When you consider that the external workforce makes up 20% or more of an organization’s talent, the importance of effectively managing this business function is critical. If the process isn't running smoothly, the logical next step is to alter the process. To do, you must develop a strong business case; especially when taking on a managed services program.  

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. That's why organizations often turn to Managed Service Providers (MSP) to outsource their contingent labor management program. 

For a step-by-step guide on how to start the MSP buying process, download the MSP Buyer's Guide now.  

Starting the MSP Business Case 

Companies often turn to an MSP program and VMS (Vendor Management System) model to optimize the external workforce. If this is something you are considering, or if you have a current MSP/VMS model that needs to be amended, 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.

Start with Problem Statements & Solutions

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?  

• Cost savings
• Transparency into the data and quality of talent
• Risk mitigation
• Process efficiency
  
  

Provide Examples

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. 

Gain Buy-In (Early in the Process)

The next 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.

Communicate with Existing Providers

In addition to aligning with your large user groups, your fourth 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.  

"In my experience, cultural alignment is the single most important contributor to a successful long-term partnership."

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 fifth 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 last 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!

About the Author: 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.