Has it really been eight plus years? Wow – it’s hard to believe that I’ve been at IQNavigator that long! During the time I’ve been here I’ve experienced and participated in IQN’s and the industry’s growth and maturations – and have the gray hairs to prove it! Though I’ve already published a few blog posts in my Implementation Playbook series, I thought I’d take a moment to introduce myself a little more formally and talk about my role as IQN’s Senior Vice President of Industry Solutions.

My role is to help prospective and current clients, as well as strategic partners, understand IQN’s implementation, integration, and global capabilities. I work with those stakeholders to scope out and plan implementation projects and to understand the keys to success (as well as risks) associated with a project as complex as a VMS implementation. In a nutshell, that’s it – read on for more details!

My years of experience have given me a great deal of knowledge about IQN as well as about how our clients and market have evolved. Early on in my IQN career I ran our Product Management and Reporting groups. That experience created a passion in me around IQN’s functionality and our strategic roadmap – that’s something I’m interested in and driving to this day.

Starting in 2007 I moved into IQN’s Professional Services Organization to oversee all of our global projects. I managed the teams doing the day-to-day work and also guided and evolved our LaunchIQ implementation methodology. I’ve overseen 100s of successful implementation projects across all spend types and in countries around the world. It was a great run where I met lots of amazing people across the breadth of our industry, learned a ton, and even got to have some adventures in places like Nigeria and India!

At the start of 2013 IQN formed the Industry Solutions group to help provide thought leadership and guidance across a variety of topics. I’m excited to be the group’s implementation, integration, localization, and general VMS subject matter expert. I love the interactions I’ve had with our clients and partners so far as well as the opportunity to express my opinions in forums like this one.

Outside of work, I’m a soon to be married father of three boys (14, 11, and 11 – the twins are identical) – or maybe having three kids is work too! I love the outdoors and spend my winters skiing and summers road biking. Food is a passion – getting to experience the great meals around the world is a side benefit of my job and I love to cook at home as well. Follow me on Twitter (@chezhoff) and you’ll not only get the benefits of my IQN-related musings but maybe a recipe or two as well!

Reach out to me at any time if there’s a topic you want to discuss and be sure to follow @IQNavigator or @chezhoff on Twitter to see my ongoing posts.

What is Big Data? It means utilizing technology and techniques to analyze large data sets to derive new knowledge and insights. However, working with raw data sources and Big Data tools can require high-level software programming and statistical skills.

That’s where Big Data Services come in. Big Data Services are pre-packaged online information services created by industry experts that provide end-users the ability to answer key questions and make better decisions – which is, after all, the ultimate goal.

In order to deliver better decisions, Big Data Services must have these components:

• Both structured and unstructured data: A large part of Big Data are new tools to analyze unstructured data – mostly text – to generate answers that are unavailable elsewhere.
• Curated: Raw data sources often include lots of data errors as well as extraneous information. The most effective Big Data services utilize data analysts to sanity-check and cleanse input data, while providing regular updates to the data sets.
• Classified: Many analyses require the data to be normalized and classified – where each record is assigned to specific categories. This can happen both automatically with advanced Big Data tools, and also assisted by expert data analysts.
• Correlated: While analyzing a single data source can answer some limited questions, the real power of Big Data Services is correlating multiple data sources. This allows new types of analyses and insights that a single data source can’t provide.
• SaaS: Big Data Services are a type of Software-as-a-Service (SaaS) – and as usual for SaaS, there’s no software to buy or install, software updates and data updates happen automatically, and fixes and new features also appear automatically.
• Self-service: Finally, Big Data Services are end-user tools that allow non-programmers to perform analyses, answer questions, test hypotheses, and derive new knowledge for better decisions.

While the “Big Data” moniker is generating headlines in the IT industry, it’s Big Data Services that are delivering value to business users who want answers and insights for better decisions.

Watch for some exciting new Big Data Services coming soon from IQNavigator!

Across the dozens of SOW explorations, business case assessments, workshops, conference presentations and general conversations I have been part of this past year at IQNavigator, one simple, yet critical theme has emerged:

There is no one-size-fits-all solution for the management of all Services spend

Welcome to the first installment of Sourcing Talk’s multi-part series on The SOW Expansion Path. Part I will set the foundation for the rest of the series’ topics by exploring the importance of asking a basic question…

Why isn’t there a one-size-fits-all solution for all Services spend?
The only reason this is a relevant question to ask is because of the general assumption that the solution already in place for the management of contingent labor can easily expand its scope to include SOW-based services. To understand why this reasonable yet false perception has persisted, let’s review the generally accepted (dare I say consensus) solution for contingent labor:

A program office (run by a managed service provider or MSP) facilitates and manages a streamlined exchange of standardized services (demand and supply) leveraging a mature VMS (vendor management system) technology that fully automates required buyer and seller interactions.

