Choosing a VMS to Manage the External Workforce

The global workforce is getting more dynamic, with companies hiring contingency staff, freelancers, and external vendors to perform more and more business critical tasks.

Which means you need the right technology and processes to manage your external workforce if you want to get the most benefit from your outside talent.

Vendor Management Software (VMS) is the most common technology used to manage the external workforce. In a recent survey, as many as 85% of companies reported using VMS to manage their vendors and suppliers. The remaining executives reported considering bringing VMS into their technology stack within the next two or three years. This is a trend that is even seen in smaller, more locally based companies.

Which is why it is becoming increasingly important to choose the right VMS technology for your business environment and needs.

When selecting a piece of mission critical business software, you cannot limit your inquiry to the core functionality of the program, i.e. handling all of the logistics related to outsourcing work to the external workforce.

There are other considerations that could end up being the decisive factors that distinguish the best VMS for your needs from the competition. The software should be able to boost the efficiency of your outsourcing endeavours, while ensuring that all contractors deliver quality work and comply with business policies and local regulation. As if that wasn’t enough, the VMS should perform these functions in a cost effective manner.

In this article, we will explore some of the factors to consider when choosing a VMS to manage your external workforce—and do it well.

The background of the VMS developer

When you transition your business to technology that will handle an important aspect of your operations, you are not only buying a piece of technology, but forming a partnership with the software developer.

That is why you need to not only consider their product, but the developer as a company. You need to understand their history as a company, as well as their overall position and strategy in the market.

When forming a partnership with another company, it's important to ensure that the company is viable and occupies a strong presence in the market. You need to be able to compare different VMS developers against each other with regards to their experience and standing in the industry.

Important factors to consider is whether the VMS developer is affiliated with any particular staffing company. You also need to consider their financials and evaluate their viability as a company. Also consider the market-related experience of the management team and their history with the company.

Integration with third-party platforms

Since you want the VMS to manage your external workforce, it should also be able to interface with all kinds of vendors and staffing companies. The VMS must also be able to integrate with the technology platforms used by those external organisations.

When choosing a VMS to manage your external workforce, make sure that the software is able to communicate effectively with MSP-supported programs as well as the self-managed programs commonly used by freelancers and independent contractors.

The program must also be able to set up workflows to manage external workers using different systems and technologies, in a way that will not increase cost or decrease performance efficiency.

Requisitions process

The VMS must provide a simple and efficient interface to send  requisitions out to your vendors and external workers. Many of these processes should be automated in a sensible way.

The program should also allow you to send out requisitions in tiers, with your preferred vendors getting an opportunity to fulfil the order first, later followed by your lower tiered vendors. You should be able to set business rules that automatically decide when it's time to pass the requisition to your second and other lower tiered suppliers.

All of these processes need to be presented into a simple to understand and manageable interface, to ensure easy adoption by your team members.

Interview & Hiring Process

The program must simplify the process of searching for new vendors and external workers. It should also provide tools to schedule and conduct interviews with potential workers, as well as tracking the interviewing process.

In the same way, the VMS should offer tools to ease the hiring process for new workers. This would include an automated onboarding process, as well tools to conduct rate negotiations with potential workers.

It might also be useful for the program to support different hiring procedures based on the country of the worker, as well as the type of work they would be required to do for you.

Handling of Timesheets

It's always important to track the activity of your external workforces, as well as the progress they're making compared to predetermined milestones.

One way of doing that is through automated timesheet tracking. Will the VMS be able to enter time worked automatically? The software should also be able to group different work activities together to ensure that work hours are categorised appropriately.

The system should then be able to process these timesheets based on the varied rates and tax systems used in the different countries where your workers are located.

Invoicing Automation

If not managed properly, invoicing can pose an onerous administrative burden to your staff.

The VMS technology should streamline the invoicing process by firstly ensuring that all invoicing data is verified and correct.

This data should then be made available to yourself and the external worker or recruiting company. If an MSP is used, the VMS should be able to generate invoices that are accessible on the MSP as well.

The system should also be able to make changes to the invoices of groups of workers at the same time—for example if there is an internal reorganisation in your company or in the way your administration work is being conducted.

It is an added benefit if the VMS is able to produce invoices and calculate applicable taxes without sending the data to another service for external processing.

Handling of services procurement

The VMS should aid in the process of sourcing new talent and external service providers. For example, when you send out a Statement of Work (SOW) and request multiple bids to be submitted in the process, the system should be able to send out the SOW to the list of preapproved or new vendors and suppliers.

The software should give you the ability to create a list of authorised suppliers that will be given the opportunity to place a bid, and deny access to the SOW to suppliers that aren't pre-approved. This whole process should be configurable to allow for differences in the type of work that is requested.

Another good feature if this whole process can be automated. The system should allow you to set up a library of SOW templates and stipulations. In this way, the process of drawing up a SOW is simplified, allowing you to reuse work done on previous multi-bid SOWs.

It would also be beneficial if the VMS allows you to use different payment structures for each SOW as needed. Another feature would be if the system automates the process where different stakeholders can provide input when creating the SOW.

