Clearing the Confusion: How to Use an VMS, MSP, and FMS Together

Between temp, perm, and freelance talent, managers have more ways to engage help than before. While the flexibility is great, the technology used to organize and track it all can get confusing. For example, do you need a VMS or FMS? How does an MSP fit into the mix? Here’s a quick way to see how the alphabet soup of technologies work together.

What they do

All three solutions help centralize, streamline, track, and automate workforce processes. However, each solution differs in how they do it, and the type of workforce they support.

VMS—A Vendor Management System is a web-based solution that manages temporary, permanent, and contract staffing. A VMS centralizes and handles the admin processes of multiple vendors, like interview requests, invoicing, and payment. But the solution can only track spend from a supplier, which means it can’t process directly-sourced (self-sourced) talent, such as those contracted through freelancing websites.

MSP—When a large company has hundreds of vendors and talent sources, it may use an outside Managed Service Provider to optimize the company’s contingent worker program. MSPs perform tasks like negotiating vendor contracts and making payments. MSPs require a VMS, which can add another layer (think time) to your talent acquisition process. When you submit a talent request to a VMS, the request flows to your MSP who then directs your request to the appropriate vendors and talent sources.

FMS—A Freelancer Management System is a cloud-based solution helps companies streamline and manage freelancer and other contingent worker engagements. FMSs often include a talent pool, which enables managers to directly self-source talent faster and easier.

If you have a VMS, do you really need an FMS?

If you have multiple freelancer project needs, an FMS is a valuable solution. Engaging freelancers require a different process. An FMS aids you in managing spend, reducing admin time contracting and paying talent, and controlling risk. More extensive FMSs, like Upwork Enterprise, include a talent pool, which makes it easier and faster for your staff to access the exact skills they need. Some solutions include built-in compliance options to reduce potential for misclassification.

Here’s where VMS and FMS technologies create a gap. A VMS does not support self-sourced, freelancer talent because it can only track spending done through a supplier. If your staff self-sources freelancers, they bypass the VMS because there is no supplier and transactions are conducted on the cloud.

Bypassing the company’s VMS can create reporting gaps, which prevents you from seeing total contingent workforce spend. It can also make it difficult to control risk, and it increases the administrative time needed to manually consolidate reports, verifying invoices, and so on.

4 ways to combine your VMS with an FMS

In a perfect world, you’d have one solution that tracks all of your contingent workforce spend, from temps to freelancers. The good news is, you can. Below are four ways to combine an FMS with your company’s VMS to create a cohesive solution.

1. Direct engagement. This option is convenient for organizations that have an MSP. Requests funnel through your MSP, then freelancers are engaged through a freelancer platform. All related admin support tasks, such as timekeeping and payments, are handled on the online platform. Invoices can be consolidated regularly, then uploaded to your VMS.

2. Direct engagement with program services. If your company doesn’t use an MSP and your FMS provides program managers, the program manager can help bridge the development and delivery gap between your VMS and FMS. Invoices can be consolidated regularly, then uploaded to your VMS.

3. Batched SOWs. If you have recurring or high volume needs for specific skill sets, this option eliminates the need for creating a requisition and a work order/engagement in your VMS. It also frees your staff to source talent outside of the VMS to access a larger talent pool.

4. Headcount tracking. This is helpful if you only want to track who is completing work for your company. It allows your VMS to track very basic information of the freelancers currently working on projects for your organization.

Keep in mind that these are just a few of many ways to combine your VMS and FMS. For a closer look at how you can optimize your VMS to fully benefit from today’s freelancing economy, download the whitepaper, Freelancers + Your VMS.


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Author: Brenda Do

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