Nothing strikes fear into the hearts of your corporate staff faster than the words, “We’re going to implement a new enterprise-wide application.” You may be reminded of an old joke:
An enthusiastic new manager assumed responsibility for implementing an enterprise software application. The project had gotten off to a slow start, and he was tasked with getting it back on track. In the desk of his new office, a letter from his predecessor, addressed to him, was accompanied by three envelopes. The letter said, “Each envelope contains advice on how to overcome problems. Open when needed.” After a few weeks, project deliverables were behind schedule so he opened the first envelope. It said, “Blame your predecessor.” He did, and it bought him some additional time to make corrections. When unforeseen problems occurred, he opened the second envelope and was instructed, “Reorganize the project team.” Again, that bought the project manager more time. As cost overruns were mounting he opened the third envelope. It said, “Prepare three envelopes.”
Many who have lived through this experience don’t see the humor in this joke. When projects fail, everyone shares in the blame. When big projects fail, someone is demoted or terminated. Vendor management systems (VMS) are designed to improve your ability to procure individual workers and project teams, screen and onboard new workers, comply with government regulations and corporate policies, administer financial transactions, and offboard those workers at engagement end. As such, VMS systems touch most functions, including Procurement, HR, IT, Legal, and the hiring managers within each Business Unit. To be successful, you must establish a plan that recognizes that this is a major transition program as well as a technology implementation initiative.
So this blog is intended to guide you past the seven major pitfalls that can cause the implementation of a VMS to go wrong.
#1: Unclear roles and responsibilities
Every VMS implementation should begin with the establishment of a governance structure that defines roles, business review schedules, issue resolution processes, and approvals.
The VMS should include an online program management office (PMO) module that enables each stakeholder to stay current with program status and developments, communicate and collaborate with other team members, and organize all associated implementation documentation.
#2: Unrealistic Implementation Schedule
The implementation schedule should accommodate other corporate activities or deadlines (e.g., plant shutdowns, ERP implementations, etc.) that may draw upon the same internal resources. It should be based on realistic expectations regarding availability of resources and data, and effort required to complete, review and approve each work step.
#3: Hiring manager resistance to program participation
There are many reasons why the intended beneficiaries may be resistant. They may fear an additional burden to an already heavy workload. They may be concerned that a centralized program will prevent the use of their favorite suppliers. Prior enterprise software initiatives may have failed to add value to the hiring manager. In implementing a VMS program, it is critically important to communicate the benefits to the hiring manager and to uncover concerns that may inhibit participation and support.
#4: Delays in providing critical business data; incomplete data
A great deal of information is needed on business policies, processes, suppliers, contractors, jobs, rates, and more when configuring and populating the VMS. To minimize the effort required to gather this information, use online tools and facilities for mass data uploads. Designate responsible stakeholders within each function and location to ensure timely availability of critical data, adherence to timeframes for review and approvals of workflows and business rules. Be sure that the VMS provider can provided additional resources when needed to assist in data collection and entry.
#5: Supplier resistance to program participation
A great supply base is essential to a high performance contingent workforce management program. Suppliers must be convinced that the introduction of a VMS will benefit them in ways that significantly offset the nominal fees applied to a supplier-funded program. Select a VMS system that offers automated billing and other features that reduce supplier costs and efforts. In the best VMS systems, the administrative savings will offset the VMS fee.
Suppliers are seeking a “level playing field” in which the volume of opportunities is driven by their performance. Resistance increases when the VMS company or Managed Services Program (MSP) provider is a division of a company that also provides staffing services. Implement a requisition distribution model in which the amount of potential business is directly tied to performance. Also, recognize that diverse suppliers may need additional support to encourage their participation.
#6: Potential loss of contractors on assignment through “sunsetting” suppliers
If a supplier will not continue to provide services to you, how do you ensure that incumbent contractors sourced by the supplier will complete their assignments? Three options are available. First, negotiate with the supplier to transition its contractors to another supplier. In this case, the contractors should be treated as payrolled workers, and you should pay reduced payroll bill rates. Second, allow incumbent contractors to stay with the supplier throughout the remainder of the assignment while removing the supplier from the distribution list for new requisitions. If neither of those options are feasible, be prepared to replace the contractors. If possible, plan a knowledge transfer period.
#7: Inexperienced Implementation Team
Be sure that the team leading the implementation is experienced with the VMS system. How many prior implementations has each implementation team member successfully completed? Do they use a formal methodology for the implementation? Do they have the skills to configure the system based on your business requirements? Are they providing the needed training to your in-house personnel who will have ongoing responsibility for system administration? Do they have direct access to the product’s engineers and developers?
What challenges did your company face when implementing a VMS? Share your experiences.
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