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4-page, A4 size brochure layout using Beeline\'s published article found online at www.cxo.eu.com

4-page, A4 size brochure layout using Beeline\'s published article found online at www.cxo.eu.com

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Beeline International MSP Article Document Transcript

  • 1. The Vendor Neutral Managed Service Programme (MSP) “The Vendor Neutral Managed Service Programme (MSP)” article was published in CXO EU’s e-magazine found at www.cxo.eu.com
  • 2. W approximately €130B in contractor labour, ith European firms spending an annual sum of The Vendor on Premise or Master Vendor Programme proved highly effective for many organisations, but it was not without organisations are scrutinising their current models of its faults and risks. In theory, the solution initially appeared sound. managing contractors to find greater efficiencies wherever The client would realise price reductions and the supplier would possible. Rightly so, there is certainly no shortage of providers in be able to provide one-stop shopping and mitigate its margin the market willing to offer “model solutions” for more losses with incremental volume. Over time, however, cost-effective outsourced labour programmes. organisations came to realise that there was a high degree of “maverick spend.” In other words, a high percentage of contract Though traditional models have offered value, they have not been spend was occurring outside the sanctioned programme. Overall without fault. However, as these models costs increased, managers who sought have evolved, they have yielded much greater variety in their supply base greater results. In fact, it seems that the complained,and negativity began to newest methodology in contractor surround the programme. Eventually management – the Vendor Neutral incumbent master vendor programmes Managed Service Programme model – is were replaced by competitive master gaining widespread adoption for good vendor programmes promising better reason; the proven success organisations value. In many cases, these client are having with it. companies surmised that the staffing company was poorly managing the VOP so Organisations have multiple choices when they simply chose to replace them with it comes to managing their contract labour someone else’s solutions that promised a programmes. Some manage it internally new way of doing business and a higher themselves whilst others prefer an degree of service. It was easy to blame the outsourced model. The outsourced staffing company and hope for a better approach has several options as well. future with the new staffing company. Heads of HR and Procurement are Realistically, organisations should have constantly under pressure to deliver been evaluating the model itself in tandem supplemental talent at the lowest price with evaluating the VOP’s performance. possible. The constant pitting of quality Deeper analysis would have revealed that against price translates to angst and the model itself was flawed. confusion for those responsible for For large and complex staffing programmes that have a high managing contingent labour. With billions of Euros spent annually number of professional service (white collar) contractors, the on contingent workers, it is easy to understand why staffing master vendor or vendor on premise model is destined to be companies are so eager to ingratiate themselves in organisations problematic. The underlying premise of the master vendor and offer solutions that manage the fulfillment of requisitions. programme is that one staffing company can provide all of the needed contingent talent. Of course, that is a highly suspect They say necessity is the mother of innovation. This was certainly assertion in most cases. Granted, this model has merit if the true in the case of the first formal managed staffing model. required talent is more commodities based, where the skills are Clients,feeling financial constraints, asked their staffing suppliers at the “ground floor” level and the supply is plentiful. to deliver qualified labour for less. Smart suppliers countered with Clerical/Administrative and Light Industrial positions can often what appeared to be a win/win solution. They offered to be well managed by one supplier in a master vendor programme. guarantee a specific mark-up along with onsite personnel in However, as the required skill levels increase, the geographical exchange for an opportunity to fulfill all requisitions. Thus, the need increases, and as the number of labour types (IT, finance, Vendor on Premise (VOP) or Master Vendor Programme (MVP) clerical, etc.) increases, no single staffing company can effectively was born. This model prevailed for many years and still exists in and competitively provide 100% of the supply. When these certain pockets even today. Over time, however, the inherent companies can not fill all of the requisitions, they often problems with this model became evident. subcontract to other staffing companies to increase their sourcing depth. Invariably, this leads to disgruntled feelings from
