Staffing Technology

45: Provade receives additional $3m to total $23m

The Business Journal reports that VMS provider Provade has taken $3m in additional funding, "with the latest funding, total venture investment in the company now exceeds $23 million." 

Provade has always been one of the most interesting VMS to me for a number of reasons:

• PeopleSoft relationships and history - Provade founder and CEO Edward Jackson has a successful track record selling companies to PeopleSoft (Skillsvillage), seems that they have good connections with the software giant
• Focus on services procurement, not just temp labor spend - from where I sit, it seems that Provade was an early adopter of services procurement and aims to support a broad set of labor categories via its VMS
• Ability to integrate directly to the ERP of its large, hiring company clients - Because it is PeopleSoft based, Provdae is uniquely positioned to integrate back into their client's ERP. This is really powerful because Provade clients that use PeopleSoft/Oracle based ATSs can avoid duplicate data entry or job requisitions and candidates, not to mention delays in broadcasting orders to suppliers
• Ability to connect software across the human capital supply chain - even deeper links are possible, ideally the hiring company's ATS it integrated with their production planning ERP so that human capital needs are communicated via the ATS/VMS in a real-time way
• Ability to partner with a variety of large staffing firms

In their press release, Provade explains that the funding is for “This next round of funding should significantly enable Provade’s expansion as a leading VMS provider. According to Provade President and CEO Edward Jackson. “We are increasing the size and frequency of deployments with new customers and program expansions into additional spend categories and geographies,” Jackson said. “As the only enterprise-class VMS in the market, we deliver global capabilities, coPublishmplete integrations, and world-class analytics for nearly 50 companies.”

Provade was founded in 2004, about 5 years after market leaders Fieldglass and IQNavigator. Even with the late start, they have stayed focus, added experienced personnel and grown market share. While I don't quite understand why they need a cash injection at this point in their evolution, the fact is that they have taken on about 1/2 as much VC-funding as Fieldglass and IQ. Definitely a VMS firm to continue to watch attentively, I'll be interested to see what they do with the cash.

42: 46% to increase tech spend in 2010

My favorite presentation at Staffing Industry Analyst's Executive Forum each year is Barry Asin's kick-off keynote describing the state of the staffing industry. While soaking up his review of what's just happened to us all and his analysis of what's about to hit us, I'm intently listening for how technology might come into play.

Barry shared 2010 SIA Staffing Survey data which showed 46% of those surveyed plan on increasing their technology budgets in 2010. Technology ranked 3rd on the list of priorities, after hiring more sales and recruiting staff. For those of us who are closest to staffing technology, it truly is news to have technology rank so high. Technology reduces operating costs, while allowing companies to scale through automation rather than adding headcount. Now that the temp market is improving, it seems that nearly half of the firms surveyed are ready to invest in technology though they maybe pressed to implement new technologies at the same time business is booming.

Barry also called out that VMS adoption hit 63% in 2009 and is forecasted that, "VMS/MSP adoption among large clients [will reach] saturation" by 2020. By saturation, he meant that VMS adoption could reach "nearly 100%" for the largest hiring companies and noted that VMS will begin to penetrate: smaller firms (floor will move down from $20m to $2m in annual hiring company spend), all types of staffing segments (e.g. light industrial) and all types of staffing engagements (e.g. SOW). He also noted that he expects to see more VMS consolidation.

Barry's 2020 projections were quite interesting. Of course, the best part was where he said the size of the staffing industry would double in the next 10 years - we all like that. He called out that "the next waves of technology innovation [will help] staffing change from "providing people" to "getting work done." He also referenced last year's Exec Forum when one of the keynotes highlighted that wise investments in technology could help staffing firms better defend and grow market share while increasing barriers to entry.

25: Peopleclick announces 30+ new customers

Peopleclick has been practically stealth on the VMS front over the past year or so. It's good to see some PR spam on them. I was beginning to wonder. With so much acquisition in the VMS space in the recent past, there are not so many interesting VMS players out there to consider at this point.

Peopleclick Grows In First Half Of 2007 (ala Hunt-Scanlon)

Peopleclick, Inc., a global talent acquisition solutions provider, closed the first half of 2007 with a record $25.4 million in revenue. The firm signed agreements with over 30 new customers across all product lines in the second quarter. "With the impact of a global labor shortage, companies are quickly recognizing the need for technology to help them recruit and retain the highest quality workforce. Also, the workforce -- as an organization's most valuable asset -- must have a recognizable return on investment. A solid talent acquisition strategy is the only way to see this return," said Ron Kupferman, CEO. "Our success in 2007 and beyond stems not only from our focus on the tools required today to gain a competitive edge in recruiting and retaining people, but also from an extensive investment in the next generation of solutions necessary to meet the needs of an ever-evolving business landscape." New clients added in the quarter ranged from small and medium-sized businesses to multinational organizations. To support this growth, Peopleclick will be expanding its U.K. headquarters later this year.

21: COMSYS acquires Econometrix (VMS)

COMSYS announced this week that it purchased the rest of Econometrix (a San Ramon, CA based VMS provider) that it did not already own.

COMSYS CEO Larry L. Enterline stated in the press release that bringing Econometrix in house supports our strategic interest in expanding our VMS business as rapidly as we can. He adds, "Econometrix will accelerate our efforts to offer new services to our customers, particularly in the services procurement outsourcing area, and we are excited about the impact Econometrix can have on our VMS business."