By unpacking the core components of this description of the basic solution for contingent labor we not only see why there is no one-size-fits-all solution for contingent labor and SOW but also identify the driving force behind even asking the question.

Program Office
A recent Staffing Industry Analyst article (VMS/MSP Primer) quotes a survey that reveals that 75% of Fortune 1000 companies have employed or are planning to employ a program office approach (i.e. a VMS and or MSP) to manage their contingent labor category of spend. With this kind of industry adoption, it is easy to see why the program office governance structure has assumed an incumbency position relative to bringing more services spend under management, specifically SOW-based services. We believe there are two key factors meriting this favorable view of program management as it pertains to the future management of broader Services spend:

1. The program office has demonstrable success and expertise in establishing and executing broad-based procurement service delivery solutions; and
2. The program office has proven their strategic value relative to category management, analysis, and continuous category improvement.

It is these accomplishments of the programmatic approach to managing contingent labor that may be, in part at least, driving the one-size-fits-all solution expectations for all Services. We see below, however, that other important elements of the program approach, when applied to SOW-based services, materially change the dynamics of the program solution.

Streamlined Exchange of Standardized Services
Streamlined exchange for the contingent labor only program refers to the procurement and sourcing efficiencies that facilitate a value-added, best practice based, and fully funded service layer that sits in between demand holders (i.e. hiring managers at companies) and suppliers (i.e. staffing firms). Essential to the effectiveness of streamlining these processes is the fact that the vast majority of underlying demands for contingent labor are easily standardized.

However, on the SOW side of the equation there are material differences in the underlying demand and sourcing processes that necessitate program solution adjustments if SOW-based services are to be added to the program office scope:

• SOW-based demand cannot be easily standardized because they are typically project or deliverable-based, naturally entailing differing scopes and requirements.
• Unique demand requires unique project delivery solutions and expertise. This, along with the need to hold parties accountable to terms, is what drives the need for a statement of work.
• When demand and supply are highly variable, the ability to standardize the sourcing process that brings demand and supply together is likewise very difficult.
• Often the potential vendor set for a given SOW-based service type is not predictable and must remain fluid to ensure appropriate solutions are considered and accessible.

VMS Technology
VMS providers have delivered technology that almost perfectly aligns with the needs of the contingent labor exchange. Most notably, VMS technology has supported contingent labor program successes by

• Automating procurement and sourcing best practices
• Driving company and end user adoption with a SaaS (software as a service) delivery method and application ease of use
• Enabling critical funding and engagement models that logically allocate costs and resources across the high volume of transactions which make up the contingent labor exchange.

But as the prior section on streamlined exchange and standardized services suggests, the variability of demand, supply, and sourcing practices prohibits a similarly run SOW-based services exchange from emerging. Even great technologies (like IQNavigator!) can only mirror defined processes and give rise to procurement rules and policies; they cannot rewrite or ignore sourcing principles and best practices.

Conclusion
The above review demonstrates the infeasibility of simply adding SOW-based services to the scope of existing contingent labor programs and expecting similar efficiency and scalability outcomes. However, just because the case has been made to identify operationalization distinctions between contingent labor and SOW-based services, don’t mistakenly think that real opportunity for SOW does not exist within the program governance structure. Nothing could be further from the truth. There is significantly more upside opportunity for SOW-based savings. Experts and our own experience here at IQNavigator suggest that from a spend perspective alone there is 10+ times more potential SOW spend to bring under program management than contingent labor. Combine that amount of unmanaged spend with the high yield returns typical in the first few years of active management and it becomes clear why clients and industry participants, such as VMS and MSP providers, are investing so heavily in the next generation of program solutions… aka the SOW expansion path.

The remainder of this series on The SOW Expansion Path will cover SOW go live strategies, return on sourcing investment (or ROSI) analysis, supplier and funding model adoption, aligning the service and technology layers, international expansions and more. If you have questions or want to influence our coverage of SOW, please don’t hesitate to email your comments to mmatherly@iqnavigator.com.

The Bureau of Labor Statistics Employment Situation Release for April 2013 showed stronger than expected hiring in the US. The release also portrayed another strong month for the creation of new temp agency jobs.

Total nonfarm employment rose 165,000. The private sector created 176,000 new jobs, while the public sector lost 11,000. Government employment at all levels has dropped 106,000 across 2012 and 2013.

The unemployment rate dropped a tenth of a percent to 7.5%, while the most inclusive measure of unemployment, the U-6, rose a tenth of a percent to 13.9%. Neither change is significant. It appears job creation in April kept pace with the natural growth of the workforce and the change in reported rates merely reflects movement across BLS categories. The participation rate (that portion of the population aged 16 to 65 at least marginally engaged in the labor force) remained unchanged at 63.3%. March and April recorded the lowest participation rates since 1979.

