The Miscasting of HCM Vendor Management Solutions

Any astute observer of the human capital management (HCM) solutions arena has noticed the “gig worker” or “extended worker” topic getting increased attention and investment from product vendors and customer organizations. Whether the conversation is centered around improving functions such as planning/procurement/deployment/cost analysis/management, value realization, or staffing agency relations, three primary reasons for this attention include:

  • There is an abundance of data showing that the most successful organizations tend to have a culture and employer brand that emphasizes every worker’s value.

  • With extended workers comprising 20-40% of an average enterprise’s workforce, it’s become a business imperative that this workforce segment’s processes and technology be cost-effective. The difference in operating costs and productivity levels between an average and a fine-tuned “gig worker infrastructure” is quite significant. Case in point: Using the standard productivity metric of ‘revenue per employee,’ a 5,000-employee organization that lifts productivity levels only modestly, perhaps from $95k to $100k per worker, creates $25M in incremental value.  

  • The notion that technology offerings in this domain have gotten attached to a category called “VMS” or vendor management systems and that this label has often narrowed their mission to one running counter to the positions highlighted above. One consequence of this: HR leadership hasn’t always framed the business proposition and the significant impact these solutions can deliver to the enterprise. Considering that Procurement teams and HR departments don’t get measured the same way, it stands to reason that related investments are marginalized.

More recently, another HCM solution category label has emerged for this area of optimizing a business, Extended Workforce Systems (EWS). While this appears to widen the lens used in creating associated business cases, it is also by no means a panacea. 

Labels almost always over-simplify and short-change any meaningful insights. In the case of “EWS” platforms (Yes, we at Utmost occasionally use industry jargon for expediency sake as well), there is a LOT more to understand about these solutions and the business benefits they can readily deliver. 

Citing a term used recently in HCM and HR Technology writings called “the ascension test” which means that a type of solution, when optimally deployed and adopted, can plausibly help a customer ascend the ranks within its industry sector, one can argue that well designed, purpose-built technology in this arena can pass that test. 

For example, the pandemic has taught us that trying different staffing models and approaches are an integral part of achieving a high degree of organizational agility, especially in unpredictable business climates. 

And it has taught us that improving organizational agility is on par with driving innovation in terms of what will typically result in better business performance if not outright industry leadership.

It doesn’t require such a vivid imagination to conclude that optimizing all processes and decisions relative to a sizable portion of the workforce can have a game-changing effect on organizational agility. Let us also agree with the premise that assembling “the best available talent” means just that, not the best available “employees.” 

Another practical perspective, particularly regarding meeting the enterprise’s resourcing demands, is that both situational and longer-term staffing requirements, whether job or project-related, should be a continuous, always-on process involving multiple channels pipelines and worker scenarios. We should view enterprise software tools designed to elevate the non-employee infrastructure within this broad but very appropriate context.

The bottom line is that modern, purpose-built technology is needed to manage extensive ecosystems of workers and worker channels that look very different today due to gig worker dynamics. These solutions are required to support three distinct but otherwise intersecting "agendas" (enterprise management, workers, and suppliers). 

Doing so at the same time requires solutions designed with this mission front and center. That is the recommended lens or model for all enterprise software instead of having solutions designed for one stakeholder group and then stretching its capabilities to meet the other groups’ needs.

Use whatever category label works for you. Just view the solution with its full - and true - mission within the enterprise.

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