What to consider when developing a business case to implement a vendor management system

What to consider when developing a business case to implement a vendor management system

Timo Scholten4 juni 2021
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Services procurement is a large, growing area of spend at many organizations. Often this is under or poorly managed. When this happens, there is an opportunity to automate processes and provide much-needed visibility that can help improve services procurement management.

Automating these processes can be achieved through technology. To be more specific, by implementing a vendor management system (VMS) such as SAP Fieldglass. An VMS could solve several of the problems that your organization is facing. Some problems that occur frequently are:

  • Lack of control over the entire hiring process
  • Multiple administrative processes in multiple systems
  • No insight into contractual pricing agreements with suppliers
  • Long lead times regarding the onboarding of new employees

However, the implementation of any tool is not free of charge. Also, you want to be sure to keep the business objectives in mind. Therefore, it is important to develop a business case to ensure that you have alignment around these business objectives.

Which steps should be covered in the business case for implementing a VMS?

  1. Define business drivers
  2. Get buy in from critical stakeholders
  3. Prioritize goals
  4. Pursue relationships with solution providers
  5. Insourcing or outsourcing a VMS implementation

Define business drivers

It is important to start with understanding what issues you want to tackle and which outcomes you want to realize. Make sure to get input from stakeholders across the organization. Examine inefficiencies, shortcomings, and pain points. Think about the scope. Not only on the short term, but also for the future. It is important to understand how your external workforce is used throughout the organization. Think ahead to what your needs may be in the future and select a solution that will grow with your organization.

Get buy in from critical stakeholders

It cannot be overstated but having stakeholders that will promote the chosen solution is vital. Your stakeholders most likely already helped you in identifying the business drivers. They should also be closely involved in the change management process. It is not a problem when a stakeholder is critical. Critical stakeholders usually support the implementation when they know how the solution can improve current processes.

Prioritize goals

A VMS implementation usually addresses four key areas: efficiency, compliance, quality, and cost. Determine and prioritize the most important issues from the stakeholders from those areas. If you want the implementation to succeed, make those prioritized issues part of the change management process. Start communicating as early as possible. With it, you will maintain momentum.

Pursue relationships with potential solution providers

Once priorities have been identified, it is time engage VMS providers. But where do you start? Usually, you reach out to VMS providers via a request for proposal (RFP). Do you know which questions to ask in this RFP? Do the questions address the needs and pain points from the stakeholders?

The solution usually needs to be integrated into your landscape. Integration is a topic which should not be underestimated. The VMS provider should offer guidance and assistance on it. Choose a provider who has ready-built integrations. This will speed up processes.

The VMS provider should also be able to help you maximizing the solution to fit your business requirements. During the implementation and long after it is completed.

Insourcing or outsourcing a VMS implementation

Setting up VMS system can be done by your organization, potentially supported by an implementation partner. But you could also consider contracting a Managed Service Provider (MSP). They will take over your program and run the VMS themselves. You will pay a fee to the MSP for running your program.

Why should you consider implementing a VMS yourself? The main objective here is vendor neutrality. With vendor neutrality you avoid a vendor lock-in. It is not always beneficial to depend on one party for your service procurement. It also provides the option to add new suppliers when needed. Perhaps you need a small niche supplier. When running the program yourself, you have full control on the suppliers you want to use.

Remember to also take the costs into perspective. That deal with an MSP sounded good in the beginning. But once in operation it will be difficult to receive a transparent cost overview from the MSP. Usually, an MSP has no interest in lowering the rates from external staff for you. Basically, you are under contract for several years, why should the MSP feel the need to find the most optimal rate for you as an organization? Having access to the entire market and having the ability to negotiate the rates freely do provide leverage and control over costs.

Need help with your business case?

Do you also want to improve your service procurement processes? But perhaps you are struggling to start this process? We have a long-lasting experience in services procurement and building business cases. Next to that, we partner with SAP Fieldglass to implement the best of breed VMS solution available at this moment.

Interested in what SAP Fieldglass can offer to your company? Visit our services Procurement page. Or get in touch with Timo Scholten (+31 6 302 16 145) of Ronald Versteijnen (+31 6 300 51 570).

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