A Buyer’s Guide for

Vendor Management Systems

Part of Learning Technologies Group plc

1 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS

How to select the CONTENTS

right VMS technology
to replace manual What is a Vendor Management
System (VMS)?..................................................02

processes and optimize What are the Standard Features

your contingent
workforce program
Choosing a vendor management solution is a high
stakes assignment. Getting it right means asking the
right questions.
This guide will help organizations define their needs,
evaluate and compare options, and prepare for a
smooth implementation.
and Functions of a VMS?.................................03
Key Considerations for Selecting
the Right VMS Technology...............................04
Steps for Selecting the Best-Fit
VMS for Your Organization...............................06
Enlist Your VMS Provider as a
Long-Term Strategic Partner............................14

INTRODUCTION CONTENTS
2 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS

WHAT IS A VENDOR
MANAGEMENT SYSTEM (VMS)?
A vendor management system (VMS) is a single,
centralized system for managing all nonemployee
workers at a company. A VMS manages all types
of labor, including contingent labor, independent Benefits of a VMS
contractors, temporary staff, and statement-of-work.
It can also track ID management for workers with • Control costs and eliminate
access to your facilities, such as cafeteria staff and rogue spend
landscapers. • Maintain compliance across the
A VMS is the focal point for a holistic contingent workforce contingent lifecycle
program, giving you
• Track and elevate vendor
• An auditable system of record – Ensuring compliance and performance and candidate
governance controls company-wide, and allowing complete
quality
visibility across your program workflow

• A tool for total budget visibility – Enabling you to track and • Boost efficiency by automating
manage total budget and control contingent labor costs and streamlining processes
• A business intelligence and analytics engine – Providing
the analytics you need to enhance and grow your program
through data-driven decisions.

WHAT IS A VENDOR MANAGEMENT SYSTEM (VMS)?

3 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS

WHAT ARE THE STANDARD

FEATURES AND FUNCTIONS
OF A VMS?

Most VMS solutions share a standard set of features

and functions:
• Requisition creation, distribution, and approval
• Candidate submittal
• Candidate comparison and screening
• Compliance management (e.g., onboarding, off-
boarding, and specific requirements by position)
• Time and expense management
• Integration with other ERP systems and
procurement processes, such as finance and
accounting
• Program metrics and analytics.

WHAT ARE THE STANDARD FEATURES AND FUNCTIONS OF A VMS?

4 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS
KEY CONSIDERATIONS FOR
SELECTING THE RIGHT VMS
TECHNOLOGY
As the need for and use of contingent labor rises, the
manual systems many companies use to manage their
contingent labor eventually prove inadequate to the task.
Transitioning from decentralized, manual systems to a single,
centralized platform presents both an opportunity and a challenge.
To minimize the stress of change management, encourage adoption,
and accelerate ROI, organizations should look for a VMS provider
that offers
• Flexible delivery models
• Auditable compliance tracking
• Configurable workflows
• End-to-end business analytics and reporting
• Streamlined implementation.
FLEXIBLE DELIVERY MODELS
When choosing a VMS, it’s important to consider how you plan to
structure your program?
Are you looking for a technology that will enable your procurement
or HR team to manage your contingent workforce in-house? Or do
you plan to engage an MSP partner to manage your entire program?
Or will you outsource program elements such as billing and invoicing,
rate rationalization, and vendor reviews?
KEY CONSIDERATIONS FOR SELECTING THE RIGHT VMS TECHNOLOGY
Ideally, the technology you select will be flexible enough to evolve
as your organization’s approach to contingent labor management
changes over time.
It’s not uncommon for an organization to shift between managing
its program entirely in-house, outsourcing entirely to an MSP, or
adopting a hybrid model, where certain elements are managed
internally and others are outsourced to a service provider.
If you plan on using one or more MSPs or other service providers,
your VMS will need role-based security access and personalized
views, and you’ll need to ensure that data access controls are
in place. You’ll also want to ensure that the system can produce
custom reports that MSPs need to effectively support your program.
If a hybrid model is better suited to your organization’s needs, look for
a VMS provider who offers tailored services to augment your in-house
contingent workforce program team. By engaging what’s known as
shared managed services (SMS) through your technology provider, your
organization gains access to experts in the solution you’ve selected—
which can accelerate adoption and increase your ROI.
AUDITABLE COMPLIANCE TRACKING
Regardless of delivery model, it’s imperative to select a vendor
management system that can manage and track compliance directly
in the application—from pre-engagement through disengagement.
When assessing a candidate VMS, confirm that its compliance
feature tracks
• Onboarding items
• Off-boarding items
• Position-specific requirements
• Location-specific requirements.
5 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS

Your VMS should give you a time-stamped, auditable record of when

a background check was completed, a laptop was distributed, and all
other requirements your contingent workers must meet.

