A transformation is underway in the arena of business application software. Often unwieldy, expensive, inflexible enterprise resource planning (ERP) systems of the past are being replaced with a disruptive software-as-a-service (SaaS) ecosystem. Aspirations from a decade ago that ERP systems would become the end-all business application suite have disappeared.
The monolithic ERP suite that required immense IT resources to integrate and customize is morphing into a modular ecosystem consisting of multiple applications with a laser focus on user experience. No longer beholden to the IT department and tethered to mammoth projects that often take years to complete, business and functional leaders have increased influence over the business applications they employ for decision-making and execution.
Backdrop: The rise of contingent workforce management
A little more than two decades ago, the contingent workforce management industry was born. The workplace was in the early stages of a dramatic transformation, one that is still playing out today. Large companies were downsizing their workforces for lower costs and flexibility, and this gave rise to rapid proliferation of temporary staffing suppliers.
Suddenly, a growing percentage of the workforce became contingent workers — temps, independent contractors, and consultants. Today, this number is fast-approaching 20 percent, with some projections that it will grow to 30 percent or even 40 percent in a few years.
VMS and the ERP Back Office
SaaS-based VMS (vendor management system) solutions are an important constituent in the new business application ecosystem. VMS platforms focus on specific user personas responsible for contingent workforce management — from stakeholders to the actual users who are in the trenches (viz., managers and workers).
The VMS provides capabilities such as sourcing, approval routing, onboarding, payrolling and benefit management, billing, financial reporting, tax and regulatory compliance, among others. Optimal performance of a VMS is achieved when it is integrated into the ERP ecosystem, which serves as the system of record for certain data types such as organizational structure and reporting, purchase orders, and benefits. VMS front-end transactions such as billing, invoicing, and approvals are routed back to the ERP, where the information is stored.
VMS integrations also extend beyond ERP to include service applications such as Portfolio and Project Management (PPM) and IT Service Support Management (ITSSM). In the case of PPM, project plans and details are maintained in the PPM system, while the VMS is used for budget management and workforce management. For ITSSM, the VMS enables worker onboarding and offboarding and the ITSSM serves as the system of record.
The Future of VMS in the Integrated ERP Ecosystem
This is an exciting time for those of us in the contingent workforce management space. The opportunities of the contingent workforce are vast, but so are the risks.
An influx of millennial workers seeking better work-life balances, who will comprise more than half of the workforce by yearend, requires that the underlying business applications within the integrated ERP ecosystem align with their user requirements. This is reflected in a number of ways. Here are a few:
1. CITE (Consumerization of IT in the Enterprise)
User experience is an important driver behind the move to an integrated ERP ecosystem. Driven by what has become known as Consumerization of IT in the Enterprise (CITE), business applications such as VMS solutions are quickly evolving. Here, user experiences with technology as consumers impact their expectations regarding their technology experiences at work.
The preferences of millennial workers are facilitating the adoption of CITE. This is having a profound effect on the design of the next-generation of HR business applications: 42 percent of HR systems are influenced by CITE today.
PRO’s VMS platform, reflects CITE principles. For example, managers are able to rate workers and suppliers based on their performance — for both hourly and project-based work. These help guide hiring decisions when other managers consider those same workers and suppliers for new assignments.
2. Mobile—and now wearable—disruptions
Most of us are living the repercussions of mobile disruption in our personal lives, and it also has far-reaching implications for businesses.
For example, 40 percent of the growth in IT spend is connected to mobile, and this directly translates into enterprise initiatives. The data directly supports this trend: 83 percent of companies will support employee-owned devices by the end of 2016, and 35 percent are developing their own mobile apps.
The new reality is that managers and workers prefer their mobile devices. As a result, user experience on the mobile device is critical. This is reflected in a recent survey comparing mobile apps versus mobile websites where 89 percent of respondents indicated they prefer mobile apps.
Clients can have demanding requirements and expect an elegant, highly intuitive user experience on their mobile devices, and their wearable devices. Our company extended the extended the omnichannel experience to the Apple Watch with Wand Wearable.
Mobile strategies should also include requirements for ERP back-office integration. Specifically, the same synchronous data exchanges that occur on the Web when a user employs a laptop must also occur on other devices — whether mobile, tablet, or wearable.
3. Business intelligence and data analytics
The magnitude of the amount of data — and its growth trajectory — is almost mindboggling. Ninety percent of all data has been created in the past two years. But much of the intelligence that businesses can glean from that data is untapped; 80 percent goes unused.
VMS integrations with back-office systems are the lynchpin for enabling data analytics. Not surprisingly, most companies feel they are not using their data analytics to their fullest potential: 75 percent believe talent analytics are important, yet only eight percent indicate they are leveraging them. This is where the integrations between the ERP back-office systems and the VMS are crucial.
There are three takeaways that we have seen occur with the integration of Wand with our ERP back-office system:
First, the analytics must be both descriptive and predictive. For example, Wand benchmarks bill rates based on location, skill sets and assignment type, among other factors. These descriptive analytics are turned into predictive analytics through sourcing recommendations during the recruiting process.
Second, data analytics should be used for tactical insights that engender real-time business changes as well as for strategic workforce planning. An example of tactical insights would be PRO’s market rate module in Wand; hiring managers are able to evaluate candidates and project suppliers based on bill rate comparisons. An example of strategic workforce planning would be examination of bill rate trends across locations, skill sets and assignment types, departments, among other factors.
Third, intelligent-actionable data insights require both a technology and human component. Our MSP team works directly with their clients to help interpret the data analytics and design new programs or modify existing ones to address the insights.
New Vistas of Success
The changing ERP landscape gives IT an opportunity to redefine its relationship with the business. Leveraging business applications such as Wand provides IT organizations the chance to create both greater IT and business agility. It also enables IT to redefine its role from technology provider to that of a strategic business broker.
This new integrated ERP ecosystem is much more malleable and flexible. Technology disruption such as CITE, mobile, wearables, and data analytics can be absorbed into the ecosystem much faster and readily. What might have taken years if developed within the traditional ERP suite can be realized much faster through the business applications that plug into the ERP and use it as their back-office system of record. This integrated stitching creates user experiences previously thought impossible.
For more details on how technology trends are affecting the contingent workforce management space, readers may want to watch our “5 Contingent Labor Tech Trends: Harvesting Innovation for Today and Tomorrow” Webinar.