It just got easier to gain full visibility and control of your organization’s contingent workforce with the Q1-2020 release of Utmost, an extended...
Utmost Brings Visibility, Compliance, and Cost Control to the CPO
For Chief Procurement Officers (CPOs) who are responsible for the contingent workforce within their organizations, the evolution of that workforce means a purpose-built technology to manage them has never been more necessary.
Utmost, the first Extended Workforce System, is a single, global platform built to manage and engage all classifications of workers, bringing full visibility to Chief Procurement Officers for:
- SOW spend and deliverables
- Time and materials contractors
- Shift-based workers
- Freelancers and gig workers
- Independent contractors
- Outsourced workers and more
Our solution bridges your Workday integration and procurement needs, meaning one set of integrations and one single source of truth to view spend by supplier and outcome, improved compliance, efficient worker classification, a better user experience for suppliers, workers, and the enterprise, and a centralized place for work requests.
In this report, we will be reviewing the current challenges of a CPO, why a traditional vendor management solution (VMS) to manage contingent labor isn’t enough, and how an EWS can provide a scalable solution for total talent management.
2020 brought about massive disruptions causing CPOs to concentrate on managing risk, future-proofing their supply chain, and maintaining business continuity. Nowhere is this more critical than labor. The need for data-driven decision-making, visibility, and analytics is imperative. We see several major buckets today’s CPOs are challenged with in a post-pandemic world:
Cost savings and cost containment will always be important, and CPOs are front and center in this initiative. The fundamental VMS paradox is that, although they have been around for the last 20 years, they only capture around 6% of the extended workforce. When looking at cost savings opportunities for the organization, CPOs only have a narrow view of the extended workforce to make decisions about how and where to cut costs.
When it comes to contingent labor, right sourcing -- selecting the right type of worker, whether employee or non-employee -- has been shown to deliver 5% to 15% of total workforce spend. Right shoring, selecting the right location for workers, delivers savings of up to 30% of total workforce spend. Finally, worker misclassification that often comes from hiring managers engaging a worker incorrectly (i.e., on a SOW vs. a time and materials contract) can cost millions of dollars a year.
Companies face the potential for wasted spend when contractors who are performing staff augmentation workers are improperly categorized as statement of work (SOW) consultants. On average, 20% of SOW spend should be reclassified as staff augmentation work, and SOW rates are, on average, 30% higher than the same roles from temporary staffing agencies. In all of these cases, a CPO is handicapped by a lack of insight into a major expenditure that could be planned, competitively bid, and managed more efficiently because this spend isn’t managed in a VMS.
Having visibility means planning how the work will be done and the right talent channel to do it, enabling companies to right-source from the beginning. This will deliver an order of magnitude savings over simple rate management. Bringing in a technology purpose-built for managing the entire extended workforce is critical.
“Applied at scale across a procurement organization, a digital transformation can use automation to accelerate the source-to-pay process by up to 30 percent, and boost value creation by one-fifth, thanks to better decision-support tools and improved connectivity between stakeholders.” McKinsey
A traditional VMS was built to handle staff augmentation workers and offers a limited solution for the management of other categories of workers. Even if a VMS manages SOW workers, this only comprises around 16% of the total spend under management. According to a Deloitte study, approximately 65% of procurement leaders have limited or no visibility beyond their tier-1 suppliers. Effectively, VMS platforms provide only a sliver of visibility into an organization’s entire extended workforce, making workforce planning, the ability to engage with strategic talent channels, and the opportunity to find cost savings (as stated above) nearly impossible.
CPOs today need a guided path for every external worker request with compliance, assurance, and recommendations, which allows for strategic workforce planning and proper classification of workers. They also need full visibility of individuals, skills, and spend, as well as the ability to track workers across engagements as they move in and out of an organization, understanding skills, costs, and performance delivered.
A VMS isn’t designed to manage this complexity of workers, nor do they engage these workers in a meaningful way as they require more flexibility in the duration of work, how they work (i.e., multiple assignments), and most critically, how their work is billed.
“In 2021, it will become significantly more important for procurement departments to be able to actively monitor and track performance management resources including automated tools that capture project level activity and performance and translate that into broader, comprehensive organizational impact.” Ardent Partners Procurement 2021
Real-time risk mitigation:
Mitigating risk for the organization is a key initiative for many CPOs. VMS platforms are poorly designed to mitigate compliance risks because worker information is tied to the supplier of record rather than owned by the worker themselves. Being able to accurately track on/offboarding activities, expired contracts or licensures, certifications, and other worker-specific data are critical.
For many CPOs, the existing tech stack puts the company at risk from a compliance and worker misclassification perspective with constantly changing regulations and legislation, including IR35. There is no consistent process and no one system of record for the organization to track workers or see anomalies that exist. There is also no checks and balances system to strategically assess how a worker is brought into the company.
Data and analytics:
Now more than ever, organizations are required to do more with less. To work efficiently, CPOs need rich, accurate, real-time data into their supply chains -- and this includes labor and suppliers.
Very few VMSs have real-time dashboards to deliver predictive analytics across the entire extended workforce. Being able to track spend and other data to make informed buying decisions is critical to the role of a CPO.
Researching and finding innovative technology partners that can provide answers to the challenges a CPO faces is critical to their success and contribute to overall revenue growth -- technology that is purpose-built for the future of work.
