Eight Common Pitfalls When Selecting a Vendor Management System

Eight Common Pitfalls
When Selecting a Vendor Management System –
And How to Avoid Them

Get expert advice on how to choose the
right technology for your business to
bypass common pitfalls.

Introduction:

Don’t Fall for the Pitfalls

Section One:

Get Expert Advice for Avoiding Eight Common Pitfalls

Section Two:

Explore SAP Fieldglass Solutions

Don’t Fall for the Pitfalls

Choosing the right vendor management system (VMS) for your business is a key strategic decision. But to choose the right VMS, you need to know about the risks and assumptions that can lead to the wrong one.

In this e-book, we highlight the eight most common pitfalls associated with external workforce management and VMS technologies – assumptions that can ultimately lead to missed business outcomes and costly rip-and-replace scenarios.

Explore the pitfalls

Section One:
Get Expert Advice for Avoiding the Eight Common Pitfalls

Expert Advice for Avoiding Eight Common Pitfalls

Narrow requirements

Narrow requirements “We just need a simple solution that supports a few specific categories of spend.”

Assuming
easy
integration

Assuming easy integration “Any VMS will easily integrate with our existing systems.”

Assuming
easy
scalability

Assuming easy scalability “Any cloud-based VMS will allow us to scale as we expand globally.”

Smaller
means more
attentive

Smaller means
more attentive “If we go with a smaller VMS provider, we’ll get more care and attention – and have a larger voice in determining the solution road map.”

Selecting a
VMS based
solely on
budget

Selecting a VMS based solely on budget “This smaller, cheaper VMS provider really fits my budget.”

Simpler UI
means same
functionality

Simpler UI means same functionality “This simple UI will be easier to learn and use.”

Excluding
diversity
goals

Excluding diversity goals “We don’t need a VMS to meet our diversity and inclusion goals.”

Assuming
partner
exclusivity

Assuming partner exclusivity “We need a VMS provider with these specific partner certifications.”

Pitfall #1: Narrow requirements

The assumption: “We just need a simple solution that supports a few specific categories of spend.”

The reality: Businesses often regret using a narrow set of business requirements initially when selecting a VMS.

Why? Because what you need today may not be what your business will need tomorrow.

Let’s say a utility company’s IT department needed a VMS to help streamline its critical use of services providers, so it invests in a niche VMS to meet the need.

One year later, the facilities department needs a VMS to support a new safety and compliance initiative for the plant – but the niche VMS doesn’t have the functionality the department needs. So the company invests in another VMS that does.

Ten years later, the company now has multiple siloed solutions deployed, complicating its IT landscape and driving up costs. It’s a VMS mess.

Expert advice

Future-proof your VMS for years to come.

Initially, focusing on a VMS deployment that supports one or two categories of spend can be wise – it’s easier to get started, create a model for success, and then scale across the enterprise.

But it’s critical to choose a flexible VMS with robust functionality and a long-term technical road map that can be deployed incrementally to meet both current and future needs across all categories of spend.

Expert Advice for Avoiding Eight Common Pitfalls

Assuming
easy
integration

Assuming easy integration “Any VMS will easily integrate with our existing systems.”

Assuming
easy
scalability

Assuming easy scalability “Any cloud-based VMS will allow us to scale as we expand globally.”

Smaller
means more
attentive

Smaller means
more attentive “If we go with a smaller VMS provider, we’ll get more care and attention – and have a larger voice in determining the solution road map.”

Selecting a
VMS based
solely on
budget

Selecting a VMS based solely on budget “This smaller, cheaper VMS provider really fits my budget.”

Simpler UI
means same
functionality

Simpler UI means same functionality “This simple UI will be easier to learn and use.”

Excluding
diversity
goals

Excluding diversity goals “We don’t need a VMS to meet our diversity and inclusion goals.”

Assuming
partner
exclusivity

Assuming partner exclusivity “We need a VMS provider with these specific partner certifications.”

Narrow requirements

Narrow
requirements “We just need a simple solution that supports a few specific categories of spend.”

Pitfall #2: Assuming easy integration

The assumption: “Any VMS will easily integrate with our existing systems.”

The reality: It pays to do your homework. Not all vendor management systems are designed from the ground up to be easily integrated with most major HR and procurement platforms.

