Conexis VMS | Blog

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

Written by John Clark | Jan 9, 2024 2:10:50 PM

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.

  • How much does a Vendor Management System (VMS) cost?
  • 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's the ROI of a 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. Quality: A 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 efficiencies:  Consolidation 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 VMS?

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.

Learn more about the benefits of a VMS

Learn more about the Benefits of a VMS and what to look for when choosing the best VMS for your organization. Download our Free VMS Buyer's Guide here:

Discover the Power of Conexis VMS

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

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. 

Looking to Switch Your VMS or Just Getting Started?

Whether you are looking to Switch your VMS, or just Getting Started, we are here to help. Contact Us for a Free No-Obligation Consultation, See how Easy Conexis is to use by taking a quick 2 minute Self-Guided Online Demo, or Book a Personal Demo Today! 

 

Additional Articles on this Topic:

   
View full post