fact sheet
VMS vs. eProcurement
Which is better for extended workforce management?
Two philosophies, two technologies
Two fundamentally different software approaches exist for sourcing and managing external labor. For some companies, it can be difficult to determine which is the better choice — an eProcurement system or a vendor management system (VMS).
But most companies agree that, for ease of use, they want to use only one system to manage their contingent workforce. So how does a company decide which system is best to use?
Spend-focused or people-focused
First, it is important to understand the difference between eProcurement and VMS solutions and recognize how they support business needs differently. An eProcurement system is designed to manage a broad assortment of spend categories and provides an end-to-end process for the purchase of cataloged goods and, sometimes, services.
A VMS solution is designed exclusively to control the sourcing and management of contingent talent and outsourced services. It is a specialized procure-to-pay solution that includes deep and rich functionality tailored specifically for easy and efficient acquisition and management of all types of non-employee labor.
You cannot procure people the same way as pencils
An eProcurement system can support basic contingent staff acquisition, such as requisition creation and approval, rate structures, cost management, and PO processing, but it lacks the automated tools necessary to manage candidate interviews, time and expenses, regulatory compliance and risk, credentialing, and other features needed to manage external talent effectively.
For services procurement – sourcing and management of statement of work (SOW)-based initiatives – an eProcurement system can manage basic procurement activities like competitive bidding and SOW negotiation. But managing the complexity of milestones and deliverables requires a system that allows users to measure results and performance, track worker time and deliverables, provide consolidated invoicing, and produce advanced analytics and reporting. Essentially, eProcurement systems just are not designed to provide the robust features and specialized functionality that talent management requires.
“The shift in managing the non-permanent workforce, from a procurement-owned ‘problem’ to a strategically integrated flexible resource jointly owned by talent acquisition and/or HR … offers numerous advantages. It enables access to niche skills on a flexible basis and supports cost-effective service delivery for specific projects.
Upgrading contingent workforce technology to VMS
As organizations increase their dependence on external workers, they tend to encounter a range of operational inefficiencies and compliance issues. MIT Sloan Management Review (spring 2023) highlighted the way companies addressed these issues in an article entitled “Managing External Contributors in Workforce Ecosystems.”
One company in the article, Cisco Systems, recognized its existing IT systems could not support the changes it needed to source and manage the company’s worldwide contingent workforce. Rather than modifying existing systems, the company chose to work with a new vendor focused specifically on contingent human capital management. That vendor was Beeline.
Following Cisco’s directive to “make it simple, make it safe, make it fast,” Beeline’s VMS replaced the company’s inefficient and error-prone manual system with technology that gives the company’s contingent workforce managers “a fluid, quick, automated process.”