Why? Some vendors are still using outdated integration technology, which not only provides a poor user experience but often lacks flexibility to do things such as add additional data fields to meet your specific needs. Others may require custom integration, which adds cost, time, and effort to your project.

Expert advice

Companies need assurance that their external workforce management and services procurement platform will easily integrate with their current – and future – technology stack. Integrations such as accounts payable, timekeeping, access control, and ERP systems enable efficient, automated, and comprehensive processing of high-volume and complex tasks spanning different functions.

Be sure your VMS provider offers standardized APIs that include prebuilt connectors to major technology platforms to help ensure the technology is flexible and adaptable.

Investigate how potential VMS providers handle integration by asking these questions:

Do they offer a vast library of prebuilt integrations to critical enterprise systems with room to grow? (SAP offers more than 250 standard APIs to leading third-party systems.)
Do they offer a true open API infrastructure available to your internal IT resources or preferred IT service provider?
Do they keep their API as the integration layer behind the wall, forcing you to submit tickets to build and maintain them?

Expert Advice for Avoiding Eight Common Pitfalls

Assuming
easy
scalability

Assuming easy scalability “Any cloud-based VMS will allow us to scale as we expand globally.”

Smaller
means more
attentive

Smaller means
more attentive “If we go with a smaller VMS provider, we’ll get more care and attention – and have a larger voice in determining the solution road map.”

Selecting a
VMS based
solely on
budget

Selecting a VMS based solely on budget “This smaller, cheaper VMS provider really fits my budget.”

Simpler UI
means same
functionality

Simpler UI means same functionality “This simple UI will be easier to learn and use.”

Excluding
diversity
goals

Excluding diversity goals “We don’t need a VMS to meet our diversity and inclusion goals.”

Assuming
partner
exclusivity

Assuming partner exclusivity “We need a VMS provider with these specific partner certifications.”

Narrow requirements

Narrow requirements “We just need a simple solution that supports a few specific categories of spend.”

Assuming
easy
integration

Assuming easy integration “Any VMS will easily integrate with our existing systems.”

Pitfall #3: Assuming easy expansion and scalability

The assumption: “Any cloud-based VMS will allow us to scale as we expand globally.”

The reality: Many VMS systems lack nuanced functionality necessary to stay compliant and secure.

Why? The fact is that there’s a lot more to managing a global external workforce than simply enabling IT access from anywhere.

Few VMS solutions have the full-featured capabilities needed to meet European Union data privacy requirements, handle the complex rate structures and invoice requirements of different countries, or navigate the complexities of worker councils, tenure requirements, local workforce polices, tax requirements, and more.

Failure to comply with these and other very localized or regionalized requirements can put you out of compliance, result in fines, and open you up to potential lawsuits.

Expert advice

As you evaluate VMS options, plan ahead for global growth. Ask about each solution’s ability to support nuanced local regulations and policy requirements in the countries where your business may be seeking to expand. Find out if the functionality already exists or if they can “build whatever you need, when you need it.” It’s much less costly – and faster – to go with a VMS that’s already built for global use.

Expert Advice for Avoiding Eight Common Pitfalls

Smaller
means more
attentive

Smaller means
more attentive “If we go with a smaller VMS provider, we’ll get more care and attention – and have a larger voice in determining the solution road map.”

Selecting a
VMS based
solely on
budget

Selecting a VMS based solely on budget “This smaller, cheaper VMS provider really fits my budget.”

Simpler UI
means same
functionality

Simpler UI means same functionality “This simple UI will be easier to learn and use.”

Excluding
diversity
goals

Excluding diversity goals “We don’t need a VMS to meet our diversity and inclusion goals.”

Assuming
partner
exclusivity

Assuming partner exclusivity “We need a VMS provider with these specific partner certifications.”

Narrow requirements

Narrow
requirements “We just need a simple solution that supports a few specific categories of spend.”

Assuming
easy
integration

Assuming easy integration “Any VMS will easily integrate with our existing systems.”

Assuming
easy
scalability

Assuming easy scalability “Any cloud-based VMS will allow us to scale as we expand globally.”

Pitfall #4: Believing smaller means more attentive

The assumption: “If we go with a smaller VMS provider, we’ll get more care and attention – and have a larger voice in determining the solution road map.”

The reality: A smaller VMS provider may give you more time and attention, but not for the reasons you’d want or expect.

