6 Signs a VMS Is Truly Innovative

Whether you’re assessing your current vendor management system or in the market for a new product, here are six steps your provider should be taking in order to create innovation that has true impact.

This blog was originally posted on VNDLY.com in October 2022.

As markets continuously change and throw competing priorities at business leaders, it becomes increasingly important to build your business around core principles that enable innovation and agility—and to partner with organizations that can do the same. Ensuring your vendor management system (VMS) provider has the ability to innovate and keep up with the latest technology developments is key to your continued business process improvement and should be a vital part of your evaluation discussions. 

But what does it look like for a VMS to be truly innovative? Whether you’re assessing your current VMS solution or in the market for a new product, here are six steps your provider should be taking in order to create innovation that has true impact. 

1. Prioritize Core Functionalities

The ultimate goal of any VMS solution, whether innovative or traditional, is simple: to make the management of your extended workers easier. As such, many of the important functions of a VMS are focused on the tracking and payment of contingent workers. Core functionalities typically include:

  • Invoicing
  • Worker tracking 
  • Hiring
  • Onboarding/offboarding
  • Integration

Innovations in these areas may be simple, but they can make a big difference in your day-to-day operations—think decreasing time to hire or streamlining integrations so they’re “click to configure.” Something as simple as being able to add a custom field without submitting a support ticket can make a significant difference when your team needs to adjust its system.

But these important features are frequently—and unwisely—passed over in favor of flashy new updates. More often than not, rethinking and innovating on the core functionality can provide greater impact, equipping your team with the tools it needs to perform more effectively and efficiently. 

2. Embrace the Cloud

The adoption of cloud technology is on the rise. By 2025, Gartner analysts say that more than 85% of organizations will embrace a cloud-first principle and will not be able to fully execute their digital strategies without the use of cloud-native architectures and technologies. 

In the VMS industry, cloud technology can have a significant impact on the ability of providers to deploy new functionality at an accelerated pace. It also provides a host of other benefits, including: 

  • Process optimization and efficiency gains through the implementation of automated, repeatable processes.
  • Reduced costs due to the removal of on-premise technology that was previously the norm.
  • Automation of software updates to ensure you’re always benefiting from the latest releases.
  • Flexibility and mobility as cloud applications can be accessed on any device with an internet connection, from anywhere.

If a business wants to optimize the management of its contingent workforce via technology, a cloud-first VMS solution is a must. 

3. Reject Outdated Architecture

The majority of VMS solutions on the market today were built in the early or late 1990s. These providers now face increased issues related to technical debt and legacy code when compared with some of the newer alternatives. Dated VMS solutions become unfit for purpose, are increasingly open to security risks, and lack the performance and depth of core functionality that should be expected.

From the outside, these VMS solutions give the illusion of stability. They appear to work as intended, but what’s missing is the ability to innovate and scale the VMS in line with changing market and customer needs. This is the result of a few factors, with legacy code being a major innovation blocker. As time moves on, the code that was used during the initial build becomes increasingly difficult to understand and even more difficult to change. This makes it near impossible to improve on current functionality, as developers fear breaking the whole system if they make any changes. Workarounds and unsustainable practices become the norm in these cases.

In the VMS industry, cloud technology can have a significant impact on the ability of providers to deploy new functionality at an accelerated pace.

Often, the result is that your team has to rely on submitting support tickets to make necessary changes—significantly slowing down your workflow. Innovative VMS solutions are moving toward systems that end users can configure and reconfigure themselves without the need to contact the VMS provider. Putting the power into the hands of those who use the VMS the most also ensures that the system will actively support you, rather than work against your efforts.

And don’t discount the user experience/interface advantages of newer software solutions. Having a tool that’s easy to learn and navigate is absolutely essential to user adoption. Your team is more likely to use a tool that looks nice and doesn’t add time to its workflow. 

4. Ensure Technology Ecosystem Alignment

To effectively manage the extended workforce, organizations often rely on data housed by multiple systems across several teams. As such, a VMS needs to be able to quickly and seamlessly connect with other technologies within a business’s ecosystem in order to create true impact. Integrations are key in this area. Being part of a full enterprise solution with  a human capital management system, single sign-on, and financial management software is the first step toward better visibility across your systems.

Having your VMS as part of an enterprise-wide system offers many business benefits, such as process standardization and optimization, reduced manual effort, reduced risk of data security breaches, increased data accuracy, as well as an improved and consistent employee experience. To assess a VMS’s integration capabilities, there are two terms you should be familiar with: application programming interface (API) and certified integration. 

Application programming interface: To put it simply, an API is the mechanism that allows the movement of data between systems. Sets of APIs are made available in order to call defined data points between systems at a set frequency.

When evaluating vendors, it’s important to discuss their API framework, the system(s) you need to connect to, and the data you need to move between those systems, in order to find out if they will be able to cater to your requirements. You should assess the level of integration that exists today, as well as any future roadmap capabilities that may be in place, before you go live. 

Certified integration: In some instances, you may find that the supplier has a certified integration already in place. A certified integration ensures a number of important elements, including:

  • Quality: It recognizes the quality and stability of the integration, assuring that rigorous testing took place to gain certification. 
  • Collaboration: It highlights the close partnership between both system vendors, ensuring they are aligned when it comes to delivering on joint innovations.
  • Continuous improvement: It means there is open communication between these providers, with both continually focused on addressing any issues and working together to improve on integration models. 

5. Build Powerful Partnerships

The acquisition of VMS providers by larger organizations, such as the acquisition of VNDLY by Workday in 2021, is increasingly common. When done correctly, these partnerships can build on the area of certification and strengthen it beyond what other providers, certified or not, will be able to offer. 

Take VNDLY, for instance. Before being acquired, we were already a Workday Access Partner with a certified integration. Post-acquisition, our VMS solution is now embedded in Workday—and this commitment is vital to both companies’ success. Continued innovation and integration across multiple product areas is an even greater focus. As a result, you can be assured that developing product strategies that deliver actual customer value—as well as working integrations—are top of mind.

6. Invest in Research and Development

If a VMS provider is truly invested in continuous innovation, there will undoubtedly be a focus on research and development (R&D). How much revenue is being put back into R&D will give you a clear picture of prioritization.

Don’t forget to look at this in terms of the company revenue and not just percentage. It goes without saying that there will be a difference in the amount that can be spent on R&D for a company with revenue in the millions versus an organization who has revenue in the billions. Again, this is where acquisition by larger companies can be hugely beneficial to continuous innovation in companies who were once in a lower revenue bracket. Using our VMS as an example, the investment in R&D—as well as the supporting resources now in place due to being part of Workday—increases the speed of functionality deployment and accelerates innovation when compared to pre-acquisition times.

Innovating Beyond the Core

While the core functionality of a VMS solution is the most important place to look for innovation, that doesn’t mean new features can’t be valuable. When new features are coming not at the expense of core functionality but rather to further support them or eliminate legacy processes, then innovating beyond the core can be just as important as improving core functionality. The key is to take into account whether features or workflows are being added with intention, rather than as the result of a trend.

If you’d like to learn how our VMS supports global organizations via continuous innovation and the core VMS functionality, get in touch today.

More Reading