Revisions to numbers reported in prior months suggest that the job market so far in 2013 was stronger than originally thought. The BLS revises its reports in each of the two months following release. Updates in the April numbers make February and especially March job creation numbers look significantly more robust:

Temp Employment
Temporary agency employment grew by a healthy 30,800. This represents 18.7% of net new jobs created in April being driven by a labor segment that typically represents less than 2% of all US employment. Employers continue to rely on contingent workers to meet their immediate labor needs while preserving flexibility in their cost structure.

Like overall job gains, the BLS revisions to February and March employment numbers increased the estimates of temp jobs created. The revisions have consistently been upward over the past six months, which is an encouraging indicator of underlying strength.

Contingent Labor Rates
Despite the better than expected job creation numbers, the upward pressure on contingent labor rates continues to be restrained. The April Master IQNdex rose only a tenth of a point to 107.4

New coverage

Reuters
NYT
WSJ

The Reasons Implementation Methodology Impacts a Project’s Success

Still reading? Good – I promise I won’t scare you away by going geeky and discussing things like critical paths and Gantt charts (though if you’re interested in that sort of thing, reach out to us)! Instead I’m going to point out a few key ways in which IQN’s award winning (Marketing made me say that) LaunchIQ methodology influences our clients’ success. By the way, IQN is so focused on methodology that we have a dedicated Implementation Center of Excellence that focuses on nothing but improving an updating LaunchIQ based on our learnings, challenges, and changes in our market.

• Client Level of Effort: Let’s face it; in today’s business environment most people have conflicting project priorities (as well as the proverbial ‘day job’ beyond the projects they’re assigned to) so it’s important that the time they spend on a VMS implementation be both minimized and efficient. There are many ways achieve this but one key tactic we use is a series of questions – customized for spend type (e.g. contingent, SOW), geography, and industry – that allow us to quickly gather a client’s business process requirements and therefore expedite the creation of a prototype system that allows for meaningful user acceptance testing.
• Risk Mitigation: Like math, VMS implementations are hard – they involve many parts of a client’s organization (each with their own goals), complex processes and inter-connected systems, and the results of failure can approach a cataclysmic level. The breadth and depth of IQN’s experience means that we’ve likely seen a similar problem before and can therefore suggest ways to eliminate or at least minimize it. The implementation guide that, well, guides each of IQN’s project managers and business analysts through our process is filled with questions to ask to help avoid typical risks and solutions designed to mitigate them.
• Repeatability: For most IQN clients implementation isn’t a one-and-done event; instead they plan to add in additional spend categories or geographies at some point in the future – often immediately following an initial go-live. These planned phases are critical to a client’s ability to achieving their goals –e.g cost savings, global visibility into headcount or spend, etc. Because of this, LaunchIQ is designed to establish a foundation on which to build thereby making each subsequent phase both easier and faster. This is also why we don’t allow our teams to say that a project is done until we complete a lessons learned analysis so that we can improve our approach to subsequent projects with that client (as well as to enable overall improvement of the entire organization)

Obviously there are more reasons that I feel that the headline of this post should resonate with you’ but these three should help convince you. As always, we’re glad to discuss these topics – or any questions you have about implementation – in more detail…now where did I put that Gantt chart???

At issue is the bill rate law firms are charging their client for routine discovery work and the pay rate the firms are paying their contract lawyers to perform that work. None of us should be surprised that the difference between these two rates, or markup, is huge – over 400% according to the article. But what does that markup or premium represent as value to the client, above and beyond the actual labor the contract lawyers are providing? (For a review of how temp labor rates are structured see this prior blog post Bill Rate or Markup? Why Not Both?) Does the markup represent client access to additional support services or expertise that the legal firm provides? Is part of the markup an insurance policy in the event something goes wrong? These are practical and tangible value-adds that are routinely offered and accepted as justification for significant markups charged, particularly by professional services firms. In the case underlying this WSJ article, though, the claim is that the markup is predominantly profit and therefore not reasonable, not justified. Ultimately a judge will decide whether the fees being charged are reasonable or not.

Knowing what you are paying for and having adequate contract terms to govern the engagement is why so many firms are bringing statement of work or SOW-based services under more active and disciplined management. From a sourcing perspective it is about choosing the right service provider and optimizing service delivery, quality, and pricing. From a legal perspective it is about managing the risk of a bad service provider selection, unexpected fees and liabilities, and other potential damages. The Procurement department’s job is to ensure these equally important elements of every project, engagement or service provision are balanced according to the organization’s financial objectives and risk tolerance.

Among the major job sectors, IT extended its upward trend in rates to a full year, increasing over six percent in that period. On the flip side, Professional-Managerial continued to show a slight downward trend, falling more than two percent since October. Office-Clerical and Light Industrial rates both rose two percent since the start of the year.

