Optimizing Program Scope

Tom Kaminsky of Crescendo Consulting

After lunch, Tom Kaminsky, Managing Director at Crescendo Consulting, faced the challenge of holding our postprandial attention, and I’d say he did a stellar job. As with all the presentations, I would do it an injustice if I attempted to summarize the whole thing, so let me just provide a few examples of what he talked about. Defining program scope is critical, Kaminsky said, because without a defined scope, programs are failures just waiting to happen, whether it’s about expected capabilities, improvement, integration, QBRs, or even funding models.

He provided a thorough list of business case considerations for both program initiation and program expansion, including defining the key business drivers and success metrics, securing executive sponsorship, and identifying various options for models (e.g. supplier funded) and how those models will affect the organization.

Vendor Performance and Supplier Optimization

Jason Ezratty of Brightfield Strategies

Jason Ezratty from Brightfield Strategies talked about suppliers. How does your organization feel about suppliers? Are they your trusted partners? What kind of a relationship do you have? What do you expect from them, and is that what you actually measure? For example, do you say you want better performance but only measure price control effectiveness? If you push too hard only for savings, you might suffer the consequences of supplier/recruiter animosity. It turns out that many organizations, thinking they want cost savings, actually want efficiency and quality even more. How do you optimize your supplier base to support that, while continuing to build a positive relationship with them?

Ezratty provided a number of insights into optimization, including skill sets as they relate to location, the variability of contract labor rates, and the impact on data analysis when companies use vague job titles like “project manager” and “analyst”.

Using Data to Drive Cost Savings

Stephanie Moore, Vice President and Principal Analyst at Forrester Research, Inc., closed out the presentations with a discussion on the relationship between cost optimization and meaningful change, particularly change in IT, which is seeing the impact of advanced and easy-to-use consumer technology. Why can’t the system you use at work be as easy as your iPad? Do you find yourself downloading necessary applications that IT doesn’t provide?

IT, says Moore, is facing a serious problem with conflicting pressure: 1) improve the quality of products and services, and 2) keep costs down. Many of these companies are not benchmarking their IT labor rates, but even if that process is a cost-savings initiative, it makes for an initial cost. An automated services procurement solution, she argues, is a realistic method for reducing costs by up to 10%.

After Hours

Blogger posing shamelessly with chef Soza

After the presentations concluded, attendees were treated to a private gathering at Añejo, restaurant of Top Chef contestant Angelo Soza. Angelo himself was there, mingling with the guests. At one point he handed me the best ceviche I’ve ever tasted. It was a fitting end to a great day.

To see more photos of the event, as well as some short video clips from the presentations, visit us on facebook at http://www.facebook.com/Consolvms.

Here’s a quick summary of how we spent the first half of the day:

Contingent Labor Trends
Barry Asin, President of Staffing Industry Analysts (SIA) started the day off with a presentation about trends in contingent labor and evolving best practices. SIA data all points toward companies continuing to increase their contingent labor spend over the coming years. While it’s already accounting for 1.8 trillion dollars worldwide, SIA predicts that contingent labor will increase by at least 5% over the next two years. Since contingent labor is such an effective means to handle variability in demand, companies avoid a problem that previously resulted in either an idle workforce or unpleasant layoffs. This solution to variability, says Asin, is the number one driver of contingent workforce use, more than rapid growth, more than the rising costs of benefits and health care.

The latest trends, as many readers might guess, include increasing SOW spend, the evolution of contingent labor as a strategic business tool, and the utilization of “third wave” technology, such as social media, big data and video. VMS/MSP adoption sees serious penetration among large companies and of the $76 billion currently passing through VMS technology, about half of that is temp labor spend, with more and more being taken up by SOW and outsourced services.

John McKimmey from InfoTree discusses 1099 MisClassification

1099 Misclassification
John McKimmey from InfoTree shared his professional insight into the risks of misclassifying independent contractors (IC). He strongly asserted that most organizations just don’t understand the inherent risks associated with using IC, and that up to 30 percent of all current IC at any given business may be misclassified. Since the IRS has stepped up its audits with 6,000 additional organizations to support its efforts, it’s more critical than ever, he says, to gain firm control over the process. Just recently, he noted, the Department of Labor inspected 137 manufacturing sites in Connecticut and closed more than 20 due to misclassification.