  • 3. It would not be until another economic downturn that a highly competing staffing firms, as the only opportunities they get to evolved model would enter the scene. In 2001, when the Internet work on are the difficult ones that the master vendor cannot fill. bubble burst and the economy slumped, a game changer arrived This begins to touch on another inherent flaw in this model. on the scene. A challenging economic climate acted as the impetus to a wholly new and innovative model. The master vendor model alienates all of the staffing firms that desire to do business with the client but are forced to work The advent of Vendor Management Software (VMS) brought an through the master vendor. This means they are going to get the entirely new, yet highly effective vendor management model. The hardest requisitions whilst having to pay a fee to the master Vendor Neutral Managed Services Programme (MSP) was born. vendor for the privilege of receiving these orders. Staffing firms In the height of the Internet boom, IT contractors were scarce don not relish the opportunity to work on one-off requests at low and valuable. Companies paid a premium to protect themselves margin rates. These staffing companies, disenfranchised with the from the dreaded Y2K as well as to install other technology-based model and lack of opportunity, begin to work outside the system solutions. Organisations faced out of control IT spend and short and develop relationships directly with hiring managers who are suppliers of talent. VMS hit the market at a fortuitous time and not satisfied with the level of service that the master vendor is offered great promise. Eager to reduce costs, drive process providing. Maverick spend increases, costs are no longer efficiency, and gain visibility into contract spend and supplier contained and the client has limited visibility into what is actually performance, organisations began adopting VMS solutions. Early occurring within its contractor population. What is the next step? adopters posed an excellent question to the VMS companies. They Throw out the provider and get a new one to repeat the mistakes asked, “If I’m to implement your vendor management software, of the past. Without question, there have been some very good who is to administer it and run my programme?” Certainly some master vendor programmes but there have also been some very organisations managed the programme poor ones. The point is that lack of success has not always been internally, but those that had been in due to poor performance on the provider’s part. In many cases, the practice of outsourcing these the model was flawed and destined to fail. A “one shoe fits all” duties had a legitimate concern. approach begets behaviour that ultimately ran counter to the Some of the VMS firms objectives of the programme and finally manifested in failure. As responded, “We will train organisations and staffing firms began to suffer the cyclical whoever does it today.” Thus, nature of replacing programmes with like programmes, a new some of the master vendor model came to bear. Enter, the Lead Vendor Programme. programmes and lead vendor programmes were suddenly in Simply put, the Lead Vendor Programme introduced additional charge of managing the use of staffing firms to the mix. It acted similarly to the master vendor the VMS. However, a select programme, but the firm managing the engagement introduced few of the VMS companies competitors with the aim of showing the client that quality would responded by offering Vendor increase whilst the cost would decrease due to the newly created Management MSPs. These VMS competitive environment. This model was a significant companies offered to run an improvement as it appeared less self serving on the master impartial programme in which there vendor’s part and allowed competing firms to play inside the was no vested interest in who filled system. This, of course,helped in reducing maverick spend and in the requisitions. As a result, the placating hiring managers demanding more variety in their supply vendor neutral MSP was conceived. base. The lead vendor lost a large portion of volume that would have been enjoyed from a master vendor model but still secured The Vendor Neutral MSP the ability to manage the programme and ensure a healthy model has gained percentage of the business. While a step in the right direction, tremendous this model was not the panacea the industry had hoped for. The traction competing staffing firms were often suspicious of the lead vendor over the and still sought ways of undermining the system when possible. last 5 Yes, the model was better, and fairer. It just was not fair enough. years Again, we started to see incumbent programmes replaced with competitors’ solutions. Same programme – different lead vendor. (article continued on reverse)
  • 4. as organisations and staffing firms appreciated a model that in one geographic location.Under this scenario, it is feasible that focuses on competition and performance. A Vendor Neutral one staffing company can meet most of your needs. As long as Managed Services Programme is one in which the company you can derive value and get a good price, this model is valid. managing the programme does not provide staffing. In its early However, this model begins to break down when positions get days, there was a fair amount of disagreement between what harder to fill. constituted a vendor neutral programme and what did not. For example, some espoused that a Vendor Neutral model meant that Lead Vendor the company providing service had to be a stand alone firm with This model is similar to a VOP but the master vendor introduces no affiliation with other staffing companies. However, two of the competitors into the equation to supplement its ability to source market leaders in the U.S., Beeline and Chimes, were owned by talent. This model is better perceived