Regionally, the Northeast was the hottest labor market, experiencing an almost three percent rise in bill rates. The West saw a modest rise in rates overall, while the Midwest was flat. Bill rates in the South region dropped a point at the start of the year, but started to recover in February and March.

Temporary Hiring on the Rise
Contingent labor remains an important focus of job creation in the US. During the first quarter of 2013, new temporary agency roles represented 11 percent of all new jobs created nationwide. This trend in temporary staffing has been evident for more than two years. Since the start of 2011 temp roles have increased from 1.3 percent of all jobs to 1.9 percent. This is the highest level since 2006, when the unemployment rate was 4.7 percent.

IT Rising – First Anniversary
The recession hit its trough in July 2009 and IT bill rates languished for several years afterward as business restrained investment. In hindsight we can say that the picture changed during 1Q12. IT bill rates overall have increased six percent in the past year. In particular, hourly rates for core development team members are up closer to 12 percent, with hot skills relating to mobile technologies commanding even more.

Learn More
The recent IQNdex white paper for 1Q13 explores contingent labor rates in more detail. It also takes a closer look at temp labor hiring trends and the hot market for IT. It is available from:

http://iqntelligence.com

But they’re not the only important problems to solve, right?

Last week a number of us in Sales and Marketing spent a few hours together discussing the unique challenges that people in Procurement positions face as they look to better understand and manage their contingent workforce landscape. As part of one of our exercises we spent some time discussing and debating recognized and unrecognized problems that the Procurement professional is looking to solve.

There was/is some healthy debate among us over what problems are (generally speaking) truly unrecognized, and of course every Procurement professional is in a different place regarding their knowledge and approach. That said, here’s our list:

What do you think? What would you add to this list? Would you push an item from one column to the other?

Additional Points

• The few bright spots for job creation were Professional and Business Services (includes, Temp Help), Health Care, Construction, and Food Services.
• Retail and the public sector declined.
• The BLS figures are consistent with the direction suggested by the March ADP National Employment Report and recent unemployment claims, but perhaps even weaker.
• The broadest measure of unemployment, the U-6, fell from 14.3 to 13.8%, reflecting the large number of people leaving the labor market.
• January new jobs were revised upward from +119,000 to +148,000, while the matching February values were increased from +236,000 to +268,000. Future revisions for March bear watching.
• The average work week crept up a tenth of an hour to 34.6.
• The unemployment rate for those with a college degree was flat at 3.8%, while the unemployment rate for other educational categories declined slightly.

Temporary Help Services
The continuing economic uncertainty appears to be sustaining the appeal of using temporary labor to meet current staffing needs. Temporary Agency employment was up 20,300 in March and the seasonally adjusted temp employment levels are up 159,000 over a year ago.

Another encouraging sign are the upward revisions in the two months after the initial release of the BLS employment figures. The temporary labor employment levels have been consistently revised upward since December 2012, most notably with a +22,000 revision for February 2013.

Media Coverage
There has been extensive media coverage due to the unexpected weakness in the numbers and the immediate impact on the equity markets.

NYT
Reuters
WSJ

The Five Key Questions to Ask

When it comes to integrations, different organizations have different priorities based on things like internal policies, their regulatory environment (especially financial institutions), system complexity, and resource availability. The five questions below are a starting point that will help you to prioritize effectively.

• Are client side resources available to do the required work? This is the first question to ask as – despite IQN’s ability to shoulder much of the burden through the (re)use of our large integration library – the development effort will require some client resources.
• What’s the volume of data involved in the integration? For example, IQN’s largest cost center integration includes over 2 million (and growing) unique values – it would be next to impossible to update these manually.
• What’s the frequency at which the data changes? A client recently asked us to build out an integration to load their unique locations into IQN. Even though they have over 1,000 domestic locations we decided to load these via a user initiated file load instead of an automated integration as they only add a few new locations a year.
• What’s the ratio of the integrations value to the overall VMS program versus it’s overall difficulty to build out? The classic example here is single sign on – it has a big impact on user adoption and the overall user experience but, because it’s based on a standard (e.g. SAML), it requires minimal client- or vendor-side effort.
• Are the alternatives to integrating effective? During a recent implementation at a global financial institution we built a bespoke integration to disable user access during an employee’s mandated annual leave. Because of the volume of users involved and the regulatory impacts associated to a data entry mistake, spending the time to automate a solution was a proverbial no-brainer.

Of course there are many more questions that could be asked but these five will give you a start and help you come up with a prioritized list of integrations that will help you launch your VMS program quickly (more on that in a future installment!) so that you can begin achieving higher level goals. IQN has some good tools we can use to assist you in this process – give us a shout, we’re glad to talk!