While he provided some examples of what the auditors look for (e.g. you can’t train an IC to do the job you contracted them to do, just as you would not train a plumber), his sterner advice was for businesses to set up in-house managers of their contractors and set policies.

Dawn Lock, Counsel for Volt Europe

Agency Workers Directive
Going global, as Barry Asin pointed out, has been noted as one of the higher priorities for many programs, but these same programs list it as a priority year after year. It’s turning out to be a very complicated matter, and Dawn Lock, Counsel for Volt Europe, spent time discussing one of the many complicating matters: the Agency Workers Directive (AWD), which extends some of the rights of permanent workers to certain types of temporary (“agency”) workers.

Agency workers, as defined by the directive, include temps employed by an agency, PAYE workers, those contractors who have income tax and social security payments withheld by their agencies but who are “workers” not “employees”, and umbrella workers, those contractors who are employed by an intermediary payroll company called an “umbrella”. Contractors supplied under Statement of Work (SOW) and other kinds of contractors may not be classified as agency workers – but don’t confuse me with a lawyer. Breaching any of the rights entitled to agency workers can bring significant penalties upon the client in question.

We’ll be posting some of these presentations shortly at www.consolvms.com and hope you take a look.

Next I’ll be talking about what went on in the second half of the day, and maybe take just a moment to talk about the amazing ceviche I had that night at Añejo. Said ceviche will not be available for download. Sorry.

“Nothing travels faster than the speed of light, with the possible exception of bad news, which obeys its own special laws.”
– Douglas Adams, The Hitchhiker’s Guide to the Galaxy

Customer Service has posed a challenge to businesses ever since the fabled “rotten figs” incident in ancient Babylon, when Jeff the fig vendor refused to refund Gladys the five shekels she paid for some allegedly rotten figs. And I’m sure you can guess what happened next. That’s right. Babylon was invaded by Persia, and the city now lies in ruins.

Okay, as you can see, I don’t know much about Babylon (especially names), but I can tell you that the challenge of balancing customer satisfaction against the overhead of support costs has been the stuff of knit brows for a very long time. Can we automate our customer care via an online portal? Can we set up a call center someplace where real estate and cost of living are lower? Can we outsource to a developing country? Will these changes benefit us in the long run or not?

What the ultimate question really boils down to is, “Can you save money by skimping on customer service when the consequences of a poor experience will spread like wildfire across the Twitterverse?” If your service is terrible, people will hear more about that than they will your bargain prices or nifty products.

But even amid this rough time we’ve called The Great Recession, some companies have found a way to highlight customer service as part of their overall appeal. We’d like to take the time now and then to call them out and acknowledge them for the great service they’ve provided.

One of our own employees recently had a great experience regarding a purchased laptop.

“We had an issue with a laptop we had just purchased. It wasn’t running properly. We expected that we’d have to take it back into the store or ship it, but instead they sent someone to our home with a replacement. It was a painless experience, and I’ve been telling all my friends and co-workers about it.”

The business in question is Staples. You’ve probably seen many of their “That was easy” advertisements, and in this case, they really made good on their promise. Some of you might not have considered Staples as your first destination when purchasing a new laptop, but maybe the story above will prompt you to reconsider.

While we all appreciate an opportunity to save a few bucks here and there during an economic downturn, the businesses that earn our loyalty know how to offer fair prices while still reminding us that we customers are important. Service matters, especially in the technology sector.

Some of us who pursued writing as a career may harbor unpleasant memories of 4^th grade math and its endless torrent of multiplication and division problems.

This same principle, by and large, applies to software. While it may not take much to get the basics of Microsoft® Word, for example, becoming proficient in all of its capabilities takes time. Someone who uses the “mail merge” feature on a regular basis will do it much more quickly than someone who uses it infrequently. This is a challenge that all software manufacturers face. What do you do about infrequent users, who likely make up a significant portion of your sales demographic?

Where services procurement software is concerned, that’s the million-dollar question. As a hiring manager, you may use a vendor management system once or twice a week, to enter a new job request, or to check on time card approvals. If you’re in finance, you might only use the VMS once a quarter to run reports. If you have to rely on practice, you’ll always be struggling with the software.

