Seamless integration of a Vendor Management System (VMS) into an organization’s current IT ecosystem is an essential task for employers who want to improve their contingent workforce management process. Integration of the Vendor Management System will help create a streamlined end-to-end process of sourcing, managing and paying contingent workers on an enterprise-wide level.  

With today’s global talent pool, organizations have access to knowledge workers around the world who are digitally based and remote ready to complete short or long-term projects, and organizations that tap into the contingent talent pool gain the flexibility necessary to scale resources in an uncertain work world.  

Why do organizations use Vendor Management Systems? 

In an increasingly complex, global workforce, Vendor Management Systems help employers take a more organized approach to managing their contingent workers. For any successful contingent worker program in any business, a VMS is a m-u-s-t.

What is a Vendor Management System?  

A Vendor Management System (VMS) is a software application, typically cloud-based (web-based), that helps to facilitate the process of contingent worker procurement and contingent workforce management. A VMS will automate and streamline the sourcing, engaging, managing and payment of contingent workers. 

When choosing a VMS, there are essential questions every organization should ask!

Why Vendor Management System Integration is important 

Managing a contingent workforce comes with unique complexities, and for many employers and their businesses, a Vendor Management System is the answer to navigating these challenges. However, integrating a Vendor Management solution within your current IT ecosystem can feel like a daunting and confusing task. 

Business leaders admit they lack insight into who works for them. One study conducted by Oxford Economics and Fieldglass finds only 40-47 per cent of business executives consider themselves “highly informed” about compliance, contingent workers’ responsibilities, tenure, quality of work, headcount and access to facilities. 

Similarly, a familiar pattern emerges with procurement professionals – the same study finds just over half of procurement executives surveyed (53 per cent) are “highly informed” about the responsibilities of the service providers, and even less are informed of the duration of work, access to facilities, systems and confidential information, work quality, progress against milestones and/or deliverables, and compliance with licenses and certifications. 

Integrating your VMS into your organization’s IT ecosystem – including Human Resources systems, procurement, supplier systems, access/credentialing systems and ERP/AP tools to start – will provide a seamless end-to-end process. 

Remember: A VMS isn’t an island! 

In most organizations, it’s common for procurement and human resources functions to view a VMS as a stand alone solution — separate from other platforms. Yet how VMS technology integrates with IT, finance, procurement and HR systems is critical to achieving a level of contingent workforce management that drives value beyond compliance, visibility and spend. 

The level of VMS integration within an organization’s current IT ecosystem will have direct effects on reducing IT costs, increasing savings and visibility, reducing risk and improving the overall management of your contingent workforce. 

Levels of Vendor Management software Integration 

Typically, VMS integration can be categorized into three levels. Each level of VMS integration ensures important information and data from one system to the next is shared across an entire organization. This provides data that is consistent across the current IT ecosystem and the new VMS solution. 

Basic integration  
Integrating the VMS with with ERP and procurement systems involves:
• Basic master data
• Invoice information and similar fields 

Intermediate integration 
This type of VMS integration will incorporate:
• Purchase requests
• Purchase order
• Budget allocation
• Encumbrance and related data and fields 

Mature integration 
This level of VMS integration will take into account:
• More detailed on-boarding, off-boarding 
• Tracking
• Asset management
• Talent/workforce management applications and procurement system scenarios
• Mappings (e.g., to other fields in e-procurement/e-invoicing, supplier management and contract management systems) 

Integrating Vendor Management software within your organization’s IT ecosystem will help HR and Procurement Departments gain the visibility needed to understand how contingent workers contribute to the overall performance of the organization. 

Examples of Vendor Management System Integration points 

Integration ensures each system within your organization’s entire ecosystem can exchange information. Below is an example of a basic integration:

Invoicing Data 

Purpose of Integration: Real-time integration with ERP to auto-create Service Entry Sheets eliminates the need for an additional invoicing step and ensures immediate and accurate cost allocation to the Purchase Order and corresponding cost objects.  

User feed 

Purpose of Integration: Enables automated provisioning and decommissioning of client users for best practice security controls and provides user role assignments for VMS to control authority within the tool.  

FAAP tables and financial controls 

Purpose of Integration: Provides user-level spend authority to commit spend (for Work Orders) and to authorize payments (for timesheets and expenses) on behalf of the client. This ensures only users with the proper level of authorization can act as financial approvers in the VMS. 

Cost objectives 

Purpose of Integration: Allows for contingent workers to select the valid cost objects in order to allocate time and expenses within the Vendor Management System, ensuring successful invoice integration.  

Work Orders 

Purpose of Integration: Real-time Purchase Order auto-creation and auto-update maximizes user efficiency and ensures data integrity and synchronization between the VMS and ERP. 

Benefits of Vendor Management System integration 

The implementation and integration of a vendor management software will help organizations achieve benefits ranging from: 

• Candidate sourcing
• Requisition distribution  
• Better onboarding and offboarding
• Vendor management and vendor performance data
• Risk mitigation and compliance
• Time management and payment 
• Greater control over contingent spending 
• Increase in costs savings 
• Automation of older, manual processes. 

Building a case for Vendor Management Integration  

When sourcing and implementing a VMS, it’s important to get the support and buy-in from the key stakeholders in the organization. Once management is on board with your vendor management strategy, the key to supporting your organization’s management objectives is planning, choosing and configuring the right technology to suit your business needs. 

When building a business case for Vendor management integration, it’s important to start by taking into consideration:

• What are the hard and soft costs of manual work?
• How much is incorrectly entered data costing you?
• What are the risks of incorrectly entered, missing or lost data? 

Future proofing your workforce with the right technology is critical to sustaining growth. If you’re considering a VMS or are re-evaluating your current system, significant operational changes can require a new management solution as you remodel your blended workforce. A Managed Services Provider (MSP) will support these tech changes across the entire contingent workforce delivery.

Are you interested in gaining deeper insights into Vendor Management Systems?

Download our free Case Study to learn how Procom’s VMS technology helped one client partner save on contingent workforce costs and more.

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