Andrew Karpie's Blog

Making a Beeline for What Lies Beyond VMS — A Smart Move?

The short answer, I think, is yes.

Beeline’s recent acquisition of OnForce may be a significant event in the staffing supply chain world. It’s certainly a notable one. Not at all a VMS consolidation play, the acquisition is about the strategic broadening of capabilities to serve markets in valuable new ways. Those markets consist of, on the one hand, those organizations that need to get work done and, on the other hand, a growing segment of the workforce that “works different.”

It should come as no surprise to anyone in the staffing industry that organizations are relentlessly seeking to optimize their procurement relationship with labor and talent. That means gaining access to the specific labor and talent that is needed, in the optimal modality (speed, duration, location, etc.) required, and at the lowest cost and risk. In 2014, this translates into a very broad range of possibilities, all the way from “securing workers as employees” to (thanks to all kinds of new technology applications) “renting worker capabilities in crowdsourced micro-tasks that take a few seconds to perform.”

Within this broad range, there are many possibilities for how work can be “arranged and transacted” (or intermediated)—but only few are generally thought about as opportunities to provide “intermediation services” that can be profitably monetized. The staffing industry (suppliers, contingent workforce management program with VMSs and MSPs, etc.) is very familiar with what is currently the most widely-accepted and standardized intermediated work arrangement called “temporary staffing,” and it is increasingly familiar with “SOWs” that effectively “bundle” temporary workers into projects to deliver specific outcomes.

But then there is the rest of an organization’s non-employee, extended, contingent workforce. In the staffing world, we casually refer to this remaining set of workers as ICs. But ICs simply means those workers who would be legally classified as “independent contractors,” and not nearly all of these independent workers an organization individually engages to do limited, short assignment work are visible and subsumed under “managed spend” programs (as ICs). Furthermore, most contingent workforce management systems in use today tend not to be basically architected to support engagements with a large population of individual independent workers (as opposed to supplier firms supplying workers).

Stepping back, there are also two trends that should be noted.

First, on the supply side, there appears to be a growing number of workers that prefer to engage in their work outside of employment work arrangements and traditional staffing channels. Many of these are expensive, high-skilled, professional-level, knowledge workers (the types of workers — like data scientists, for example  that organizations need desperately, but are finding it is difficult or costly or both to engage through traditional means. This population of workers may not be the majority in an organization, but their impact on business outcomes and performance is disproportionate to their numbers.

Second (and perhaps more importantly), on the demand side, organizations and managers in those organizations care about one thing: getting and applying the resources to the tasks, activities, projects that must be accomplished to achieve the desired business outcomes. As mentioned above, managers and “organizations are relentlessly seeking to optimize their procurement relationship with labor and talent.” This drive is only becoming more intense as organizations find themselves in more and more competitive and rapidly changing, globalized and digitized economic and market environments. Managers need key “plug-in” workers (or their services) to meet specific limited requirements, under many different modalities — often quickly and always with low transaction costs.

These two trends are converging and driving the need for new kinds of intermediation solutions that will allow the unique supply and demand sides to engage and enact legitimate work arrangements. Making this happen will encompass direct sourcing, building talent communities, accessing online labor marketplaces, etc. Not surprisingly, a big part of these solutions will be technology-driven in order to support the data and visibility, the speed, and the configuration of every unique engagement into a legitimate work arrangement.

Gene Zaino, CEO of MBO Partners has on numerous occasions spoken about what he sees as a trend toward “unbundling” of traditional work arrangements—meaning that different elements of a work arrangement (like bringing work and worker together, validating identities, determining and managing terms of the engagement, legal compliance, payment, etc.) can be broken down, modified, and even recombined in different ways. MBO Partners, VP of Corporate Development, Jay Lash, said it well this week: “I see it as an unforming of the way we work today and reforming to serve a new world tomorrow, so it performs better going forward. The old models are too closed and restrictive. Open models are hard to design and take some guts to let everyone see what you are made of. In the long run we all benefit when the new form serves the common good and really takes it forward.”

My read on all of this: business economics are driving needs for changes in work arrangements, and technology is enabling that change (sometimes illuminating how that change is possible). We all have been seeing how technology-driven, platform-based business models are changing ways in which significant economic activities get accomplished--from Amazon in retail to now Airbnb and Uber in lodging and short-range transport. It is not that these models have resulted in the elimination of industries, but they have certainly supplemented them, extended them to meet needs and serve markets differently (or even expand them), especially for certain segments or populations.

On the two (supply and demand) sides of the staffing industry, there are growing populations of “young and restless” (and “older and fed-up”) workers and managers, armed with new powerful technology; and they are prepared and intend to “work different” (i.e., accomplish economic activities in different ways) when and where that needs to be what happens. They will not accept the status quo, when they can design and implement legitimate alternatives and make things happen differently.

And so we are now starting to see the emergence of new technology-based models that will enable engagements and work arrangements for those economic actors who need or want to “work different.” We’re at the beginning of this new phase of development within the contingent workforce and staffing supply chain world, and much lies ahead. That includes determining what systems, processes, “work arrangement unbundlings and reconfigurations,” etc. will add up to capturing profitably monetized, “intermediation services” market share in this new world.

In my opinion, starting to take steps now in this direction is a smart strategy.

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