So what’s a VMS to do?  A software platform for managing contingent labor comprises a significant investment, and as I mentioned in a previous post, a user who decides to circumvent the VMS can cost the program more than just lost savings. The software can’t just be easy to use. It has to be effortless.

If you’re in the market for a VMS, be mindful of the product’s usability. If there’s a learning curve involved, your user adoption rate will suffer, and therefore so will visibility, cost savings and compliance.

Ergo, a balance that must be struck, ensuring that program users have an easy-to-use platform, while at the same time the program itself must have the tools necessary to track effectiveness.

Sounds like an excellent strategy, right? Except it leaves out a crucial third party: suppliers.

It’s not always easy being one of the suppliers in a contingent labor program. Suppliers often foot the bill for the program, and they face tough competition from other suppliers to find optimal candidates at the right rates. Your program’s VMS must not only be easy to use, it has to offer benefits that outweigh the program fee you’re charging your suppliers. If the VMS seems like a hassle on top of a fee, it’s hard to imagine why a supplier would want to use it.

If suppliers don’t want to adopt your VMS, they can and will find a way to work around it (or they might decide not to work in your program), and that has greater potential for program disruption than if your internal users resist adoption. You’ll lose not only the visibility, compliance and cost control, but you might also lose access to candidates with rare skill sets. Jobs won’t be filled, work won’t get done, and everyone’s going to be upset.

That means when you’re in the market for technology, don’t forget suppliers. How does the VMS make it easier for them to communicate with your program? What’s it like for them to submit candidates? How does the VMS handle time cards and payment? How many hoops do they have to jump through?

If you find technology that suppliers enjoy using, they may even become strategic allies in enforcing adoption across the program. Show them a little love.

While we can all breathe a collective sigh of relief that modern databases and archives are less susceptible to attacks by Roman emperors, a lesson worth taking away from this is the library’s methodology.

Imagine that your contingent labor program is the city of Alexandria, a thriving port with workers passing through like those trade ships, and on each ship is information about on-boarding checklists, desk space, phone lines, time cards, contracts, the provisioning of computers, and more. When those workers pass through, do you keep all that information in one centralized archive?

Many workforce programs use multiple systems to manage their contingent labor, including the VMS, ERP systems, timecard systems, and HRM systems, not to mention a daunting number of file cabinets. The data tends to end up in different places, when it would benefit from consolidation and archiving. Paper records get damaged, hidden under stacks of other records, spilled on, and worse.

As it happens, any modern VMS is already positioned to serve as a central archive or “system of record.” Since the majority of program data tends to pass through the VMS at some point, it’s easy enough to configure the VMS as the final destination of that data. Consolidating the data offers a number of obvious benefits to the program, including easier quality management and compliance and easier access to the data for analytical purposes.

The future of services procurement technology sometimes requires a change from its users as well as from the technology itself. Inertia can be hard to overcome, but in the 21^st century success depends heavily on controlling and accessing information. Sometimes it isn’t about knowing what the facts are as much where the facts are. How’s your data archive looking?

Fast-forward to a suite of reporting tools, standard with nearly every VMS, allowing insight into compliance and performance. The modern VMS has augmented reporting functionality with ad-hoc reporting tools and powerful analytical software that goes beyond simple reporting to perform complex analysis through multiple levels of detail.

At this point, the VMS has already largely outgrown its name, offering capabilities far beyond the management of “vendors.” But we’ve only begun to scratch the surface in terms of the role a software platform is going to play in support of contingent labor management.

The next big thing to hit the VMS space will almost certainly be social media. We’ve arrived at a point where smartphones keep the business world constantly connected, and users need new technology and capabilities to support the pressure that comes with modern expectations. Since procurement, HR and finance, like everyone else, are forever pushed to come up with ways to do things faster, smarter, more efficiently, they will need tools that improve the speed of communication and that provide better organization of information. If you have a question about a supplier that isn’t part of the standard supplier profile, who can you ask? Who else in your organization has used them? Where do you go to find all your contracts and documentation? How do you communicate effectively across the various departments that comprise your management program?

