CWS 3.0: February 8, 2011 - Vol. 3.4

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Feature: Growing with Your VMS

By Jason Ezratty

Vendor Management System (VMS) solutions continue to mature, both as software products as well as companies. With hundreds of millions of dollars in recent investments in the space, it is clear that the VMS will remain on the map of B2B applications. The VMS market is estimated at roughly $60 billion. 

In fact industry insiders believe that the market may split into two categories -- those VMS companies that serve global entities and those that don't -- with customers ranged in either camp depending on their needs. The smaller VMS companies, especially those that are not well-funded, may have a good shot at catering to smaller clients with lower amounts of temporary labor spend under management. 

The big picture aside, what is less explicit and more immediate is how a VMS installation evolves within a company. A VMS deployment goes beyond simple installation. A VMS provider is expected to be a partner, weathering challenges with you as you attempt to capture savings and efficiencies through it. However, one must remember that no VMS has fulfilled the feature breadth destiny promised by the industry. 

VMS product roadmaps have a long path into the future, and, as new contingent workforce categories like SOW consulting are added, these paths are only getting longer. Accordingly, the evolution of the VMS is inextricably tied to the increasing needs and expectations of CW buyers.

While account size can help you impart leverage on product roadmaps, leading VMS players are already flush with large accounts claiming "most-favored client" status. Even the largest of clients are likely to share that seat with another company -- or several. Therefore, influence over a VMS roadmap is collective at best -- and an empty promise at worst. 

As a result, companies need to explore other ways to control the fitness of the VMS product being purchased and installed. Chief among these needs is to gain as much control of your evolution with your VMS provider, from the very first sales appointment through a quarterly business review in the third year of steady-state operations.

Courtship

A VMS implementation begins, as most things do in a capitalist society, with a sales transaction. Salespeople are trained to identify opportunity and align their solution with that opportunity. The opportunity could be hard savings from competitive bidding, improved talent quality, efficiencies through automation, and transactional visibility and control -- in any combination. Their job is to paint a rosy picture of tomorrow, where gains are maximized and risks are minimized.

While some cast salespeople with a reputation for unsavory tactics, in my experience working side by side with them, most salespeople want the best for their clients. However, it is easy to see why their view of tomorrow is at least incomplete. They are busy selling. The burden of lead generation and deal closing can take several months to several years. They can be too preoccupied to truly understand what obstacles lay in front of their clients and what it is about a VMS purchase that may be painful. Like a commercial, their job is to assert the upside, not dissuade with negativity.

Where things go wrong. The most-often quoted line salespeople utter when leaving a sales meeting is, "[Client] doesn't know what they want." On one hand, this works in favor of the salespeople. They have an opportunity (along with their competitors) to craft the client's perception about what is most important in a VMS solution decision. Some may even be granted the opportunity to share in the creation of an RFP template -- enabling them to ask all the right questions to aid their own product's positive differentiation. 

On the other hand, a customer not knowing what it wants works against the salesperson. If nothing else, an undefined solution is not likely to have a compelling business case worthy of genuine executive support. Without higher-level support, VMS deals can wander in the "maybe" desert for years.

Contracting Phase

Assuming all goes well with selection -- well-defined functional and non-functional requirements were clearly demonstrated, company culture aligned, finance gave its thumbs up, and references checked out -- another leg of the journey begins: the contracting phase.

Just as many salespeople are maligned, so, too, are lawyers. Of course, it is their job to safeguard their respective organizations from downside potential while our friends in sales attempt to maximize upside potential. Unlike buying software for your personal computer at a Web site or retail outlet, VMS solutions have a host of terms and conditions making the transaction more complicated. 

A lot is on the line for both parties -- service-level agreements (SLAs), indemnification clauses, issue resolution and escalation plans, handling of private and other sensitive data, obligations to support migration of data should the agreement terminate, and what to do should the VMS provider become insolvent. Accordingly, given all that we ask them to account for and protect us from, it is understandable that some natural tension would exist among lawyers and their counterparts on both sides of the negotiating table.

Where things go wrong. If requirements weren't properly defined prior to selection, price and contract negotiation becomes a fancy version of Liar's Poker. Negotiating price without knowing scope is literally impossible. Similarly, if you have defined good requirements and have demonstrated alignment with your solution of choice, things go sour if the contract negotiation teams don't build from those achievements. Both of these issues happen all the time.

Implementation Plan

With a signed contract in hand, kick-off excitement can sometimes lead to premature celebration. To be sure, getting processes, stakeholders (including suppliers), end-users, and technology sufficiently in place for a successful go-live is no easy task. There are too many parties and moving parts for things ever to be easy. 

For example, if you are integrating your VMS application with other internal systems, each of those brings its own risks and schedule hiccups.

With few exceptions, VMS applications aim to meet client-specific workflow and data needs based on configuration rather than coding. However, this should not relax your testing requirements. 

A thoughtfully developed set of test data, representing each use case scenario (including international differences such as language and currencies), should be used to check technology fitness. A solid set of test data will come in handy beyond implementation and throughout every subsequent change your VMS is destined to confront. This is especially the case with systems integrations, where some level of coding, on either side of the interface, is likely to still be present.

Where things go wrong. First, not all implementations wait for a signed contract. As much as I believe in the value of a handshake, many find themselves trying to reconcile price-effecting terms and conditions after the proverbial train has already left the station. 

Another source of angst, similar to the previous section, is when the implementation team is not fully aware and accountable to the requirements and deal points established from preceding steps. 

However, the greatest and most frequent issue is more likely to be an overly optimistic and under-detailed implementation plan. A good project plan should be more than a listing of best-case scenarios-- it needs to include risks, assumptions and dependencies, with contingencies and countermeasures pre-identified.

Beyond Go-Live 

Go-Live may be the final milestone on an implementation plan but it is also the first day of the rest of your program. Moreover, many programs go live with some non-critical but important features yet to be deployed -- resource type (e.g. SOW consultants), unresolved minor bug (e.g. misspellings), etc.

But, most important, with a VMS program up and running you finally have an opportunity to see what really goes on, continue with change management goals, and test how suppliers respond to competitive pressures. So the task of implementing a VMS is never truly done, it's a constant evolution from transactional basics to more strategic initiatives like workforce mix planning.

Where things go wrong. After the exhaustion of going through selection, contracting, and implementation, program teams may feel tempted to take a much needed breather. However, the first six weeks after go-live are likely to be as harried as those leading up to it, if things weren't planned properly.

The real question is where you want to steer your program. Getting the boat in the water is only a success to the project team, not the program overall or the company. Steering and improving upon a program to meet your company's strategic talent needs is the ultimate, never-ending journey.

Of course, as your program matures, your VMS provider is necessarily exploring new sales opportunities to support the growth goals promised to shareholders. As you evolve your program, VMS salespeople are attempting to initiate others. Hence the natural tension: While you vie for product development and configuration bandwidth, so are many others.

Attending your VMS provider's client forum is a great way to voice where you see things going; however, real traction is achieved with client-partners that best articulate their needs and can represent why these needs translate into the VMS provider's next opportunity for market leadership.  Bottom line: get involved and stay involved.  Be the squeaky wheel.

Jason Ezratty leads strategy and analytics for Brightfield Strategies, consultants to Fortune 500 companies on contingent workforce strategy initiatives such as program design, VMS/MSP selection assistance, and performance metrics analysis. He can be reached at jezratty@brightfieldstrategies.com.

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