Five steps to engaging a VMS/MSP

May 1, 2013

“How much does a VMS/MSP cost?”  These may be just a few of the many questions that you have spinning in your head.  So where do you start?  Right here my friend, you have come to the right place.  Beeline recently contributed to an article published by Forrester, FAQs About Services Procurement Solutions, which answers many of these types of questions.  I could spend the course of several weeks, maybe even months, going into greater detail on anyone one of these topics, but instead I have listed five things you’ll want to address when engaging a VMS/MSP partner.

Building a business case

The first step is building a business case.  Forrester stated in their above mentioned article that “As a general rule of thumb for a combination MSP/VMS, $20 million a year spent on labor being managed in the system is a good benchmark.”  As we continue to see non-employee demand rise due to economic uncertainty, skills shortages and organizations looking to adopt a more flexible workforce, it’s important to understand the value a VMS provider can bring.  The first thing is to make sure you understand what your current state processes look like so you can get to the desired future state.

Identify key criteria you want in a VMS/MSP

It’s also important to engage with key stakeholders who can help to define program scope and ultimately drive adoption within the organization.  Once buy-in has been gained, you can then engage with potential VMS/MSP partners

Determining key vendors

Forrester identifies a sample listing of providers who can help your organization with VMS, MSP or Staffing solutions and services.  Before you engage with a provider however, it will be important to have an idea on key criteria you will want in your VMS/MSP provider.  Typically the gathering of this information is done through a Request For Information (RFI) or Request For Proposal (RFP), face-to-face meetings or through recommendations from hiring managers.  Most of the analysts who cover this space can provide key evaluation criteria, but all VMS providers should have sample RFI/RFP templates they can provide you with. It is important to find the right partner who can help to bridge the gaps from your current state to future state.  It’s critical to find a provider whose organizational culture is similar to yours so - as your program expands or changes - you know you have a partner you can count on.  Thiscan be difficult to assess this on paper, which is why face-to-face meetings, site visits and reference calls are key evaluation criteria.

Contract Considerations

Who holds the contracts for these providers and should there be separate contracts for the VMS and MSP providers?  “Forrester recommends evaluating and contracting the VMS and MSP separately – even if you end up buying both the services and software from the same supplier.”  In the end, you will need to find the approach that best meets your organization and your business needs.

Pricing Models

For Contingent Staffing, what Beeline classifies as classic temporary labor or staff augmentation (please visit this video to see more details on worker classifications), a percentage of total spend or supplier funded model is common.  When it comes to managing strategic outsourcing work, such as IT Projects, Consulting Services, Offshoring, etc. this model can vary.  Forrester states “Services firms, which are less commoditized than staffing firms (Contingent Staffing), do not feel compelled to be part of a VMS/MSP, and as a result will not pay the fee - meaning clients who want to use these solutions for SOW/project work wind up paying the fees themselves.”  At Beeline, we have several clients who follow this approach, but also still have clients who have adopted a supplier funded model or at least a portion of the program which has adopted this model for managing this strategic spend bucket.  The average VMS spend price points fell between “0.35%-1.5%” as also stated within the report.

So whether you’ve already created a business case or are already negotiating pricing, we hope this blog post and resources will help guide you along the way!