I love to see staffing companies aggressively go after VMS business. Any large enterprise that has not implemented a VMS is nuts, there are just too many benefits. I think customer-oriented staffing companies will win in the long term and if you intend to service large enterprise you'll have to include VMS in your business model. (BTW, about 73% of the market is nuts because VMS penetration sits at 27% according to SI Analysts).

I recently wrote an article for SI Review article, Profitable Staffing via VMS, where Matt Ewings of Ewings Associates shares his VMS-only business model. 

Honestly, Enterline is the first staffing company executive I have heard use the term "services procurement." Last October I gave a presentation on human capital services procurement in Scottsdale at the Chimes' Annual Customer Forum. In my opinion, it is just a matter of time before goods-focused procurement departments turn more of their attention toward labor services. Once procurement has more visibility across all their labor categories, they will start to manage services spend more tightly. 

While procurement departments have started looking at the temp category via VMS reports, you can expect them to start looking across a broader set of labor categories, including independent contractor spend, perm spend, professional services spend, etc. It's great to hear staffing companies start to develop strategies that reflect their knowledge and understanding of where their customers want to go.

We've posted a page with more resources on services spend management.

10: VMS best practices & industry standards

Please note that I am a card carrying member of both the Human Capital Institute and the HR-XML Consortium.

Earlier this month, the Human Capital Institute announced that they had formed a committee to develop and publish best practices and industry standards focusing on vendor management. The press release mentions that the committee is focusing on the Managed Service Provider (MSP) model, that they will define what is included in a base offering and will provide performance measurement guidelines. It was mentioned that a final draft of the standards will be released by HCI in 1Q07. 

I am really looking forward to learning more about the HCI standards and best practices in the months to come. In the short-term I have two key questions:

1. How do these new standards relate to HR-XML's SIDES standard?  My first reaction to the press release was that the HR-XML Consortium was noticeably missing. The HR-XML Consortium is a membership funded standards body that develops data exchange standards for the HR, staffing and recruiting industry. Years ago they released the SIDES schemas, which is the set of standards used for data exchange between staffing suppliers, VMS software and hiring companies. 

Based on my limited knowledge, it seems that the staffing companies involved in the HCI committee are different than those most involved in the SIDES working group.  It is a bit confusing to me that that HCI press release used the word 'standards' but didn't clarify how their standards will relate to the SIDES standard (or not). I also noticed that the HR-XML Consortium posted on VMS recently, called "Choosing SIDES for Vendor Management Services". (Additional information on SIDES can be found in my article about SIDES in SI Review, "Staffing Industry Exchange Goes Global," registration required).

2. Are staffing suppliers really able to develop comprehensive and unbiased VMS best practices? The list of committee participants is clearly a list of staffing suppliers.  Staffing suppliers are the target readership of this blog and I don't mean to offend you, but I would suggest that you do not have an entirely unbiased view when it comes to VMS. I have no doubt that staffing companies can add a lot of value in nominating best practices, but I would argue that your end customers are in a better position to define what they really want.  Based on the press release, it doesn't sound like hiring companies play a leadership role in the committee. 

I have always thought that the impressive publication posted by Cynthia Goss and the Chicago AITP Special Interest Group on VMS, called "Vendor Management Systems: Best Practice Guide" (Feb 2004) was a must-read on this topic and available at the low, low price of free.  It is a whopping 89 pages of best practices developed and documented by real-life hiring companies on how to find, engage, manage and measure VMS providers (MSP or otherwise as far as I can tell).

In my experience, the HCI acts with great thought and provides incredible value to their membership. I am also certain that I will find the committee's results to be useful insights and helpful in the work that we do.  At the moment I am lacking information on how they are meant to fit into the larger body of collective work on this subject.

2: Politics hinder VMS adoption

The cost savings are well-proven, so why aren't vendor management system (VMS) implementations booming?

Case study upon case study has shown that implementing a VMS will reduce contingent labor costs by 5-20%.  VMS software and services have matured, making implementations relatively quick and low risk. With a measured upside and manageable downside, why aren't more of the Global 2000 implementing VMS?

I'm always interested to hear from any of you about your views on VMS. Feel free to email me or comment.

Staffing companies are in a position to coach their customers on the benefits of using VMS, but most choose to avoid the technology whenever possible. I would argue that customer-focused staffing firms would be proactive and help their clients understand the benefits and work through the issues.

The hard dollar savings do not seem to provide companies with enough motivation to overcome the barriers to implementation.  In my interviews I have found that the barriers are left unresolved because there is difficulty in getting this type of program on the executive agenda. Approval for a VMS program depends on HR, Procurement and IT joining forces. Further, VMS implementations require getting hiring managers on-board through training and change management efforts; that�s a lot of people to convince and they may all have their preferred consulting firm (e.g. The Code Works Inc.) that they want to keep. Successful VMS programs often depend on a single, self-appointed VMS champion. Without a leader, the level of complexity and coordination can easily grind any forward momentum to a standstill so that the VMS project never gets off the ground.

According to Staffing Industry Analysts, the rate of adoption is increasing but at a slower rate.  Still not even half of their study sample has implemented the technology. In a recent article I wrote I quoted Andrew Bartels of Forrester who described the rate of adoption as "glacially slow".