Utmost is the first extended workforce system and the next evolution of vendor management systems (VMS). Utmost allows enterprises to track, report, source, and manage spend for all categories of the extended workforce. Today, a mix of contractors, freelancers, gig workers, outsourced workers, professional services, independent contractors, and other classifications of non-employee labor is set to exceed traditional full-time employees in the workforce by 2023. A CPO needs a scalable solution to manage across all of these categories of workers.
Total Spend Visibility
Utmost’s Extended Workforce System makes Workday the single place for all worker management and reporting -- both employee and non-employee -- delivering total visibility into all spend. While employee labor in Workday isn’t necessary under Procurement purview, it allows for a single system to strategically plan and collaborate across the entire enterprise.
Through our partnership with Workday, we are uniquely able to offer organizations the ability to do total workforce planning. Together, organizations are able to determine at a granular level what is the right approach to each role or project. Utmost also provides the ability to track workers across engagements as they move in and out of an organization, understanding skills, costs, and performance delivered with one single worker profile.
Improved supplier management
Utmost’s Supplier App is built for the supplier to handle the workers they bring to clients and add value to the workflows. It also gives procurement details around spend, pricing, performance, with the goal of complete transparency and improving supplier relationship management, categorization, and key decision making.
Global at the Core
Utmost has been designed from the beginning to be a global system. This means that, compared to a VMS, we do not need to have separate set-ups for each country where there are workers. In addition, our architectural and commercial model allows for the full capture of the extended workforce, not a segment of it that has the highest amount of spend. This is a critical component of delivering total workforce and spend visibility.
Utmost Front Door
Utmost Front Door is the single place to request workers or work to be done, regardless of where the hiring manager is, where they want to hire, or the optimum classification of worker, whether employee, contingent, SOW or outsourced worker. Misclassified workers can raise overall workforce costs by 5-10%.
Front Door delivers a single common process for all requests, guiding the hiring manager to the optimum classification and sourcing channel. Front Door gathers the data necessary to create a requisition and routes the requisition for approval with no additional steps or data entry. Front Door allows organizations to simplify the hiring manager experience, enables “in-the-moment” labor decisions, improves compliance, and dramatically reduces administrative overhead.
“Nearly 47% of the total workforce is now considered ‘extended,’ as more and more talent is comprised of contractors, staffing agencies, professional services firms, and more. Hiring managers need an innovative and seamless way to navigate through these workforce options,” said Christopher J. Dwyer, Vice President of Research at Ardent Partners. “Utmost’s Front Door offering enables managers with those options, as well as fostering collaboration between HR and procurement teams that want to fully control the entire process for any type of talent request.”
Compliance and risk mitigation
Given the magnitude of the adverse consequences linked to the misclassification of workers, a compliance system is vital. Utmost’s Anomaly Detection manages compliance with corporate policies and rules. You can define anomalies based on information within the system or create custom fields unique to your business. This ensures you can find issues with classifications, pay rates, network access, equipment, certifications, training, and more. You can see all the anomalies in a real-time global dashboard across all geographies.
This configurable engine surfaces different anomalies in an easy-to-use dashboard, allowing you to proactively respond to anomalies instead of reacting when it’s too late. Utmost EWS allows you to replace manual audits with automation.
Very few VMSs have real-time dashboarding capabilities to assess compliance or risk issues such as expired certifications, ending contracts, or systems access. With Utmost, these dashboards are real-time and customizable, so you can view and sort the information in a way that works for you. A VMS is designed for requisitions and spend approval, not for managing the variety of risks that poor extended worker onboarding/offboarding can pose to an enterprise.
Separate from, but integrated natively with Workday, Utmost gives you complete control and visibility of your total extended workforce. Fully extensible and user-configurable, Utmost extends the Workday experience across everyone who does work for or with your organization, allowing you to dynamically manage total talent for optimal business outcomes.
VMS integrations with Workday are limited, resulting in poor user experience and lack of visibility into the extended workforce. If your existing VMS has integrations with Workday, you already know how much time your team spends doing data mapping to Workday. These data fields are already mapped in Utmost, ensuring correct and reliable data across all worker classifications.
Reporting and Analytics
“Procurement teams have long lacked the decision support tools and analytics required to identify and prioritize improvement actions that will have the biggest impact on inventory and performance...It’s no wonder that over one-third of rising supply chain workers list a lack of tools and technology as their most pressing frustration.” Future of Sourcing
Utmost has reporting and dashboards that differ from legacy systems in the following ways:
- No restrictions on the number of workers that you can have in one report.
- The ability to build custom dashboards with drill-down capabilities and report generation.
- The ability to segment data visibility by attribute rather than by role.
- Real-time data (particularly for MSP users) rather than monthly in arrears.
- The ability to show exactly how much the organization is spending on a worker and what an individual worker costs
This makes it easier to provide timely and accurate information as well as make proactive, informed hiring decisions.
There has been a transformational shift in the way work is done. Unlike old point-to-point vendor management solutions, Utmost has built something fundamentally different to support dynamic business environments and agile operating models in a scalable way.
The future of successful organizations will capitalize on the way people want to work. Many existing systems are transaction-focused, but workers are not just a rate card or cost center; they’re human beings with skills, preferences, and needs. Utmost shifts the lens to put the worker in the center, resulting in better communications, experiences, engagement, and data privacy. Happier workers make more successful companies. Tomorrow’s CPOs can now embrace this transformation and bring in technology that can enable and scale with their organizations well into the future.
Every month we host a two 30-minute demo webinars. If you’d like to learn how Utmost is helping clients reimagine their extended workforce system, please join us for our next monthly demo.
The marketing team at Utmost. Contact us at firstname.lastname@example.org for press inquiries.