It should also trigger alerts when a compliance item is due to expire.

This functionality will enable you to ensure, for example, that your
contingent workers’ certifications and licenses remain current
throughout their entire engagement.

CONFIGURABLE WORKFLOWS
Sourcing and onboarding/off-boarding follow the same general
process at most organizations, but nearly all organizations have
one or more unique steps or requirements in their workflow. Workflow Elements That Require
Configurability
Your VMS should automate and streamline that workflow, not
change or dictate the way you work because of its limitations. • Requisition templates

So look for a VMS technology that allows configuration at the data • Distribution
and process level, ideally without extensive service engagements
with the provider or significant burden on your in-house IT • System notifications
resources. • Approvals
A readily configurable VMS allows your HR and procurement team— • Onboarding and off-boarding compliance items
and the hiring managers across your organization—to adapt and
change at the speed of business, whether in response to corporate • Engagement workflow
directives or market conditions.
• Time and expense logic
Your VMS should allow your procurement and HR team to tailor
forms and templates for requisitions, compliance requirements
like background checks, drug screens, and onboarding tasks by
location, department, and/or role.

KEY CONSIDERATIONS FOR SELECTING THE RIGHT VMS TECHNOLOGY

6 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS

A readily configurable VMS allows your HR and procurement team— Examples of reports that are critical to driving success in
and the hiring managers across your organization—to adapt and your program are vendor scorecards, time-to-fill analysis, rate
change at the speed of business, whether in response to corporate comparisons, and compliance tracking.
directives or market conditions.

Your VMS should allow your procurement and HR team to tailor

forms and templates for requisitions, compliance requirements like STREAMLINED IMPLEMENTATION
background checks, drug screens, and onboarding tasks by location,
department, and/or role. When transitioning from manual tools to an automated and
centralized system, speed matters.

It’s important to find a VMS provider who understands that process

and can, based on experience, provide a streamlined and proven
END-TO-END BUSINESS ANALYTICS AND REPORTING
approach to defining processes and workflows, importing data from
For organizations that use spreadsheets to manage their contingent your currently distributed sources, and testing and validating the
workforce program data, one of the most significant pitfalls is new VMS with stakeholders.
inaccurate reporting and lack of visibility into program metrics.
When looking for a technology, vet your provider to ensure they
Extracting data from spreadsheets is time-consuming, meaning
have a standard process and methodology in place to manage your
your business analytics are already out of date before reports are
implementation.
submitted.
Communication is the keystone of any implementation process. In
A vendor management system should solve this challenge with
addition to their overall approach to implementation, a best-in-class
real-time analytics and robust business intelligence and reporting
vendor will be able to articulate clear lines of communication to
capabilities.
ensure mutual success.
Look for a VMS that captures and analyzes data on the quality,
The adoption of a vendor management system is a significant
efficiency, risk, and costs associated with your contingent labor
milestone for your organization. So it’s important to screen vendors
program. Key criteria for selection must include a robust reporting
for their ability to ensure a smooth implementation.
engine that gives you

• Preformatted, out-of-the-box reporting

• Ad hoc reporting

• Custom reports

• Scheduled or automated report delivery.

KEY CONSIDERATIONS FOR SELECTING THE RIGHT VMS TECHNOLOGY

7 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS

STEPS FOR SELECTING THE

BEST-FIT VMS FOR YOUR
ORGANIZATION

Selecting a VMS that meets your organization’s needs

requires participation from key stakeholders, executive
support, and a methodical approach designed to help
your selection committee make the best choice for your
organization.
By following these 9 steps, your team can navigate the often
daunting task of selecting a vendor management technology and
help you find the VMS that best meets your needs.
Key Questions to Assess Your Current State
• What tools or technologies are we using to manage
contingent labor?
• Do these tools/technologies support our current needs?
• Does our technology constrain processes for managing
our contingent workforce?