Administration automation

The VMS package you ultimately choose, must be able to integrate with your company structure and management style. To that end, the VMS should be configurable and allow you to set up workflows that match your current business processes.

The system should be able to trigger specific workflows when certain events occur. For example, when overtime is entered into a worker's timesheet, the system should automatically trigger specific actions and procedures.

Another example would be if the cost of a particular transaction exceeds a predetermined threshold. The system should be able to identify these events and initiate the appropriate workflows to deal with these situations.

Technology & security

The way the VMS software is set up will have a marked effect on how you have to configure it on your end, and what the ultimate cost of the package will be to your business.

This would include the technology architecture used to build the system. For example, many software solutions make use of third-party software that requires additional licensing or specific infrastructure configurations.

Another major technology concern is cybersecurity. The VMS must implement certain information auditing procedures to detect intruders and keep your information secure.

The VMS should employ backup procedures and systems to handle potential data losses with robust data and fault recovery procedures.

Many VMS systems are cloud based. Determine where the system is hosted and the security certification of the data centre used.

Product roll-out and integration

After deciding on a particular VMS for your needs comes the arduous task of integrating the system with your existing technology stack. It's important that the developer provide tools that will streamline the process of integrating their systems with yours.

When deciding on a particular VMS solution, you should inquire about the implementation process for the software. What are the key steps that have to be followed and processes that have to be implemented?

You also need to inquire if the system is specifically geared towards integrating with the ERP, HR and ecommerce technologies you currently use in your business.

VMS user interface

The overall usability and presentation of the system is crucial to its ultimate successful deployment in your organisation.

If you consider the VMS from your users' point of view, the technology is the connecting point between yourself and your external workforce. When a freelancer logs into the VMS portal, they should have a positive experience—one that is easy to use and to understand.

The system should be intuitive, so that workers would be able to get productive without spending a lot of time just to figure out what to do. Otherwise, workers may not know how to interact properly with your systems, which will lead to incomplete data, diminished collaboration, and lost opportunities.

The relationship with the VMS developer

Finally, when deciding on a VMS platform, you must consider the type of relationship you will have with the VMS developer.

Not all technology vendors are as easy to work with. You want a software vendor that will be willing to partner with you in making a success of the implementation and integration of their technology with your current business practises.

There are many clues that would point to your potential, future relationship with the developer. For example, what is their approach during the sale process? How open are they to answer all your questions? Do they collaborate with you in finding a solution that will meet your particular business environment and needs? Do they share feedback with you that they received from their other clients?

The VMS developer needs to consider your current technology infrastructure to determine if it meets the technical requirements of their program. They must then help you make the necessary changes and upgrades to your technology so that the VMS will function optimally.

The developer must also guide you through a process of evaluating your current situation to ensure that there is a business case for their technology in your company, and that you will receive a good ROI on your investment.

Some vendors have a solutions design team that are specifically tasked with formulating a customised solution for each of their clients. This team will walk you through the process of determining your business needs and goals for the technology.

They will then draw up a solution package that is tailor-made to your company with specific products most suited to your needs. The team will also advise on the product workflows that will be most suited to your business objectives and processes.

When it comes to technology, the after-sales support is just as valuable as the product itself. What good is acquiring the best product in the world with the longest list of features, if you're unable to wield its full potential?

Developers who are willing to form a lasting business partnership with you in making the technology implementation a success, are much more valuable to you than lower prices or even stronger products.

Here is what you need in a technology partnership:

• The developer should collaborate with you in producing the best solution for your circumstances.
• The developer should provide excellent after-sale support.
• The developer should be proactive in their approach to formulate innovative solutions so that you can get the best value from their products.
• The developer should help you integrate their program with your existing technology.
• They should give you the tools to customise their technology to fit your existing business processes and workflows.
• The developer should be able to communicate clearly when explaining their technology or supporting specific product recommendations.

Change is inevitable. Your business circumstances and technology needs will never stay stationary. So just from a business continuity perspective, you need to forge strong technology partnerships with developers that will meet your future technology needs.

The right partner will help you on a continuous basis to optimise their program to meet your business objectives—and change their approach when your needs and market conditions change.

Conclusion

The global contingent workforce is set to only grow over the next couple of years. Which means that it's critical to your success as a business to manage these workers effectively.

To this aim, you need the right technology to handle the management of these workers.

Choosing the right VMS solution is therefore of strategic importance to the future success of your company. The program has to work well with all your other technologies and across all the departments in your company.

Transitioning to a new technology also bears substantial cost, both in terms of time and financial resources. This means that once you've made the transition to a VMS, the system will have to perform adequately for a long time.

Which makes it all the more vital that the VMS is able to meet your company's needs, both now and for years to come.

Choosing a vital piece of technology is never easy. If you follow the suggestions in this article, you will have a broader picture of what to consider when making your final decision.

It will help you consider all the factors needed to optimise and streamline your vendor management workflows and gain the visibility in your external workforce to make effective decisions.

Regardless of which VMS you ultimately choose, the technology makes tremendous business sense. It provides excellent value, and will be a boon to your overall efficiency and profitability as a company.