Why? Because they’re more likely to spend your time – and their limited budget – building the functionality they currently don’t provide, and your business requires now. And in many cases, your business can’t afford to wait – especially when your business strategy or growth goal depends heavily on an external workforce.

Expert advice

Get the right kind of attention and your business needs met faster with a larger, more established VMS solution provider that has more funding, development resources, and existing functionality.

With more money invested in R&D and the gainshare of many customers across multiple industries, a more established VMS provider can deliver a solution that leverages the best ideas from industry leaders and continually evolves for customer needs and technological innovation.

Expert Advice for Avoiding Eight Common Pitfalls

Selecting a
VMS based
solely on
budget

Selecting a VMS based solely on budget “This smaller, cheaper VMS provider really fits my budget.”

Simpler UI
means same
functionality

Simpler UI means same functionality “This simple UI will be easier to learn and use.”

Excluding
diversity
goals

Excluding diversity goals “We don’t need a VMS to meet our diversity and inclusion goals.”

Assuming
partner
exclusivity

Assuming partner exclusivity “We need a VMS provider with these specific partner certifications.”

Narrow requirements

Narrow requirements “We just need a simple solution that supports a few specific categories of spend.”

Assuming
easy
integration

Assuming easy integration “Any VMS will easily integrate with our existing systems.”

Assuming
easy
scalability

Assuming easy scalability “Any cloud-based VMS will allow us to scale as we expand globally.”

Smaller
means more
attentive

Smaller means
more attentive “If we go with a smaller VMS provider, we’ll get more care and attention – and have a larger voice in determining the solution road map.”

Pitfall #5: Selecting a VMS based solely on budget

The assumption: “This smaller, cheaper VMS provider really fits my budget.”

The reality: Smaller VMS providers may have a cheaper up-front price tag. But the true cost of a VMS solution encompasses so much more – and these costs can quickly match or even exceed the cost of much more comprehensive solutions.

Why? If your VMS lacks the functionality you need for your business, you likely pay more in “hidden” costs, for example:

Lack of automation for key processes: Automation is vital to increasing efficiency and reducing costs. If you can’t automate your key processes, you’ll pay for it through custom integrations, or worse, doing it manually.

Required custom integrations and ongoing maintenance: A smaller, cheaper VMS will typically offer fewer prebuilt integrations to enterprise systems, forcing you to pay for custom integrations and their ongoing maintenance.

Limited reporting capabilities: Limited reporting capabilities can inhibit and delay critical decisioning. For example, what if your CFIO wants to see reports across all external workforce spend categories to reallocate spending to align with revised business priorities, but your VMS can’t generate what’s needed? Your staff may waste precious time creating spreadsheets – and perhaps not fast enough for your CFIO.

Expert advice

A truly enterprise-ready, comprehensive VMS can deliver the automations, prebuilt integrations, reporting capabilities, and global readiness you need right from day one, allowing you to meet evolving global business requirements with ease.

And if you choose a VMS that allows you to easily configure functionality using your internal IT resources, there’s no cost to make changes that enable you to extract more operational cost savings from your business – savings that quickly pay for the cost of the VMS itself.

Take, for example, invoicing. The average cost of manually processing a vendor invoice is US$24. But using the prebuilt integration delivered standard with SAP Fieldglass solutions, for example, the cost drops to less than one penny.

SAP Fieldglass solutions empower customers to define and own their VMS setup. Customers tell us that the configurations they can make with just a few clicks in their SAP Fieldglass solutions would have taken one FTE a full month to complete using their prior VMS.

Expert Advice for Avoiding Eight Common Pitfalls

Simpler UI
means same
functionality

Simpler UI means same functionality “This simple UI will be easier to learn and use.”

Excluding
diversity
goals

Excluding diversity goals “We don’t need a VMS to meet our diversity and inclusion goals.”

Assuming
partner
exclusivity

Assuming partner exclusivity “We need a VMS provider with these specific partner certifications.”

Narrow requirements

Narrow requirements “We just need a simple solution that supports a few specific categories of spend.”

Assuming
easy
integration

Assuming easy integration “Any VMS will easily integrate with our existing systems.”

Assuming
easy
scalability

Assuming easy scalability “Any cloud-based VMS will allow us to scale as we expand globally.”

