In my years of experience in the workforce solutions industry, I often see an organization’s external workforce ranking in the top five commodities in terms of total expenditures. If you consider that the external workforce often makes up 20% or more of an organization’s talent the importance of managing this workforce is compounded. Knowing how to effectively develop and manage an outsourced contingent labor program starts with the foundation of a Managed Service Program: a strong business case.
Companies often turn to an MSP (Managed Services Provider) program and VMS (Vendor Management System) model to optimize its external workforce. If this is something you are considering, or if you have a current MSP/VMS model that needs to be optimized, it’s time to develop a strong business case in order to lead that vision forward. Easier said than done, right? Your mind may be running in a million directions, but let me break down how to build that winning business case in five easy steps.
Starting the MSP Business Case
In my experience, a winning business case is one that gets the rest of your company on board with the MSP you already know your company needs. The first step in developing a business case is to define your problem statement. To do so, simply answer this question: What are your current pain points?
Start with Problem Statements & Solutions
- Cost savings
- Transparency into the data and quality of talent
- Risk mitigation
- Process efficiency
Then, be prepared to bring solid examples on how a Managed Service Provider would alleviate those pain points; such an industry reports or case studies. For example, in a first generation MSP/VMS, the cost savings opportunity is typically as high as 5% to 20% just by optimizing supplier and process improvement.
How to Gain Executive Buy-In
The second step is to gain buy-in from large user groups. Research your current state and gather preliminary data, then meet with a targeted user group (typically, the one with the highest amount of pain points) to really understand the challenges they face. Your IT organization is a good example of a place to start. Expenditures are high, quality is imperative to the business, and talent is in short supply. Your IT organization is typically a significant user of external workforce, utilizing all types from contingent labor to project and services SOW Management. You will need the IT team’s support through the project, from implementation of the VMS solution through adoption of the new program. Move on to understand the needs of other large user groups as well. This can include business operations, accounting and finance, creative and call centers. Note common themes within all the groups as well as unique challenges.
Tips for Sourcing Providers
In addition to aligning with your large user groups, your third step should be to simultaneously talk to MSP, VMS and industry associations and analysts. During this process, you will start to understand a potential partner’s unique culture and success in the MSP or VMS space. Culturally, some will be very process driven and structured while others will be more innovative and offer high-touch customer service. In my experience, cultural alignment is the single most important contributor to a successful long-term partnership. Think about the high-level facts: an MSP/VMS will manage one of your company’s top expenditures and 20% or more of your workforce. They will need to become an extension of your organization.
Dive Into the Data
The fourth step is to conduct a deep dive on the data. Become an expert in the details so you can quantify the opportunity. Understand things like spend details, categorizations of the external workforce based on your definitions, current supply chain and contracts, and analyze the trends in your data. In a first generation opportunity, sometimes gathering this data from your ERP software is easier said than done, but compile what you can and use it as a starting point.
As a final step, finalize your internal team of stakeholders and define a short list of suppliers to participate in the RFP. If you have done your homework throughout the process you should be able to narrow the participant list considerably so you can streamline the evaluation process.
By following the above steps, you should have developed a high-level, concise MSP business case. This should outline industry trends and definitions, identify your current state, and articulate the vision of your improved future state of managing your external workforce. Now you are prepared, confident, and ready to present and gain that executive buy in. You’re going to nail it!
Erin Fortunato serves as Vice President, Enterprise Sales and is responsible for new MSP account development. Erin holds a degree in Mathematics and has been working in the staffing industry for 23 years. Prior to this role, Erin spent most of her career in Strategic global and national account management responsible for some of the largest client programs in the industry.