• Does it support our needs for managing risk and

STEP ONE: ASSESS YOUR CURRENT STATE compliance, controlling cost, realizing efficiencies, and
engaging quality talent?
To select the right VMS for your organization, first you must define
your current state and your needs. What technology(ies) do you • How does our current solution impact HR, procurement,
currently use to manage your contingent workforce? What do you staffing suppliers, and/or contingent workers?
need a vendor management solution to do, from both a strategic and
process perspective? • What is the strategic vision for managing our contingent
workforce?
The heart of this phase is defining your sourcing, selection, and
onboarding and off-boarding processes. Clearly document all manual • Is our current system able to support that vision?
and automated steps you currently follow, as well as the technology
• Why change NOW? What are the compelling reasons
that drives these steps.
driving our need for a new vendor management solution?
This information will inform your list of required features and
• Have we benchmarked our current processes and
functions and may also shed light on areas where your processes
technology to help us define success with a new tool(s)?
can be simplified or modified for efficiency or compliance. It will also
give you a head start on the Request for Proposals (RFP) you’ll need
to compare vendors (see Step Six).

STEPS FOR SELECTING THE BEST-FIT VMS FOR YOUR ORGANIZATION

7 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS

STEP TWO: ALIGN WITH BUSINESS OBJECTIVES AND

DEFINE SUCCESS
The next critical step is to determine how contingent workforce Key Questions to Align with Business Objectives
management aligns with and drives business objectives. This
• Describe in detail the vision or roadmap for contingent
requires a blend of visionary thinking and tactical analysis of high-
workforce management for the next 3 years, then 5-10
level metrics like supplier diversity, engagement quality, time-to-fill,
years.
and conversion rates.
• What drives our need to better manage contingent
Gather your HR, procurement, and other key leaders to understand
labor?
how centralizing vendor management can power business outcomes.
And define as concretely as possible what success looks like. • What is the current cost of managing our contingent
workforce?
As with Step One, the information you gather during this step will be
part of your RFP (see Step Six). • Why is the solution needed? What issue are we trying
to solve and how is it specifically aligned to the
When technology selection aligns with business objectives, you will
business?
be well-positioned to demonstrate ROI and convey the value of a
VMS to executive leadership. • What new or revised processes could a VMS support to
drive greater agility, efficiency, quality, or cost control?

• What happens if we wait or do nothing?

• What are the challenges, benefits, and barriers?

• What will successful selection and implementation

look like?

• How will we measure our success?

• Have new goals and metrics been established for our

contingent workforce program, and do they align with
the technology’s expected ROI?

• Who is ultimately accountable for ensuring key metrics

are met?

STEPS FOR SELECTING THE BEST-FIT VMS FOR YOUR ORGANIZATION

8 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS
STEP THREE: IDENTIFY AND ENLIST YOUR
SELECTION TEAM
Every project needs a team and every team needs a champion.
Start by securing an executive-level sponsor for your technology
selection project. Ideally, this role will be filled by a senior leader from
procurement or human resources.
He or she will ensure you have adequate budget, maintain visibility
of the project among stakeholders, and provide the business and
organizational context necessary for a successful outcome. They will
also champion any change initiative required during implementation
to ensure your team reaps—and communicates—ROI on the new
VMS.
Next, gather the internal team that will participate in product demos,
review and rank potential VMS providers, and make recommendations.
The ideal selection team includes a cross-section of multi-level
stakeholders, including those who will use the system, those who
will implement and support it, and those who will interact with the
technology provider over time.
Key Stakeholders in Contingent Workforce
Management
• Procurement leaders • Finance
• HR leaders • Contracts
• Hiring managers • IT
STEPS FOR SELECTING THE BEST-FIT VMS FOR YOUR ORGANIZATION
STEP FOUR: RESEARCH PRICING MODELS
Obviously, the right VMS is one that fits your budget.
But unlike with other business SaaS solutions, your organization
will likely be able to get a robust VMS without incurring licensing or
renewal fees.
This is because vendor management systems typically aren’t funded
by the companies who use them to manage their contingent labor.
Rather, the VMS provider will charge staffing vendors a percentage of
spend for the labor they source on your behalf.
This is what’s known as a vendor-funded pricing model and it applies
whether you manage your program in house, through an MSP, or
under a hybrid or shared managed services (SMS) model.
If your organization is outsourcing your program in whole or in
part to an MSP or shared managed services provider, you’ll need to
understand how those services are priced.
Most can be added within a vendor-funded model as additional
percentages of spend, but some vendors may charge transaction fees,
monthly fixed fees, or implementation fees, depending on the scope.
Conversely, if you manage your nonemployee labor directly, you may
need to hire a dedicated contingent program manager.
As your organization considers how to manage its contingent
workforce, comparing total costs is critical. Consider how each
option will scale as your contingent labor force grows, and how
much burden it places (or relieves) from your procurement, HR, and
compliance teams.
9 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS

STEP FIVE: CONDUCT MARKET RESEARCH

Perhaps the most time-consuming step in the process is researching
solution providers.