Smaller
means more
attentive

Smaller means
more attentive “If we go with a smaller VMS provider, we’ll get more care and attention – and have a larger voice in determining the solution road map.”

Selecting a
VMS based
solely on
budget

Selecting a VMS based solely on budget “This smaller, cheaper VMS provider really fits my budget.”

Pitfall #6: Simpler UI means same functionality

The assumption: “This simple UI will be easier to learn and use.”

The reality: Be careful about what’s behind the simple UI curtain. In many cases, a VMS provider has oversimplified functionality to such a degree that you’re leaving value on the table in terms of – for example – your supplier distribution strategy, rate card analysis, compliance and offboarding details, ability to revoke network access to external workers, and other key areas.

Why? Without robust functionality and critical access to data, your business will be limited in its ability to perform complex tasks and maximize the value of your external workforce.

Expert advice

As you evaluate VMS solutions, look for rich, deep functionality with a highly configurable UI that empowers you to “mask” the UI features and functionality that are not needed today – either enterprise-wide or for certain user groups.

Masking UI is a way to start simply and then grow your external workforce management program. At first, you may use only basic capabilities such as creating a requisition, reviewing candidates, and approving time sheets. Over time, you can activate sophisticated functionality for statement-of-work bids, dynamic rate structures, awarding large contracts to more than one supplier, and more.

Expert Advice for Avoiding Eight Common Pitfalls

Excluding
diversity
goals

Excluding diversity goals “We don’t need a VMS to meet our diversity and inclusion goals.”

Assuming
partner
exclusivity

Assuming partner exclusivity “We need a VMS provider with these specific partner certifications.”

Narrow requirements

Narrow requirements “We just need a simple solution that supports a few specific categories of spend.”

Assuming
easy
integration

Assuming easy integration “Any VMS will easily integrate with our existing systems.”

Assuming
easy
scalability

Assuming easy scalability “Any cloud-based VMS will allow us to scale as we expand globally.”

Smaller
means more
attentive

Smaller means
more attentive “If we go with a smaller VMS provider, we’ll get more care and attention – and have a larger voice in determining the solution road map.”

Selecting a
VMS based
solely on
budget

Selecting a VMS based solely on budget “This smaller, cheaper VMS provider really fits my budget.”

Simpler UI means same functionality

Simpler UI means same functionality “This simple UI will be easier to learn and use.”

Pitfall #7: Excluding diversity goals

The assumption: “We don’t need a VMS to meet our diversity and inclusion goals.”

The reality: A full-featured VMS solution allows you to track supplier diversity and helps meet – or even exceed – your critical diversity and inclusion goals.

Why? Because your business is increasingly focused on setting diversity and inclusion goals, the right technology should help you meet them.

Expert advice

The right VMS can help you funnel more spend to diverse organizations and create a distribution strategy to achieve this through system configurations. For example, you can set up your VMS so that first-look sourcing activities focus exclusively on diverse suppliers.

Some vendor management systems enable you to flag diverse suppliers to help ensure they participate in the requisition process, as well as provide app extensions to easily connect to talent networks focused on inclusivity.

In addition, some VMSs can also deliver flexible, comprehensive reporting so you can assess progress toward these goals.

Expert Advice for Avoiding Eight Common Pitfalls

Assuming
partner
exclusivity

Assuming partner exclusivity “We need a VMS provider with these specific partner certifications.”

Narrow requirements

Narrow
requirements “We just need a simple solution that supports a few specific categories of spend.”

Assuming
easy
integration

Assuming easy integration “Any VMS will easily integrate with our existing systems.”

Assuming
easy
scalability

Assuming easy scalability “Any cloud-based VMS will allow us to scale as we expand globally.”

Smaller
means more
attentive

Smaller means
more attentive “If we go with a smaller VMS provider, we’ll get more care and attention – and have a larger voice in determining the solution road map.”

Selecting a
VMS based
solely on
budget

Selecting a VMS based solely on budget “This smaller, cheaper VMS provider really fits my budget.”

Simpler UI means same functionality

Simpler UI means same functionality “This simple UI will be easier to learn and use.”

Excluding
diversity
goals

Excluding diversity goals “We don’t need a VMS to meet our diversity and inclusion goals.”

Pitfall #8: Assuming partner exclusivity

The assumption: “We need a VMS provider with these specific partner certifications.”

