Every lemon — or supplier — only has so much juice. Contingent workforce program management, and the VMS technology that underpins it, historically has been sold on the premise that companies can achieve cost savings by implementing a managed program; companies achieve cost savings by creating a competitive bidding process along with standardizing rates and reducing supplier margins. There comes a point, however, when there just isn’t any juice left to squeeze — out of a lemon or a staffing supplier.
Enter VNDLY, a new Cincinnati-based startup that thinks it can turn the VMS world upside down by empowering suppliers and going beyond staff augmentation for value creation.
“Our name stands for ‘vendor friendly,’ two words that historically have not gone together in this space,” says CEO and co-founder Shashank Saxena. Over the last 10 to 15 years, Saxena says, the playbook has been to beat up suppliers, manage bill rates and margins; but he argues that playbook is exhausted. “The wave of savings has already happened. Suppliers don’t make the same money they did 10 years ago. So the question becomes, if we’ve already squeezed suppliers as much as we can, where is the next generation of value going to come from?”
There are more than 100 VMS vendors globally, with the two largest incumbents controlling about a third of the market. VNDLY differentiates itself in two primary ways. First, it offers tools and services to suppliers to help them run their business more efficiently, with the thought being that when a sub-vendor is successful, the programs they support will be successful. Examples include a Talent Data Exchange-like dashboard where suppliers can see their performance versus that of their peers, providing process transparency through the application lifecycle, and a one-click candidate application.
The second differentiator is that the firm is not trying to “build a better mousetrap,” but is instead looking to facilitate a paradigm shift in CW management toward outcome-based work.
“Most VMSes today are focused on process, things like timekeeping, billing, payments, invoicing, all of that, and these days maybe putting a slightly better UI on those processes,” says Saxena. “Obviously you need those things, and rightsizing and cost savings are important, but you are not going to transform your business by focusing on $3 to $5 an hour; you need high-quality talent and a way to get them in the organization quickly. Our goal is to help clients move towards SLA-based management, dashboard-based management. Focus on the outcome, not the process.”
To support this paradigm shift, the company is moving from traditional percent-of-spend-based pricing towards SaaS-based pricing. “Today, VMS companies are managing about $150 billion in mostly staff augmentation,” Saxena says. “But there’s $3 trillion plus in contingent work, and nobody is tapping into that. We think you need a different model to get that spend, and that’s what we’re betting on.”
The recipe seems to be hitting the spot. Founded in 2017, the firm recently raised $11 million in a series A funding round from Battery Ventures, backers of procurement software Coupa.
The Buzz
Supplier management has historically been about managing margins. VNDLY thinks it can redefine the industry by facilitating a paradigm shift in program management. Time will tell if they are right.
