Don't Overlook the Most Overlooked Keys to Successful Services Procurement

Vendor management systems manage every aspect of contingent labor management provided by non-permanent workers.

Eileen Rimeikis
Eileen Rimeikis

Over the past 15 years, there have been dramatic changes in the way companies meet their workforce needs, with more and more of them making the strategic decision to employ contingent workers who provide services as contractors, freelancers and other non-permanent positions. As a complement to companies’ permanent workforces, these contingent workers enable companies to launch new initiatives more quickly, respond faster to customer needs and adjust to changing market opportunities—making it a significant competitive advantage to companies in the same way that efficient supply chain practices have been a hallmark of today’s most successful companies.

The supply chain comparison is appropriate because many companies hire and manage contingent workers with the same processes and personnel as traditional supply chain goods and services. That means that a company’s supply chain executive often has a major role in management of these procured services, and that’s a good thing because the same best practices that are so effective for supply chain management can help achieve efficiency in contingent workforce management.

As every supply chain executive knows, technology has an important role to play in that. Just as supply chain software can save a company millions of dollars in supply chain costs, similar software for procured services, called vendor management system (VMS) software, can achieve similar efficiencies and cost savings for contingent labor—which is why supply chain executives who have input into contingent labor management so often end up championing the use of VMSs.

As you may already know, VMS software manages everything aspect of contingent labor management provided by independent contractors, staffing firm temps, consultants and other non-permanent workers. It is designed to streamline the process of procuring those services, establishing scopes of work, managing the projects those workers perform, coordinating invoicing processes and a million other details that are distinct to this kind of acquired labor vs. traditional employees. VMS software is naturally not as large in scope as supply chain management software, but it still requires the right implementation strategy in order to maximize the benefits to the company.

A big part of my day-to-day responsibilities is to advise companies about how to design and implement VMS rollouts, and most of the questions I get are naturally focused on the technical aspects of implementations, such as:

  • “What’s the best way to link my VMS system to accounts payable so that contractors get paid in a timely fashion without my having to manually approve a million invoices?”
  • “Is there a difference between the way I set up new, statement of work (SOW)-based contractors in the VMS compared to temps that come from a staffing agency that we’ve worked with for a while?”
  • “How do we structure the implementation to give us the maximum flexibility for the future in terms of new categories of services, new departments involved, etc.?”

These are all important questions, but they are all related to the science of a successful VMS implementation—in other words, how best to engineer the implementation in logistical terms. Those are important questions to ask, but you need a bit of art to go along with the science, and the art of a VMS implementation requires a set of soft skills that can pave the way for a rollout’s success. Success often hinges on the ability to navigate skillfully through tricky office politics and personality issues among key stakeholders.

The two most important people in your VMS implementation are the program manager and the VMS sponsor. The program manager is the day-to-day point person for the implementation and the one who typically continues ownership of the VMS program well after the initial implementation is complete. The VMS sponsor is an executive-level person who has taken a strong interest in the success of the VMS implementation. The VMS Sponsor is, in many ways, the public face of the VMS implementation at the company and plays an equally important role in governance going forward. Together, the program manager and VMS sponsor identify and navigate around potential obstacles to the success of the VMS program, and soft skills play a critical role in steering the ship safely to its destination.

Persistence is a key soft skill because many objections to VMS implementations burn hotly, but briefly. When a VMS implementation is first announced at a company, many people object reflexively at first, but eventually warm to the idea, especially after they better understand the benefits. A VMS sponsor (and program manager) who doesn’t spook easily outlasts the vast majority of the initial objections that arise.

Persistence is important, but there is no substitute for influence and this may be the most critical soft skill, even though it is the hardest to define. VMS sponsors who are in a position of strong influence in the company and who have natural leadership abilities can be invaluable to the success of a VMS implementation. If a departmental manager is standing in the way of a full implementation, for example, a VMS sponsor should know how to successfully navigate the politics or have the authority to go over the head of the objecting party if need be.

Salesmanship is equally important. I don’t mean selling in the traditional sense; I’m talking about the ability to make a compelling case for the VMS program in terms that resonate with each internal constituency. A person with these soft skills knows what makes each of those audiences tick, and can customize the “sales message” for each of them so that everyone understands the benefits and gets on-board with the project.

Sometimes the most important factor is having the right “pull” to solve problems by making deals. One common example is when departmental directors or executives put up resistance because the VMS systems further taxes their short-handed team. A VMS sponsor with the right pull can solve that sort of problem by pulling strings for that department to get extra arms and legs. Sometimes it’s as simple as approving an additional headcount and those objections immediately melt away.

Another common situation involves departments or business units that feel a one-size-fits-all VMS system is being imposed on them from above. This prompts requests for enhancements or exceptions to the VMS program rather than a truly standardized system across the entire company. Or perhaps a certain business unit requires its own governance model for valid reasons. A VMS sponsor with the people skills and the influence to handle those negotiations and approve the solutions is invaluable.

Too often, the implementation strategy for a VMS program focuses exclusively on the technical and operation steps, but don’t forget the importance of effective governance because it helps break down stakeholder resistance by enlisting businesses and departments in a common goal. An amazing strategy is great, but without the buy-in of the business, it remains just that, a strategy. Having a VMS sponsor and program manager with the right soft skills can ensure that your company turns potential objections into opportunities for departments to collaborate and move toward a common goal.