09 Sep Consistently Low NPS Scores Call for a Disruption of VMS
For much of my time in HR and talent acquisition leadership, I didn’t know much about vendor management systems (VMS) for much of my time in HR and talent acquisition leadership. They were procurement tools that coordinated the countless staffing agencies calling on managers and created consistent onboarding and invoicing processes. Now, as HR and procurement dismantle the unproductive silos between their respective units on all things workforce management, VMS finds itself in the spotlight. That spotlight is calling attention to some severe blemishes.
A recent post from Frank Enriquez at Staffing Industry Analysts contains a graphic showing Net Promoter Scores (NPS) for VMS over the past dozen years. The chart demonstrates that, after six positive years, the NPS for VMS has dropped off the charts. It’s a similar but less dramatic story for Managed Service Providers (MSP).
What is a Net Promoter Score?
Net Promoter Score (NPS) is a metric used to measure customer loyalty by asking how likely they are to recommend a product or service. Responses are categorized as promoters, passives, and detractors, and the score is calculated by subtracting the percentage of detractors from promoters.
NPS is simple to implement and is a common metric in digital environments because it can generate relatively high response rates. NPS benchmarking across industries is easy and can provide actionable insights into customer loyalty and potential business growth. On the downside, NPS can oversimplify customer sentiment, focus only on extremes, and be skewed by response bias or cultural differences. The response scale is weighted towards detractors, so a negative score does not necessarily mean a negative sentiment across the category. It means there is a lot of work to be done.
So, What Happened?
It’s tempting to suggest that the pandemic and its aftermath contributed to the drop in NPS scores. However, it’s important to note that the decline started in 2019, before the pandemic.
By 2019, digital transformation was well underway. Many businesses have adopted digital tools and technologies like cloud computing, automation, and data analytics to enhance operations, customer engagement, and decision-making. Most companies were still in the midst of their transformation journeys, facing challenges such as integrating legacy systems, upskilling their workforce, and achieving a cultural shift towards digital-first thinking. The most prominent VMS in the market then, with aging code stacks, technical debt, and development-heavy customizations, simply could not keep up with the changes.
Publicly available reviews on VMS suggest a few reasons for the NPS decline
- Lack of innovation
- Strategic implementation challenges
- Perceived declining value
Legacy VMS technology has been frustrating users for years, and many reviews show teams feeling handcuffed by the old technology. We see reviewers with common pain points like lack of dedicated support, long wait times on tickets, lack of intuitive UX and UI, inability to make changes, integration struggles, reliance on manual input, data migration problems, and so much more.
Changing the Game Requires Changing Your Tools
The COVID-19 pandemic in 2020 dramatically accelerated digital transformation efforts across industries as companies had to quickly adapt to remote work, e-commerce, and digital collaboration, further pushing organizations toward maturity. This accelerated the need for change, further leaving legacy VMSs behind despite efforts to modernize with the acquisition of point solutions, tweaking user experiences, and bolting on of new features and functions onto existing stacks.
Keeping up with digital transformation and the demand for increasingly agile and cost-effective workforces amidst a long-term talent shortage requires an entirely new design VMS rather than incremental changes. In other words, it requires a disruption.
The post-pandemic era, now melting into the Age of AI, demands an entirely new VMS architecture built for multiple integrations, limitless configurations, enhanced data management, and on-platform AI capabilities. These capabilities need to be native to the VMS, or it simply won’t be able to keep up.
What to Look for Next
Flextrack will host a special edition of our Influencer Forum on September 12 to explore what’s next for VMS with panelist Chris Dwyer of Ardent Partners. Chris and I will discuss what to look for in a VMS to find solutions that will deliver better experiences, more efficiency, and keep up with technologies like AI.
Register now and receive a curated list of highlights from the session whether you attend or not.
We are looking forward to seeing you there!
Jeff Mike
Managing Director, Customer Strategy and Value, Flextrack
Jeff Mike works closely with HR, Procurement and IT leaders to design extended workforce ecosystems that fuel and future-proof enterprise talent strategies. Jeff brings over 16 years of experience leading HR functions, along with six years leading global HR- and workforce-related research, to combine the best thought leadership, business practices, and platform technology into purpose-built solutions.
