What industry practice has done more to ruin relationships, decrease quality hires, keep hiring managers from communicating effectively with recruiters, increase corporate bureaucracy, generate countless meetings, waste hundreds of hours in unfruitful training, and ultimately result in long, expensive implementations? Ask anyone in staffing during the last 10 years and you'll get the same answer: Vendor Management Systems (VMS).

The underpinnings of this failure range from power-hungry HR departments to ill-conceived venture-backed software companies to simple large project miscommunication. In any case, there is a silver lining: from the ashes of VMS failure a nimble staffing company can grow roses of success, not just for itself but for everyone from hiring managers to candidates to subcontractors.

First some history
"If you people know the staffing industry so well, why on earth do you think we would be interested in your products?"

That's a quote from an angry staffing owner at an ASA conference a year or so ago. She was addressing a panel of VMS vendors, and she had a good point.

What value does a VMS bring to the staffing company? Who wants to be disintermediated from clients? Who wants their bill rates reduced by three percent? Isn't it bad enough that workers' comp has already chiseled away what margin there was? How can I make a quality hire for my client if I can't talk to the hiring manager?

And, who were these VMS vendors anyway? By and large they were staffing companies that decided it would be fun to develop VMS software. Now, there's nothing wrong with the software business. One look at the market caps of Microsoft and Oracle and it makes you wonder if you're working the wrong side of the fence in staffing. But these VMS vendors have failed as commercial endeavors. They go wrong in an "oops, I forgot the sales and marketing costs" kind of way.

"Oops, I forgot the sales and marketing costs"

Long sales cycles, scripted demos, flying around to see prospects - it gets old fast. You spend a pile of dough fast. And if you're a staffing company, you may well have poached your best sales people on this long shot chance at the big time.

It's an illusion that the marketing problems end once you sign a software deal. It continues with lengthy implementations, training that invariably digs up internal client politics, contradictory sets of modification requests. The time entry screen that worked fine for the client's engineering department is unusable by the call center. No one agrees on how authorization should work for requisitions. Version control resembles the Tower of Babel.

There's a better way.
Solutions don't need to be forced down the user's throat. Some say they want a revolution, but success in the VMS business begins back home at the staffing company with a sound integrated staffing system. One that allows all staffing business processes - recruiting, invoicing, payroll, accounts payable, web portals, and vendor management - all to be done on the same system.

That system needs to offer multi-tenancy, i.e. multiple parties using the instance of a system as if the instance were theirs alone. With multi-tenancy, a staffing company can host other staffing companies or other divisions, giving each the sense that they are running on their own independent system.

With this kind of flexibility, you can gradually introduce your client to the advantages of working with you as a managed service provider. At the beginning, you can simply show them how to do business better with online reporting and order management. This can quickly evolve into a single point of billing for all of their contingent staffing, or perhaps the processing of large volumes of time clock and web-time data.

Continuity Good. Disruption Bad.

Notice that you accomplish this with your client without a disruptive implementation. You eliminate the pain of discontinuity. You are the easy guy to do business with.

At what point does this become a VMS? When you help your client with other vendors, when you distribute orders to other vendors, when you let those vendors submit candidates via your candidate portal, when you capture their web timesheet, when you do any of these things - you've crossed the line into VMS.

Yes, clients want the advantages of VMS. They want the best candidates regardless of which staffing company provides them. They want competition for their contingent spend. They want better internal control over approval. But, they also want a system that works - today and not next year. Staffing companies that provide it can profit handsomely.

Contact TempWorks to find out how you can create success for your clients with VMS.

By Gregg Dourgarian
President and CEO, TempWorks Software