MSPs: What to Look for when choosing a Vendor Management System (VMS)

Written by Wayne Burgess | Oct 16, 2020 7:21:42 PM

Selecting the right Vendor Management System (VMS) is one of the most important strategic decisions an MSP can make. As VMS technology continues to evolve, MSPs must rethink how they evaluate and assemble the right mix of VMS partners.

One Size Does Not Fit All

The truth is simple: no single VMS fits every client scenario.

A strong MSP strategy includes a flexible toolkit of complementary VMS partners, each suited for different spend levels, geographies, worker types, and program complexities.

Below is a clear framework to help MSPs evaluate what matters most when choosing a VMS—and why having multiple modern VMS options is now a competitive advantage.

Why MSPs May Need More Than One VMS Partner

Most MSPs serve clients across multiple industries, geographies, labor categories, and maturity levels. Because of that, relying on one VMS provider can limit your ability to meet client expectations quickly and competitively.

Here’s how VMS needs vary across clients:

1. Market Size & Complexity

Enterprise Programs

Enterprise workforce programs with global scale often require highly specialized, complex systems. These platforms offer deep configurability and suit organizations that accept higher software costs and longer implementation timelines. They remain the right choice when your client demands global governance and extensive customization.

Mid-Market (Under ~$75M in Spend)

This fast-growing segment requires sophistication without enterprise-level cost or complexity. Mid-market clients still need advanced workflows - but delivered in a modern, intuitive, faster-to-implement system.

Small Market (Under ~$10M)

Historically underserved, small market clients today expect quick onboarding, budget-friendly pricing, and technology that “just works.” Modern cloud-based VMS tools now make this possible.

2. Skill Categories

Different worker types require fundamentally different workflows. MSPs should ensure their VMS toolkit supports all major categories:

IT & Admin – Standard workflows; most VMS platforms can support these natively.
Healthcare – Requires scheduling, shift rules, credentialing, and rapid compliance checks.
High-Volume Shift-Based Roles – Warehouse, logistics, manufacturing. Requires bulk onboarding, shift scheduling, mobile timekeeping, and high-speed approvals.

3. Worker Engagement Models

Your VMS partners must support:

Contingent Staffing – Hourly, piece or day rate workers.
Direct Sourcing or Self-Sourced – Whatever you call it; your VMS should allow you to self source and manage these candidates for job assignments.
Direct Hire – Many organizations also use their VMS to manage the req to check processes for direct employee hires. Your VMS should also manage this workflow.
Statement of Work – Fixed fee or agreements based on performance. If you require this, there are several new cloud software systems that manage SOW effectively.

If a VMS cannot support the full workforce mix your MSP manages, it limits your ability to scale client programs.

What MSPs Should Look for When Choosing a VMS Partner

With dozens of VMS platforms on the market, MSPs need criteria that separate “full VMS” partners from partial solutions or outdated tools. Here are the areas that matter most.

1. End-to-End Functional Coverage

A true VMS must manage the full contingent lifecycle:

Supplier management
Job postings
Candidate submissions
Onboarding & credentialing
Assignments
Time & expense
Invoicing

If any of these are missing, you’re not looking at a full VMS—you're looking at a recruitment tool, a timekeeping system, or a partial workflow tool.

2. Reporting, Data, and Analytics

Visibility is the core purpose of a VMS. MSPs should ensure the system provides:

Prebuilt reports
Custom/ad hoc reporting
Raw-data access (ideally via API) to support BI tools like Tableau or PowerBI

This is essential for program optimization, client scorecards, and MSP KPI tracking.

3. Invoicing Accuracy and Taxonomy

One of the biggest pain points MSPs face is inaccurate or inconsistent invoicing.
Your VMS must:

Generate accurate client invoices
Maintain rate cards and tax rules
Handle exceptions cleanly
Provide audit trails

Always ask for a demo or sandbox to validate invoice scenarios before committing.

4. AI Roadmap & Automation Maturity

AI in VMS is still developing, but MSPs should look for:

Vendors that have a practical, realistic AI roadmap
Automation that reduces administrative load (not just marketing claims)
Tools that enhance MSP productivity

A strategic VMS partner will show you how their roadmap aligns with your client programs.

MSP-Specific Requirements That Are Non-Negotiable

Beyond core functionality, MSPs have their own operational needs that not all VMS providers understand.

MSP Fee Models & Tax Capabilities

You should be able to configure any fee structure—admin fees, PM fees, markups, or custom rates—based on geography, contract type, or worker category.

Program Reporting & MSP Scorecards

There must be reporting tailored specifically for MSP operations, supplier performance, SLA tracking, and client scorecards.

MSP User Permissions

A modern VMS must support MSP-only roles such as program managers, coordinators, and analysts, assignable across multiple clients.

Multi-Tenant Architecture

Your team should be able to manage all clients within one system and toggle between programs instantly. This is critical for operational efficiency.

Why Modern, Mid-Market-Focused VMS Solutions Matter

Many long-standing VMS platforms were built over 20 years ago. While still powerful and appropriate for specific enterprise use cases, they can carry:

Higher implementation costs
Longer onboarding timelines
More complex user experiences
Limited flexibility for small and mid-market clients

This doesn’t make them “bad”—they’re simply designed for enterprise needs.

However, the largest growth area for MSPs today is the sub-$75M mid-market, where clients want:

Faster implementations
A cleaner, more intuitive UI
Lower total cost
Modern API architecture
Better support models
Strong MSP partnership alignment

This is where modern VMS platforms—like Conexis VMS—add tremendous value in an MSP’s toolkit.

Final Thoughts: Building the Right VMS Toolkit for Success

MSPs succeed when they can match each client with the right technology - not force a one-size-fits-all solution.

The goal may not to replace enterprise systems or legacy tools that serve their purpose, but to expand your toolkit with modern VMS partners that strengthen your competitive edge.

A strong MSP VMS strategy may include:

An enterprise-focused platform
A more modern, mid-market-friendly solution
Ensure your vms choice includes those that can support specialized systems for healthcare or high-volume shift work (if relevant)

Why Conexis VMS is the Right Choice for MSPs

At Conexis VMS, we designed our platform to fill a critical gap in the MSP toolkit:
a fast, modern, white-label-ready VMS purpose-built for mid-market and small-market programs.

By choosing the right mix of VMS partners - including a modern solution like Conexis - your MSP can deliver:

Faster implementations
Better user adoption
Higher margins
A stronger supplier experience
And a more competitive offering for every client segment

The MSPs that win will be those who build a flexible, future-ready technology stack - and selecting the right VMS partners is at the heart of that success.

Learn more about Conexis VMS for MSPs

About Conexis VMS

Conexis is an award-winning Vendor Management System built for organizations that want the power of enterprise software without the complexity or cost.

Leveraging the latest technology, Conexis delivers the expertise, reliability and security of enterprise systems, while offering the flexibility, user friendliness and tailored, personal service you require. Learn more about our Company and why organizations Choose Conexis VMS.

Discover the Power of Conexis VMS for MSPs

Conexis VMS is purpose-built for organizations seeking to manage their contingent labor spend effectively. Here’s why we're the right choice:

Fast Deployment: Get up and running in weeks, not months
Transparent Pricing: Flexible pricing with no hidden costs
White-Label Ready: Customize the platform with your brand
Real-Time Insights for MSPs: Built-in analytics and unrestricted access to your own data
Audit-Ready Compliance: Store contracts, worker data, and rates in one secure hub