The reality: Times have changed, and choosing a VMS based on partner certifications is a thing of the past. Instead, focus on agility to make your business more resilient.

Why? Today, business partners change often – for example, due to acquisitions and mergers and strategic changes to IT system landscapes. Agility is the priority because it makes your business more resilient.

Expert advice

The larger consideration factor is having a VMS provider with an open and agnostic framework that can change and grow with your business and its partner relationships.

As you evaluate VMS technologies, find out if they require use of their own selected middleware platform to support the data variant, data mapping, and transformation needed to connect data from the VMS to other applications. Additionally, find out if they give you the options to either leverage a middleware solution to support data handling and mapping between two systems, or even better, do this without middleware by providing functionality to support data mapping and handling directly within their VMS tool.

Having a VMS provider that can flexibly support different scenarios and business needs is critical – and a key reason why choosing a provider with an open integration and agnostic VMS platform is so important.

Section Two:
Explore SAP Fieldglass Solutions: SAP Fieldglass solutions are ready to help.

SAP Fieldglass Solutions: Built for Agility and the Modern Workforce

These are all common pitfalls we hear from new SAP Fieldglass customers who have either been managing their external workforce manually or using a patchwork of disconnected siloed systems, many of which were built for use in a specific country or region. They wish they had made different choices in the past, because if there’s one thing business has taught us all, it’s to expect the unexpected – and having the ability to adapt swiftly to change is vital to business resiliency.

Therefore, choosing a VMS is a strategic business decision, not just a technical one. Your VMS plays a vital role in operationalizing your external workforce strategy to realize your goals, for example, by gaining external workforce visibility, strengthening compliance, boosting management efficiency, maximizing work quality, and increasing cost savings. Your strategy and VMS deployment can start with contingent or services external workforce management, and over time, encompass both.

Contingent Workforce Management

A VMS for contingent workers needs to help you onboard high-quality contingent workers quickly while also improving collaboration with suppliers. It should track and manage every stage of external workforce management, including:

Contingent Workforce Management

It should track and manage every stage of external workforce management, including:

Hiring managers requesting talent
Selecting a candidate for a position
Onboarding
Time-and-expense tracking for nonemployees
Payment processing
Offboarding

Once workers are offboarded, the VMS should provide built-in evaluation processes and run reports.

Learn more

Services Procurement

Our solution fully supports labor-based indirect spend using any of the following payment schemes:

Milestone-based payments
Deliverables-based payments
Unit-based payments
Time-and-expense tracking for nonemployees
Progress payments
Fixed fee
Single fee

A multibid SOW created in SAP Fieldglass solutions provides the service or bid requirements to chosen suppliers. It can be created from templates or past bids and includes workflow for the evaluation and selection of the best supplier.

Learn more

Organizations often engage workers on a project basis, including statements of work (SOWs), consultants, independent contractors, and offshore or outsourced programs — all of which can be tracked and billed in SAP Fieldglass solutions. Our solution fully supports labor-based indirect spend using any of the following payment schemes:

SAP Fieldglass solutions are ready to help. Since 1999, SAP Fieldglass solutions have delivered proven, innovative solutions that fundamentally change how companies get work done. Our open, cloud-based applications simplify elements of procuring and managing your external workforce so you can:

Flexibly adapt solutions to meet evolving user needs

Flexibly adapt solutions to meet evolving user needs to deliver a smooth, user-centered experience (for example, by deploying only what you need today and adding more functionality to the UI as you need it)

Deploy scalable, global-ready functionality to meet current and future needs

Deploy scalable, global-ready functionality to meet current and future needs – for example, new data privacy compliance standards, complex rate structures and invoice requirements, worker council and tenure demands, and compliance with local workforce polices around the world

Proactively manage your external workforce

Proactively manage your external workforce – everything from costs and compliance to security, quality of work, and more

Integrate with ease to both current and future IT systems and partners

Integrate with ease to both current and future IT systems and partners using an open, vendor-agnostic framework

Find new and more diverse talent faster and easier

Find new and more diverse talent faster and easier leveraging a connected ecosystem of global talent and SAP partners

Avoid hidden development and integration costs – and stay in budget as needs change

Avoid hidden development and integration costs – and stay in budget as needs change – because advanced and global capabilities and integrations have already been anticipated and built into industry-leading solutions

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