As Jason Corsello at The Human Capitalist writes, “I sense collaboration and the use of technology is being leveraged proficiently amongst individuals and teams but lack corporate awareness and an overarching strategy that can benefit both organizations and individuals alike.” We’re inclined to agree with him. 2012 marks the beginning of a new era in corporate communications for human capital management.  

We’ll see programs using the same system to procure labor, manage projects, post on discussion boards, chat via instant messaging, schedule interviews, and a whole lot more.

Hardly seems fair to keep calling it a VMS.

Everyone who’s worked in retail or food service probably knows the cautionary tale of the unhappy customer who didn’t speak up but never came back. You don’t want to ever assume that things are just fine with a customer who doesn’t say anything, goes the tale, since they might not feel comfortable speaking up. With large-scale software and services, it’s unlikely that the client won’t speak up, especially about critical, deal-breaker concerns, but what about the less-critical things that could add up to “death by a thousand cuts” when a contract is up for renewal? Or what about the many positive aspects of the service/product that could easily go unmentioned?

Even with the best of intentions, providers can face challenges getting feedback from their customers. For those of you who have a service or technology provider, do you provide feedback when given the opportunity? Why or why not?

For those of you who work in services procurement, how do your providers make sure you’re heard? What has worked well for you? Do you ever feel like you have opinions to share, feedback to provide, that’s not getting through?

‘The whole point of this country is if you want to eat garbage, balloon up to 600 pounds and die of a heart attack at 43, you can! You are free to do so. To me, that’s beautiful.’ 
- Ron Swanson, Parks and Recreation

Everyone’s favorite TV libertarian makes a great case for freedom. It’s your money. As a private citizen you can spend it however you want. Put it in the bank, get another bad haircut, go on a cruise, or remodel the kitchen: it doesn’t matter. Do whatever you like. Whether or not people really do know best what to do with their money (compared to a financial advisor, for example), there are no money police. Consequences, maybe, but not money police.  It’s your money, your life.

But when it comes to government or corporate spending, it’s a whole different story. Even with the best of intentions, all that potential for reckless spending won’t cut it when you’re accountable to shareholders and taxpayers.

In the case of corporations, there are in fact money police, though we usually refer to them more politely as procurement and finance. And they’re here to help. They make sure the company saves money, and that’s usually good for everyone.

As Spend Matters pointed out just recently in a two-part blog post, the US Government is a little behind Corporate America in terms of strategic spending. When you adopt such measures, you need business rules and compliance, but above all you need visibility into what’s happening.

It’s about time government spending got on the VMS bandwagon. Corporate procurement, HR and finance already know the benefits: compliance, visibility, faster cycle times, and risk mitigation, just to name a few.

 Not everyone wants to hear about centralization when it comes to government, but when it comes to spend visibility, it’s hard to make a good case against it.

Unfortunately, Iowa is a poor predictor of the presidential nominee. Bill Clinton, George H.W Bush, Ronald Reagan and Jimmy Carter all placed lower in the Iowa Caucus on years they were chosen as the nominee of their party (and subsequently elected president). Despite the media attention, it could be anyone’s game, and the upcoming New Hampshire primary will make an even greater impact. What seemed flashy and impressive one day can be undermined by new information the next.

When exploring options for enterprise software to manage services spend, it can be a challenge to take the long view and not to make hasty predictions. It’s easy to marvel early on at a flashy feature, a fancy widget, but don’t forget to consider every aspect of the solution to identify the best possible candidate.

You also have to consider the decision makers involved in the process. The workplace has its own politics, and when it comes to something like enterprise software, every department involved has a lot at stake. When you have a small group of decision makers, each representing the various needs of their parent groups, you can end up with a tension not unlike what you see during an election year. Everyone’s usually acting in the best interests of the company, but they’re also going to be focused on what they know best – the needs of their specific departments. Is it possible that one loud voice can dominate the discussion and push toward a solution that marginalizes the others? How do you make sure everyone has an equal say?

It may be daunting when you imagine trying to find a solution that pleases everyone, but ultimately you have to think of what’s best for the company. The average approval rating among US presidents since Truman is only 56 percent. Surely you can do better than that.