In part one of this brief, we deconstructed the meaning behind the buzz word “gig economy” and explored what these new digital supply chains look like. In part two, we’re addressing the potential value opportunities, risks and challenges associated with digital supply chains for work and services and how practitioners can make the gig economy work for them.
This two-part brief is available to readers as part of SIG and Spend Matters ongoing partnership.
What is the potential for value, risk and challenges of digital supply chains?
The conditions we discussed in part one of this brief present contingent workforce and services procurement with a new set of potential value opportunities, risks and challenges.
As with pushing ahead with most innovative approaches, achieving value means confronting, evaluating and, where possible, addressing risks and execution challenges.
But moving forward is not a binary choice of go or no-go; rather, it is a gradual calibration of readiness and opportunities. It depends upon the state of an organization and numerous related factors, including industry vertical; perspectives and knowledge of business users, other stakeholders, and contingent workforce and services procurement practitioners; internal technology capabilities; and the goals, milestones and performance expectations of the business. In other words, there is no one truth, no one way — but for each organization, there is an incremental path forward.
How Can It Be Done?
While there are real opportunities to achieve new value in many forms, there are also real risks and challenges. The components of potential digital supply chains for work and services are mostly in an immature state — some more-or-less mature than others. Some platform-based work and services suppliers have gained little traction, while some have done so, but with adoption by individual business users or departments. There are gaps in enterprise technology that have not yet been filled by certain VMS players that are trying to do so, FMS players that have tried and are evolving, and some upstream platform-based work and service suppliers that are taking it upon themselves to try to make it happen.
Nonetheless, there is ample evidence of a significant number of large, mainstream enterprises across multiple industries that have found their trailheads and have started down their own paths. These include companies like GE, Thomson Reuters, Procter & Gamble, The Washington Post and Southwest Airlines — each on different stages of its journey.
Enterprise contingent workforce and services procurement practitioners face a “practitioner's dilemma,” caught between being locked into old processes for satisfying well-established internal customer needs and being able to shift organizational resources and mindsets toward new approaches, sources and enabling technology. But there is a way out and a model for finding your organization’s path forward.
Spend Matters’ research and analysis points to the following model and process: The process should be incremental and span years, not months — there should not be the expectation of a sea change. It is a process of transformation of organizational learning and change, starting small and progressively expanding scope and depth all the while reducing the risk of a blind-side disruption and progressively increasing the capability to respond to opportunities and threats.
All of this can be guided by a nine-step process:
1. Seriously get to know the external landscape
2. Poll your business users on current and desired consumption use cases
3. Stringently assess and identify best-fit VMS and MSP
4. Confer and collaborate with trusted peer companies
5. Invite platform providers to do presentations, demos, Q&A
6. Develop an initial pilot and adoption program plan
7. Engage and present to senior management (including CTO and CFO)
8. Move forward with pilots and record what happens
9. Analyze what has happened, document in a report for all stakeholders and proceed as appropriate
This whole cycle or parts of it may be repeated any number of times, occurring over a time frame measured in years. Instead of a “Big Bang project,” this process moves the organization in the appropriate direction, gradually and incrementally.
Some key advantages are:
- Allocation of time and resources are held in check and manageable for the organization (the program never becomes “too big to fail”).
- The gradual progression makes it possible for the organization to absorb information and learn in many different ways, including understanding the most valuable opportunities, assessing new procurement processes, technologies and management methods (e.g., in strategic sourcing, category management, supplier management, etc.).
- The stepwise and iterative nature of the process makes course corrections possible as learning occurs.
- The process ensures organizational involvement and change across all stakeholder groups (avoids problems like the “not invented here” syndrome).
- The process progressively increases organizational capabilities to respond to opportunities when they arise and avoid being blindsided by disruptive developments. In fact, the process could mitigate disruption by bringing parts of the organization together and avoiding a widening misalignment between internal customer needs/expectations and the gradually increasing capability of the procurement organization to deliver new labor/talent solutions.
For further details of this model and process, consult “9 Things Contingent Workforce Procurement Can Do to Prepare for Online Talent Platforms.” For related research on innovative technology solution adoption practices, see “Best Practices: How Enterprises are Adopting the Latest Contingent Workforce & Services Technology Solutions.”
In this Spend Matters brief, we have not only taken the stampeding gig economy by the horns but we have also tried to dissect it and frame its real anatomy for contingent workforce and services procurement practitioners — to put it into their perspective and make it real and exploitable. For practitioners, the gig economy is like superficial advertising for new goods and services — it tells you nothing about the practical matters of how to source and manage the procurement of those goods and services.
As noted at the outset, practitioners understand that there are significant and real developments taking place behind the buzzwords. But it has been difficult to get a practical grasp of them from their own procurement standpoint, understand where their organizations stand relative to these developments and other organizations, and determine what to do in some rational way. This user’s guide to the gig economy is intended to be at least a starting point.
You can follow Andrew Karpie on Twitter @andrewkarpie and read more of Spend Matters’ contingent workforce and services procurement coverage.
SIG has teamed up with Spend Matters to provide members access to Spend Matters’ SolutionMap Accelerator and associated knowledge base (Insider and PRO subscriptions) at a discounted rate.
Andrew has over 30 years' experience working as an analyst, executive, and adviser at the business intersection of technology and services. His first brush with procurement came early in his career when he was a network planner for a Ford Aerospace telecom services subsidiary, responsible for leasing high-speed digital bandwidth facilities from emerging suppliers. In his long career, he followed the thread of information and communications technology (ICT) across a number of different service industry verticals and small to large companies in a variety of analytical planning and management roles (both buy- and sell-side). In more recent years, beginning as a research analyst at Staffing Industry Analysts, he has become focused as an analyst, writer, and adviser researching the rapidly changing services and labor supply chains (especially the impact of technology). Andrew holds an MS in Policy Analysis from Carnegie Mellon University, where he first learned to code in FORTRAN and developed a deep appreciation for the value of data and statistics. He lives in the San Francisco Bay Area, where he enjoys time with his family and volunteering as a Pet Assisted Therapy dog handler.