Assign one or more members of your selection team to research the

VMS technology marketplace by gathering information such as

• Recommendations from contingent workforce managers at other

organizations

• Software reviews from sites such as Capterra, G2 Crowd, PC

Magazine, and Serchen

• Reports from industry analysts such as Spend Matters or Staffing

Industry Analysts

• Responses to Requests for Information (RFIs) sent to high-

potential vendors

• Technology consultants.

These inputs should give you a broad sense of the technology

landscape, including enterprise technologies and niche providers,
giving you a list of companies to research in greater depth.

STEPS FOR SELECTING THE BEST-FIT VMS FOR YOUR ORGANIZATION

10 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS

STEP SIX: CREATE A REQUEST FOR PROPOSAL (RFP)

The purpose of an RFP is to document your requirements and create
an opportunity for potential vendors to present their capabilities and
vie for your business.

A carefully written, well-organized RFP is the key to a sound

technology decision. It enables providers who cannot meet your
needs to self-select out of the process and gives the others clear
instructions for their proposals.

Outline of an Effective RFP

• Overview of your organization and need for vendor management
software

• IT and system specifications

• Required or desired system features

• Information required from vendors

- Company overview, including financial viability, market
share, strategic partnerships, industry leadership, number of
employees, and years in the business
- Description of solution, including standard and optional
features, functions, and modules
- Customer base and retention rate
- Representative clients within your industry
• Instructions and deadline for submitting proposals
• Selection criteria
• Point of contact for questions.
Often, companies request that bidding vendors provide cost
information separately, to help the selection committee focus
on technical capabilities. To help ensure that proposed costs are
comparable across vendors, include in your RFP a template for
bidders to use.

- Integration capabilities with your HCM, HRIS, or other systems
- Support model
- Technology security and data protection
- Implementation approach and timeline
- Cost proposal, including all licensing fees, training, customer
support, and implementation
Solution providers will respond to your RFP according to the
schedule you define, which should include a period during which
bidders can ask clarifying questions to ensure their proposals are
responsive to your company’s needs.
Share all proposals with your full selection team and give them time
to thoroughly review each one. If you can, eliminate any vendors at
this stage, based on ability to meet your specifications, cost, or other
objective criteria.

STEPS FOR SELECTING THE BEST-FIT VMS FOR YOUR ORGANIZATION

11 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS
STEP SEVEN: GET DEMOS OF SHORTLISTED
SOLUTIONS
A good shortlist includes at least 2 and no more than 5 providers.
After your selection committee has narrowed the field based on
cost and technical proposals, it’s time to see the solutions in
action.
A demo gives you an in-depth look at the system, its features
and functions, and its user experience. It’s also your opportunity
to ask questions to ensure your selection team understands
how the solution will fit into current workflows and satisfy the
needs of leadership to track meaningful KPIs for your contingent
workforce program.
You’ll also get a sense of each vendor’s customer service
philosophy and focus—that is, how they will treat your company
during system implementation and beyond—and how eager they
are to work with you.
STEPS FOR SELECTING THE BEST-FIT VMS FOR YOUR ORGANIZATION
Questions to Ask During a Demo
• Does your solution meet our system specifications and
deliver our required features and functions?
• How will your solution integrate with our current systems?
• Describe your approach to migrating supplier and other
data from our current solution.
• Is training included in the cost of the solution?
• How often are software updates released?
• How long does implementation typically take for an
organization of our size with similar requirements?
• Describe your support model.
• What type of training will be provided to our procurement
team, hiring managers, and administrator(s)?
• How configurable is your system without incurring
additional costs?
• Can your solution be configured to our specific needs? If
so, at what cost?
• Are features and modules upgraded automatically?
• What type of business intelligence reporting and analytics
are included?
• What is the process and response time for resolving
issues?
• Tell me about your approach to data security.
12 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS

STEP EIGHT: MAKE YOUR SELECTION

The selection process culminates, obviously, in actually choosing
the system that best fits your organization’s current and future
needs.

Regardless of the size of your selection committee, it’s critical

that each member understand and apply the same criteria. To
achieve that understanding, document and weight your criteria in
a spreadsheet.

Give each individual a copy of the spreadsheet to capture their

scores for each of your shortlisted solutions, then have your
committee leader consolidate the scores.

By having committee members assign their scores separately,

perhaps even anonymously, you can avoid groupthink and ensure
each individual’s judgment is equally valued.

