Vendor management system providers have their own rationale and direction for continued investment in their proprietary technology solution, as is evident in Staffing Industry Analysts’ VMS Service Differentiators report. However, broad themes do exist, whether it’s back-end ERP integration, worker engagement, mobile solutions, business intelligence or delivering solutions that can manage an extended and global workforce. These themes in the VMS market have existed for several years now, but what has changed recently is a decisive focus by each vendor around a single theme.
Visit the websites of the vendors listed in our differentiators report to see just how different and unique the value proposition is marketed. Some “blue ocean strategy” is at play here: the idea that winning is not achieved by direct competition with rivals but rather winning is all about creating “blue oceans” of uncontested market space. This differentiation is both an opportunity and a challenge to buyers of VMS solutions. On one hand it should be easier to evaluate and match a VMS to the strategic direction the buyer wants their contingent workforce program to take. On the other, immediate issues pop up around the need to be decisive on strategy in the first place, and how to quantitatively evaluate distinctly different solutions, each with their own philosophy and service direction.
The Dean & Co. “Delta Model” suggests three very different objectives vendors will orient toward: system lock-in, total customer solutions and best product; when creating a unique value proposition. We can see this in action with dramatic M&A activity in 2014 for VMS and the launch of new products and mobile-enabled products to capture new client business and consolidate existing client relationships.
The SIA VMS report calls out the difference between configuration and customization and the possible benefits and drawbacks. For me, the VMS solutions that will do well over the next few years are those that offer a mature configuration framework allowing users with no coding experience to setup and deploy the VMS. This is an essential “democratization” of VMS solutions, enabling them to become a more mainstream technology. Handing over configuration control to the client reduces time to deploy while extending the configuration possibilities a client has to ensure stakeholders view the solution as supporting their procurement/HR processes rather than the other way around.
Vendors without sophisticated configuration capabilities will find it increasingly difficult to maintain their market position, for many reasons, not least the illusion that custom coded solutions are better adapted to client needs will be shattered. When the cost of additional coding is factored into a solution that needs upgrading and extending to meet the growing maturity and complexity of CW programs, it will probably be wiser to buy a product-based solution rather than making your own.
Look for our comprehensive SIA VMS Service Differentiators report for further insight and revelations.