9 January 2024

Vendor Management Software: What's the Cost & ROI?

John Clark
John Clark

As organizations look to invest in a Vendor Management System (VMS) to help them better manage their contingent workforce, there are two key questions that are often asked: "How much does a VMS Cost?" and "What is the ROI?".  In this blog, we will answer these questions.

Companies rely more and more on the use of contingent workers (aka external workforce) to keep their business scalable, agile and flexible. This has resulted in a growing need to implement a technology solution to facilitate the engagement of these contingent workers.

Spreadsheets and other non-centralized, non-automated tools are no longer suitable which has resulted in the explosion of Vendor Management Systems (VMS’). When considering the option of moving to a VMS your business will have some basic questions when investing in such a system.

  1. How much does a Vendor Management System (VMS) cost?
  2. What is the Return on Investment (ROI)?

Before considering the cost, you should first look at the benefits, and what return will your company get from this cost.

What is the ROI of a Vendor Management System (VMS)?

The use of VMS technology helps organizations centralize the process of managing contingent workers, which provides a consolidation point and visibility as well as facilitates the automation of the end-to-end engagement of external labor. Generally, this results in four key areas of ROI for your business when using a VMS:

  1. Cost: A VMS can help streamline processes, automate tasks, and reduce manual efforts in managing vendors. This can lead to cost savings in terms of time, labor, and operational expenses. More importantly, it can help with capturing rogue spend, encouraging competitive billing, increasing visibility into pricing and reducing billing errors.
  2. QualityA VMS can improve the quality metrics of your program significantly. Visibility and reporting as well as transparency allow organization to measure critical metrics such as time-to-fill, turnover, time-to-submit, submission to placement ratios and allows benchmarking of agencies against their peers. It also allows the ability to drill down into the root cause of issues to drive improvement.
  3. Process efficienciesConsolidation of the end-to-end process not only is the right thing to do in this era of digital transformation but having one system for the entire process allows companies a much better experience for internal managers and program users. Providing a centralized platform for managing vendors, a VMS can enhance workflow efficiency. This includes quicker vendor onboarding, improved communication, and streamlined processes; all contributing to time and resource savings. 
  4. Reduced risk: A VMS can help ensure that vendors comply with contractual agreements and regulatory requirements, reducing the risk of penalties or legal issues. Visibility also allows proper tracking of contingent workforce to ensure co-employment risk reduction.

What is the Cost of a Vendor Management System?

The largest evolution in the VMS space in the last decade is the availability of a VMS for companies with any spend. Generally, the pricing has remained consistent through the years, as a percentage of spend, though some large enterprise platforms are pushing a license model. Percentage of spend means a percent of the total invoiced amount (before sales tax). The easiest benchmark is a VMS should cost you around 0.5% (half of one percent) with no cost implementation. Some providers may charge for intensive custom development or integrations.

The Conexis Difference

At Conexis VMS, we’ve built a sophisticated VMS software solution that’s easy to use and easy on the budget.  We’ve removed the complex functionalities and features of the traditional VMS providers and only included the components that you truly need.  Conexis VMS has changed the game by providing our clients with the option to pay a flat monthly fee. Our software as a service (SaaS) model means we’re the very first vendor management system designed with no minimum spend requirements. Just pay the license fee every month and the system is yours. For more information, visit Conexis VMS pricing

Interested in learning more about Vendor Management Systems?

Whether you are looking for a new VMS Solution, or just getting started, we are here to help.  See how easy Conexis is to use by taking a quick 2 minute Self-Guided Tour.  Contact Us for a Free No-Obligation Consultation to discuss your workforce challenges (and get immediate actionable insights) or Book a Personal Demo Today! 

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John Clark

John Clark

A Co-Founder of Conexis, and Staffing Industry Analysts’ (SIA) top 40 under 40 recipient, John has more than 15 years experience in the Contingent Workforce, Managed Service Provider and VMS technology space. John has designed, built and run dozens of client workforce programs across multiple industries, managing over $1bn in spend. John’s expertise sits in both program design and delivery as well as VMS technology implementation and management.

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