STEPS FOR SELECTING THE BEST-FIT VMS FOR YOUR ORGANIZATION

13 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS
STEP NINE: PREPARE FOR IMPLEMENTATION
After thanking your selection team for their hard work, enlist their
support in developing a plan for successful implementation of your
new vendor management solution. By capturing their knowledge of the
VMS and building on their relationship with the provider, you can make
a smooth transition into the implementation phase and maintain the
buy-in of your key stakeholders.
With a detailed plan for implementation, you can avoid common pitfalls
and position your team for maximum success.
A successful implementation plan includes the following:
• Purpose, intent, and scope of the project – This may come verbatim
from your RFP or may reflect changes suggested by the winning
vendor. Either way, reinforcing a common understanding of goals
and objectives is key.
• Success metrics and measurement plan – Define what a successful
implementation means in qualitative and quantitative terms. This
may also come from the RFP but can and should be augmented
with a timeline and milestones.
• Implementation team – Typically this includes some, but not all,
members of the selection team, plus data security and HRIS/HRIT
administrators.
• Roles and responsibilities – Ensure everyone on the team, including
the vendor, knows who’s doing what and who is accountable for
success.
• Level of effort – Estimate hours for each step, task, and team
member so you can allocate resources effectively.
• System integration – Define any/all other systems to be integrated
with the VMS. Work with the provider’s implementation team to
determine the best approach.
STEPS FOR SELECTING THE BEST-FIT VMS FOR YOUR ORGANIZATION
• Data definitions – Clearly specify data that will be migrated or
integrated into the new system and the source(s) of that data.
• Workflows – Map your sourcing, onboarding, and off-boarding
workflows. During implementation, your VMS vendor may be able to
identify opportunities to streamline your processes for even greater
ROI.
• Use cases – Define example scenarios for hiring managers,
procurement, system administrators, and other users of the new
VMS. These use cases will help your provider configure the system
during implementation and serve as test cases to ensure the VMS
is ready for launch.
• User acceptance testing – Engage representative users of the
system to test and provide feedback on configuration, functionality,
and ease of use.
• User training plan – The provider’s proposal should define an
approach and level of effort required to train all system users, but
your team may wish to augment that plan or document it more
fully.
• Communications plan – Define your approach to communicating
with key stakeholders, including executive leadership, HR and
procurement leaders, staffing suppliers, and hiring managers.
• Project risks – Define any potential roadblocks your team may
anticipate—such as cost overruns, competing priorities, internal
reorganization, or resistance to change among key users—so you
can proactively address them with your VMS vendor.
Tip: To generate and sustain energy and accelerate adoption of your
new solution, enlist champions across the organization.
These people will serve as a channel for change communication and a
source of momentum throughout implementation.
14 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS

ENLIST YOUR VMS PROVIDER

AS A LONG-TERM STRATEGIC
PARTNER

The relationship between your HR and procurement

team and your VMS provider should be a strategic
partnership.
Your contingent labor needs will evolve in response to shifts in
the job market as a whole, trends affecting your industry, and
internal organizational change. You need a VMS—and a VMS
provider—that can adapt to the way your hiring managers need
to work today and in the future.

The VMS provider you select should be able to advise your

procurement and HR leaders and teams on best practices,
drawing on their expertise in vendor management and their
experience serving other clients.

By enlisting your new VMS provider as a long-term strategic

partner, your company can get the most from your vendor
management technology—powering your talent strategies well
into the future.

ENLIST YOUR VMS PROVIDER AS A LONG-TERM STRATEGIC PARTNER

15 A BUYER’S GUIDE FOR VENDOR MANAGEMENT SYSTEMS

VectorVMS, a former division of PeopleFluent,

delivers software and services to help
businesses optimize their contingent workforce
programs.
We work closely with clients and partners—drawing on 20
years of experience to combine the right people, process,
and technology to design and implement best-fit vendor
management solutions.

With our VMS, HR and procurement teams can control

costs, maintain compliance, and drive quality and
efficiency throughout the contingent labor lifecycle.

VectorVMS delivery models are the most flexible in

the industry. We empower clients to manage strategic
sourcing entirely in-house or through one of our many
trusted managed service providers (MSPs). And we
augment client resources with a team of experienced
program managers who provide operational support, Find out how VectorVMS can deliver end-to-end visibility and
white-glove service, and advice on industry best control over your contingent workforce with a flexible VMS
practices.
that’s quick to implement and easy to use.
A part of Learning Technologies Group plc (LTG),
VectorVMS also powers a total talent ecosystem that
gives clients a holistic view of their contingent and full-
vectorvms.com | +1 877 820 4400
time workforce.

ABOUT VECTORVMS