Last week, we had a tremendous turnout to the Myths, Pifalls and Realities around Services Procurement webinar (click here for the replay) and there were some follow up questions from attendees that I thought everyone might be interested in. Please feel free to comment and add your insights.

Q: “Can you provide your position on whether Services Procurement differentiates from a Vendor Management System? If a company already has a VMS /MSP, is it beneficial to move to a Services Proc. system and what are the benefits?”

A: A Vendor Management System (VMS) is dedicated to contingent labor while a Services Procurement Solution includes VMS plus allows you to purchase contingent labor AND any other service such as Print, Market Research, Consulting, Installation, Promotional items and more. Each of these has unique attributes that must be recognized in the solution. For example with Labor you need to consider time tracking; Print, stock, color, formatting, etc.; Consulting, milestones, fixed fees, time and expense. On top of all this the Services Procurement really should be part of an overall eProcurement Solution that allows you to purchase goods as well. It doesn’t make sense for users to have to learn 2, 3 or more systems depending on what they are purchasing.

It is absolutely beneficial to move to Services Procurement from several points.

1. Tying your VMS to your MSP can be very risky. Ask the hundreds of customers that were abandoned when Chimes went bankrupt in 2008. The VMS and MSP should be decoupled allowing you reduced risk and greater flexibility. Remember the VMS becomes part of your internal process and culture. The MSP is actually easier to swap out if need be.
2. As I pointed out earlier, one system is a huge advantage. Easier to train and use. Admin and IT has less to worry about The down side may be that the all-in-one solution may have only 98% of the functionality of a VMS but the advantages far outweigh this disadvantage.
3. Perhaps most important, with a Services Procurement Solution you can manage more spend from additional categories such as goods, print, marketing, consulting, etc., so that more spend can be managed. By managing your spend more effectively you can realize significant savings to your bottom line.

Dan Ashton is Senior Solutions Marketing Manager, responsible for Services Procurement & Content, at Ariba.