Look Past Your Current Needs When Selecting a VMS

464267817Up until the last year or so the scope of requests received for IQNavigator’s vendor management software (VMS) predominantly queried our support of contingent or temporary labor spend. Frequently those requests contained a few basic and generic questions about our SOW (statement-of-work) capabilities; only a scant few elicited from us in-depth responses about how we are able to meet their well-thought, comprehensive SOW and services procurement requirements. Today, however, nearly all of the requests and inquiries we receive are heavily focused on SOW capabilities and we are seeing much greater attention being paid to the needs of the broader services procurement function.

So what is driving this change in how companies are researching and selecting vendor management systems?

Could it be SOW?

It will not surprise any to hear that my answer to the question is: “SOW, of course.”And not just because I am @SOWgeek, or even because this is a blog series on SOW-driven changes in the contingent labor market.* Rather, I believe there is something more tangible and real taking place in our industry:

Managing SOW-based services from a similar program structure that manages temp labor services,and thereby achieving similar program successes (visibility, control, savings, etc), has finally hit the collective radar of services / indirect procurement groups not as a distant possibility or a nice-to-have, but as a current, near term necessity.

Buy stocks (and VMS) on future performance needs…

So what is meant by “look past your current needs when selecting a VMS?”

It does not mean buy VMS features or functionality that you do not need, as Steve Knapp of Brightfield Strategies so deftly advises against in a recent Contingent Workforce Strategies 3.0 article (Don’t Go Overboard on VMS features: Look past the bells and whistles to what you really need). I totally agree with his advice.

Look past your current needs simply means to take the long view and don’t assume (or settle for the idea) that:

  • Your current services procurement functions are fully matured
  • Your current spend management environment is stagnant and won’t be materially impacted by the benefits of a VMS.

Looking past your current needs means thinking two, three or four steps ahead and realistically identifying, indeed planning on future needs.

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Huh? Can you give an example?

Imagine a company that thinks they have a clear need right now to better manage the professional services spend in their organization.  Does that mean management of professional services spend, as the company currently defines it, is the only requirements driver that should inform the VMS selection? No. The company should be thinking about what may (and probably will) happen once they gain visibility into and control of that spend they call professional services.

Here is a real life example I have seen played over and over again:

The professional services GL (general ledger) account and the accounts payable vendor payment records are often the extent of data sources some companies have to identify and gauge third party spend. That GL, though, may be just a bucket of various types of vendor-based spend, a common limitation of putting SOW-based services solely on POs (purchase orders). Deploying a VMS technology (like IQN!) can provide greater line item detail to the commercial terms of those SOW-based transactions and enable greater differentiation between SOW and vendor types.

This kind of visibility helps companies deepen and broaden their spend segmentations. So, what the company originally referred to singularly in their RFP as professional services and narrowly asked for assistance managing, turns out to be many different types of spend from many different types of vendors.  This is an important early outcome to anticipate because different services such as IT support services, IT consulting, management consulting, strategic consulting, engineering services, audit services, tax advisory services, etc –all service types that often roll up into the professional services GL– can and often do require different operational, vendor and spend management strategies.


If a company can look past the current state and envision a (realistic) future state, then why wouldn’t that company select their VMS provider based on those future yet very real needs? If a company can’t look past the current state, then that may be all the more reason to select a platform, staffing and MSP -independent VMS provider that has proven to the services procurement industry it is already thinking two, three or four steps ahead.

*A later post in this series will address terminology at which time we will confront the challenging and confusing industry nomenclature that is contingent labor – hint: it may be time for some more change!

MORE: “Smaller” spend levels can call for VMS

Michael Matherly

Michael Matherly
Michael Matherly is global services procurement and SOW practice director with IQNavigator.

Michael Matherly

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