Key insights from Allegis Global Solutions and Apex Systems on the evolving relationship between MSP and supplier.
Allegis Global Solutions (AGS) President Steve Schumacher and Apex Systems Alliance Program Director Greg Toloczko recently discussed the Managed Service Provider (MSP) and supplier relationship amid market uncertainty. Apex was named a top supplier to AGS earlier this year. Toloczko’s perspective on the staffing landscape paired with Schumacher’s viewpoint on MSP evolution resulted in some key considerations for professional services organizations.
Customer Demand Shifts Focus to Services-Based Solutions
At the core of the current MSP landscape lies the fundamental premise that customers are consistently asking for more value, relying on MSPs to help them build a future roadmap that takes their current business to a next-generation program. Most customers analyze and develop roadmaps annually while monitoring and adjusting their vision for the next three to five years. Customers are seeking providers to be consultative on anything from demand planning, risk mitigation, technology assessment and more extending far beyond managing staff augmentation.
Ongoing economic uncertainty, accompanied by shrinking budgets and hiring reductions, underscores the shift toward consultative services and more collaboration between the MSP and suppliers. Trending topics of conversation include digital transformation efforts through technology and automation, statement of work (SOW)/services procurement, and building out actionable DEI initiatives. All of these are areas where the MSP can provide valuable insight.
Managed Services and Evolving Technology
A major opportunity across both AGS and Apex’s customer base is centered around growth in the SOW/services procurement space. For the MSP and providers alike, SOW has been the largest amount of spend uncaptured in programs and continues to show tremendous growth. Suppliers who are investing in this trend will be better equipped to support both their MSP and customers’ evolving needs.
Emerging technology enhancements like direct sourcing tools and AI automation are also continuously disrupting the industry. Both providers and suppliers must be prepared to adapt and incorporate these advancements into their existing business models. Although these tools are likely to create new efficiencies, Schumacher and Toloczko agree that the core service model around contingent workforce management will not be entirely revolutionized by any one technology. Harnessing the power of emerging tools like AI, direct sourcing platforms, recruiting tools, and VMS technology, and identifying their roles within the business will be key for the future of both MSPs and suppliers.
Customers are seeking providers to be consultative on anything from demand planning, risk mitigation, technology assessment and more.
Like the Vendor Management System’s (VMS) evolution to more of an extended workforce system, Schumacher and Toloczko believe the MSP will evolve to provide more robust solution offerings in the coming years. The MSP model will continue to center around managing the workforce, while successful models will incorporate analytics, data/BI, and a consulting perspective into their guidance that will emphasize outcomes for the entire ecosystem. The leading MSPs have already begun the shift to offering services that enable technology.
As the instability in the market plays out, inconsistencies with MSPs are becoming more apparent. On one side of the spectrum, companies are continuing to operate traditionally with strict vendor neutrality, markup structures, and no supplier partnership strategy. The other side is moving away from the vendor neutrality model, pushing fair market rates through consistent market analysis, and engaging more with their suppliers to offer joint solutions to their customers.
The future success of professional services organizations depends on the MSP moving away from process management and more towards collaboration to provide more value to customers. Enabling open, insight-driven collaboration between suppliers, customers, and the MSP, will be a significant factor in differentiating organizations in the industry. To achieve this, the MSP must continue its expansion and investment into solution capabilities, leveraging the supplier community to help achieve desired outcomes, and harnessing technology to create new efficiencies.