by other staffing firms parent companies that also owned staffing firms. They too because they at least get a chance to compete for some business. claimed to provide vendor neutral MSPs, since they had no vested Of course, there is still a degree of mistrust and resentment since interest in who did the staffing. Over time, the industry came to the lead vendor has a preferred status and maintains oversight of recognise that vendor neutrality, in its truest form, is simply the the requisitions. If your company has an excellent relationship absence of an ability or desire to show favouritism to any one with a single vendor but you don’t want to put all of your eggs company. Skeptics of Beeline and Chimes eventually had to in one basket, this model can make sense. concede that those firms did in fact run vendor neutral programmes. Today, vendor neutral managed service programmes Vendor Neutral MSP are simply those in which the company running the programme The company overseeing contract labour management does not does not provide staffing services;they simply have oversight for provide staffing services. This model has been rapidly gaining these activities. acclaim and success as it is perceived by staffing firms to be the most fair to everyone in the programme. A competitive The vendor neutral MSP model has gained in popularity because environment is established which translates to better quality and all three constituents—the organisation, the MSP and the price. In this model, performance is king. This model can make vendor—all benefit. The client (“organisation”) is the prime sense in any scenario. Once you choose this model, you have to beneficiary because they are able to outsource non-core duties to decide whether or not you want to choose a separate VMS experts who maintain a fair and competitive environment. This (vendor management software) or if you want one provider to “level playing field” environment fostered by the vendor neutral do both. There are pros and cons to each. If you go with a MSP means hiring managers have access to an appropriate separate VMS and MSP, you get the flexibility of choice. You may supply base which increases quality and reduces costs. The love a VMS and a different MSP provider. This option allows you staffing firms win because they are judged strictly on their to have the best of both worlds. If you choose a vendor neutral performance and their ability to provide quality at a fair price. MSP that brings its own VMS, you will get better pricing, have Nobody is taking the easy jobs and passing on the hard-to fill greater accountability with “one throat to choke”, and you will jobs. They all get the requisitions at the exact same time and get probably leverage more functionality in the VMS since your MSP to compete. The vendor, of course,benefits from the revenue knows it so intimately. derived from providing its service. For once, all three constituents can rest assured they are operating ina performance based arena. Whichever model you choose, be sure that you spend as much Evidence of this model’s success rests in the turnover score-card. time in your due diligence process looking at the companies, not There are certainly examples of Vendor Neutral MSPs being just their solutions. What is their vision? Which customers have replaced by competitors, yet the percentage is relatively low. It they lost and why? What have been their greatest successes? appears the shelf life of a Vendor Neutral MSP is significantly What do their customers say about them? How do their financials greater than that of a VOP or a lead vendor programme. The look? It is important that you first understand which model makes model is sound. the most sense for your organisation. It is equally important that you choose a company with whom you respect and like. The When choosing a model for your organisation, there are many company you choose will be responsible for managing one of considerations. While the vendor neutral model has great merit your highest expenditures. You will want to enter into a veritable and success, it is not necessarily the right model for your partnerships vs. a client-vendor relationship. Ensuring that you organisation. Every model has its own merits. There are, albeit find a partner with a respectable balance sheet, similar values few, examples of companies going from a vendor neutral MSP and a vision that aligns with your long term goals will position back to a VOP. It is important to understand your contingent you well in managing such an important component of your workforce landscape and apply the appropriate model that will labour force. best deliver the results you seek. The following is intended to provide high level guidance on which model to choose: For more information, please contact us at 0207.429.5465 or visit our website www.beelineintl.com Vendor on Premise (VOP) / Master Vendor Programme (MVP) In this model, one staffing company is charged with filling all the requisitions. This model often guarantees a fixed mark-up and comes with onsite personnel to help manage the programme. Beeline International Headquarters Though this model fails to provide a competitive environment, Millennium Bridge House there are valid reasons for deploying it sometimes. If your 2 Lambeth Hill contingent workforce programme is relatively small (50 – 100) London EC4V 4BG or if it is comprised of low skilled workers, then this programme might make sense. This is especially true if your company operates United Kingdom