Understanding the Value of a VMS: Assess Your Organization’s Technology Maturity

The technology maturity model of contingent workforce programs is often broken down into two simple categories: programs that have implemented a vendor management system (VMS) and those that have not. However, this oversimplifies the technology state of contingent workforce programs, losing the nuance needed to fully understand the value provided by adding a VMS or bringing a new VMS into your program.

By expanding on the maturity model in our recent whitepaper “Building the Business Case for a Vendor Management System,” Dan Smoker, director of extended workforce strategy, Workday, provides insights into how to assess your current state. Fully understanding the state of your workforce management technology makes the process of adding a VMS or replacing an old one simpler, meaning your business will see a return on investment (ROI) faster.

The Technology Maturity Model Explained

Gradually bringing in new technology as a contingent workforce management program grows is a typical step in the maturity of the program overall. As companies evolve, they tend to go through the same phases.

1. Disconnected: While a company is utilizing contingent labor, it has disparate processes and technology to manage the various parts of its program.

2. Digitization: A company in the digitization phase often has some technology to help manage its contingent labor, but is often using solutions that don’t scale effectively or don’t work efficiently for the contingent workforce.

3. Optimization: This is often the stage where next-generation VMS technology comes into play, providing ample support for managing all things contingent workforce, whether it be onboarding, invoicing, acquiring, or other essential tasks relating to external workers.

4. Total Workforce: At this stage, a company is not only ready to manage its contingent workforce using a VMS, but it’s also connecting the data and information from the VMS with the data from other workforce management systems to create a strategic plan across its entire workforce, both full-time and contingent.

These phases make up the expanded maturity model, and each has its own unique technology needs, as well as specific steps to move from one phase to the next. As such, this model becomes essential to creating a value story or business case to justify buying a VMS. This is why we strongly encourage companies to understand where their business is on this scale, and identify their needs to move to the next level.

Understanding Your Current Technology Maturity Model

The basics of understanding your company’s maturity model start with asking three important questions:

• Do you know how many contingent workers are in your program?
• Where are your contingent workers located?
• What is the total cost of your contingent workforce?

Struggling to answer these simple questions is a sign that your program is more disconnected than you think, while knowing some answers but not others can be indicative of needing better digitization. However, if you can’t answer any of these questions, it’s likely that your program would be considered disconnected. It may be difficult for your team to get basic information when needed, and data may be stored in spreadsheets.

If you can answer these questions, it’s better to focus on whether or not your program reacts to change or plans for change. While you may have the basics down, inconsistencies in process and difficulties being proactive in your optimization are generally considered part of the digitization phase. Ask your leaders if they’re able to anticipate the needs of external workers, or if they’re using reporting features to guide their decision-making when it comes to contingent spending.

The optimization phase can be more difficult to pin down. It often includes the ability to be proactive in anticipating your contingent workforce needs, and your team can effectively manage plans, but things are still primarily focused on the now. Leaders outside of IT are often driving technology change and contributing to contingent workforce management as well. Planning and strategy are still on the back burner, and while you have detailed data, the insights gleaned from it are not acted upon.

Finally, there’s the total workforce stage. This phase of the maturity model requires that quite a few standards be met. You should be equipped with insights on your entire workforce, not just your external workforce, so that you can anticipate future contingent needs and costs. In addition, your business has a streamlined process for leveraging the contingent workforce when ad hoc workers are needed or other change arises. The ability to plan, forecast, and be proactive is key to this state.

What to Do Once You Know Your VMS Maturity Model Stage

Once you have assessed your maturity model, it’s easier to start looking at the ROI that a VMS will provide your contingent workforce program. Creating your own value statement, or beginning the process of buying a VMS, are usually the steps to take once you have your technology maturity model. Even if you’re not currently in the market for a new VMS, understanding where your contingent program sits on this maturity model can help determine areas of improvement.

Under this model, reaching the total workforce management stage is the end goal for most businesses. Doing so starts with this expanded maturity model, but includes many nuanced factors unique to your program and business strategy. Whether you’re looking to upgrade your technology, or establish a more unified contingent workforce program, building a business case can help you understand not only your place in the maturity model, but also how to maximize your ROI with new VMS technology.