

Hidden Potential

Here’s an example from Reed Elsevier that proves this point. A supplier was providing high-level information technology skills for one of our locations. It had built a strong following and was pleased with the headcount prior to joining our MSP. Because of its success outside of the MSP, we were initially concerned that the supplier could be a problem, but that could not have been further from the case.

The supplier embraced the program and took the challenge head-on. It saw potential in the program; it understood that the location it was servicing, though important to Reed Elsevier, was still only one location. Once the supplier was working through the MSP, it was able to identify other key locations where it could be successful. This led to the opening of strategic new locations where its skill sets met our needs.

The supplier joined the MSP in November 2009 and saw its revenue rise 48 percent in the first full year. That revenue growth includes an unlikely benefit to its permanent placement business. The growth to new markets has led to relationships that benefited both the firm’s temporary and permanent business. In addition, it has become a top five supplier in the program. Perhaps most important, it may even gain two new clients through the MSP relationship. This is quite an accomplishment in a short period of time. The sky is now the limit for the supplier as it continues to gain momentum with Reed Elsevier and our MSP.

When I told this supplier I would be using its story for this article, they summed up the experience best, “we went from being a local company supporting a local company, to a national company supporting a global company.” It sure beats the alternative.

Look Ahead

It will take leadership, flexibility, and an eye to the future to see what this supplier saw, but it is attainable. Embracing the MSP environment will start a small staffing firm on the path to increased revenue and open the door to new opportunities. How far you are willing to take it is up to you.

Procurement is looking for partners in the supply base and the best way to attain that is to embrace the culture. Our culture is an MSP/procurement partnership that supports the suppliers in our network. We need to all succeed for the goals of the program to be reached. One way for that to happen is for the continual growth of local suppliers.

Mark Lamphere is global category manager of contingent labor for Reed Elsevier.

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