Work Market recently announced a deal with global enterprise software giant SAP. This deal not only indicates that large enterprises are reaching out and engaging with online staffing platforms to access needed talent, it also demonstrates that there are many new ways in which this can be happening (especially as enterprises more and more adopt flexible, extended workforce models). It shows that online staffing platform businesses can maneuver and position themselves in agile ways to provide innovative, advanced contingent workforce staffing solutions for 21st century businesses.
Based on the information in the press release (read it here) and on my recent interview with Jeff Leventhal, Co-founder and CEO of Work Market, this is what I understand the deal is about.
Like many large companies, SAP has established an enormous, geographically far-flung channel and service partner ecosystem that is vital to its sales and support (especially sales and support for the many, many thousands of SAP customers that are smaller than those in, say, the “global 1000” tier). A key to SAP’s business success is the availability of SAP-proficient technical talent (sales consulting, professional support, software development) within the ecosystem; without this talent — accessible in many different locations to SAP VARs--the ecosystem will not function. Companies like SAP have a very complicated and mission-critical “extended workforce problem” — making sure that their ecosystem partners have a sufficient supply of SAP-skilled labor to perform their sales and support functions in the ecosystem.
SAP has engaged Work Market in order to establish an innovative workforce solution to this problem of ensuring a sufficient and adequate supply of SAP-skilled talent across the SAP ecosystem. According to Leventhal, SAP has a obtained a SaaS license to use a customized version of the Work Market platform, which SAP and Work Market have customized to address the requirements of this specific business application (building and maintaining the necessary SAP-skilled talent pool as a part of the SAP channel and support partner ecosystem). SAP, SAP’s ecosystem partners, and the SAP extended contingent workforce will now have a standard online platforms through which SAP-skilled talent can qualify itself and offer labor services, SAP’s curation/qualifications can be set and applied, SAP partners can access an online marketplace and workforce management system to find, engage, and pay SAP-skilled contractors.
So that’s what the deal is actually about. Now what does it mean (from my perspective)?
Well, first of all, it means that the myth of online staffing platforms only being suitable small businesses is further eroded. Very large enterprises are interested in exploring ways to use online staffing platforms to access flexible, on-demand, extended contingent workforce talent. The recent partnership between oDesk and Kelly, is further evidence of this, indicating there is an appetite among larger businesses for the “online freelancer” talent-as-as-service, “work performed online” that many online platforms have been sourcing and making available from all over the world.
Second, another myth is also being dispelled. For some time, online staffing platforms were dismissed as just a means to tap cheap workers for short, low-cost online gigs (work performed online). But it has been becoming clear over the past 1-2 years, because of platform businesses like Work Market, Onforce, and several others, that this is clearly not the case. By now, it is amply clear that online staffing platforms can be employed in varied and valuable ways to fully intermediate “onsite” work arrangements, even (as we see in this SAP case) mission-critical ones that are vital to the success of an enormous enterprise. In the recent SIA 2020 Online Staffing Segment Forecast, we showed that by 2020 total spend for all forms of “online staffing platform-intermediated work arrangements” could be as high as $40B+ (in an “aggressive, but possible scenario”). And in all of the scenarios, “Onsite/local work performed for all-size business” (the category where Work Market’s current business falls) was projected to represent about one-third of the total.
Finally, this Work Market arrangement with SAP means something else. It demonstrates (or portends) something about how online staffing platforms may become parts of very new kinds of enterprise workforce solutions that previously would—without the right technology available and brought together—not have been possible (and perhaps not even realistically conceivable for many staffing businesses).
What I think is key here is the term “ecosystem.” Above, this concept was discussed in terms of SAP’s ecosystem of partners. But beyond that, what is also implied is SAP’s ecosystem of talent, including its extended contingent workforce engaged by the SAP partners. Enterprises, like SAP, are trying to establish broad “talent ecosystems” (aka “talent communities”).
And how does this dream come true?
Yes, through online staffing platforms and their own attendant “digital services ecosystems.” Because online platforms are “information processing hubs” that enable value-added transactions and interactions and make vital information flow across digital media, they tend to form and support information-based, “digital service ecosystems” consisting of different entities (businesses, people, etc.), platforms, and even other ecosystems. In fact, it turns out that online platforms (with standard-based technology, APIs, etc.) can do—have the DNA to do--this with great agility relative to traditional businesses with “enterprise IT infrastructures.”
So we are starting to see that online platforms are establishing new kinds of logical infrastructures and diverse and physically far-ranging digital services that enable the development of something new: “talent ecosystems” which can serve enterprises as modern extended-enterprises that encompass both partner ecosystems and extended contingent workforces, all functioning as a whole.
There have been other recent examples of online staffing platforms forming unique, uniquely configured “talent ecosystems.” We have seen Elance initiate an arrangement with IBM recently to enable a “talent ecosystem” that would form a vital part of the partner and developer ecosystem IBM is forming around its newly launched Watson division (this arrangement appears similar to the SAP-Work Market one, except that the “talent ecosystem” will consist of online freelancers who will perform online work; and unlike the Elance-Watson case, the SAP partner ecosystem is already mature and very large). Another example can be found in the recent partnership between Work Market and MBO Partners, where the two companies are aligning their “talent marketplace” and “professional engagement/compliance” platform (respectively) to enable of “talent ecosystems” for enterprises and the fast-growing and much-in-demand workforce segment of high-skilled “independent professionals.”
The Work Market-SAP deal is a “big deal” for a number of reasons, some which may seem obvious and others not. But perhaps its major significance for me is that it is a further demonstration of how online staffing platforms can engender completely new kinds of enterprise workforce management solutions (especially in the new world of extended enterprises and different kinds of extended workforces). It is an indicator of how different kinds of differently configured workforce management solutions will be created using online platforms and digital service ecosystems--created in different combinations by the successful enterprises of the future, the emerging platform providers, and the innovative players in what refer as the “staffing industry” today. The extent to which “staffing industry” players will be critical components in these combinations will depend upon the strategies they are executing now and in the next several years. 2020 is not that far way!