MSP vs VMS: Which is the Best Choice?

Discover the key differences between Managed Service Providers (MSPs) and Vendor Management Systems (VMS) to make an informed decision for your business.

In today's complex business landscape, managers have no choice but to rely on specialized services to streamline operations and optimize their workforce efficiencies. Without the support of these specialized services, managers are forced to meticulously oversee every aspect of the work process, often leading to a significant drain on their time and diverting their focus from critical objectives.

Managers must leverage specialized services to navigate this complex landscape effectively. Relying on external expertise has become a necessity rather than a luxury as companies strive to maintain a competitive edge and drive sustainable growth. Not only do these resources save managers critical time, but they also reduce the possibility of manual error that often results from overworked managers. 

Managed Service Providers (MSP) and Vendor Management Systems (VMS) do just this!

Read more below to see how these two services can augment your management process today.

Understanding the Difference between MSPs and VMS

Managed Service Providers (MSPs) and Vendor Management Systems (VMS) are both integral parts of the modern business landscape, streamlining all aspects of the management process. However, the two serve different purposes. Understanding the difference between MSPs and VMS is crucial for making informed decisions about managing your business operations. The first step in understanding which service is best for you is to distinguish their differences. 

Managed Service Providers (MSPs): MSPs are third-party companies that provide comprehensive services to businesses by taking over the entire staffing process. This includes managing aspects such as recruiting, on-boarding, training, and managing the performance of all staff. These services offer direct human support and work closely with the client company to understand its unique needs and provide tailored solutions in the management process.

Vendor Management System (VMS): A VMS is a highly efficient automated software platform that helps businesses manage their vendors and contingent workforce. It excels in streamlining the procurement and management of temporary or contract staff from various vendors while also focusing on tracking performance metrics, facilitating contract management, and handling invoicing processing. 

Where the two strategies differ significantly is that an MSP is comprised of employees who work together to manage a client's processes, whereas a VMS is a computerized platform that manages all aspects of the management process completely automated. However, an MSP relies heavily on computerized software to enhance its analytics and reporting metrics capabilities. A VMS uses human knowledge to augment the system consistently and provide additional ongoing support to clients when needed. Understanding these differences is not just important, it's empowering for determining which solution best meets your business needs.

The Benefits of MSPs

The next step in deciding which service is best for you is understanding each service's benefits to your company. Partnering with an MSP offers numerous benefits for businesses. Some of the key advantages include:

Access to a team of skilled professionals: MSPs have a dedicated team of experts specializing in various staffing and management domains. This ensures that businesses have access to a wide range of technical expertise without the need for in-house hiring and training. These experts bring years of experience into your industry, ensuring that your company consistently follows best practices and is on the road to success.

Proactive support and maintenance: MSPs provide proactive monitoring and maintenance services, ensuring the seamless operation of critical technology systems. By leveraging advanced monitoring tools and techniques, MSPs can detect and resolve potential issues before they escalate into significant disruptions, thus minimizing downtime and maintaining business continuity.

Enhanced cybersecurity and compliance management: MSPs implement robust security measures to protect businesses from cyber threats. They continuously monitor networks, implement security patches, and provide data backup and recovery solutions to safeguard critical business information. Additionally, an MSP team plays a crucial role in ensuring your company remains compliant with local labor laws and provides all contingent staff have the necessary qualifications for your company. 

Scalability and flexibility: MSPs offer scalable solutions, allowing businesses to easily adjust their contingent workforce as changes in supply and demand arise. Whether adding or removing staff from your company, updating analytics capabilities or software, or expanding to new locations, MSPs can provide the necessary support to grow with your company.

An MSP may be attractive for a company looking to partner directly with human knowledge through consistent collaboration and discussions. Companies may rely more on the human workforce's skills and trust that a team of skilled professionals can help them succeed. Importantly, MSPs continue to use technological software to enhance their capabilities further, ensuring that partnering with an MSP will give you the best of both worlds.

The Benefits of VMS

Implementing a VMS can provide several advantages for your business. Here are some key benefits to consider:

Streamlined vendor management: VMS automates and centralizes the entire vendor management process, eliminating manual tasks and reducing administrative burden. It provides a single platform for vendor on-boarding, contract management, performance tracking, and payment processing, ultimately enhancing a company's efficiency. 

Improved vendor performance: VMS enables businesses to track and measure vendor performance based on predefined metrics. This data-driven approach helps identify top-performing vendors, drive accountability, compare vendor performance and optimize vendor relationships. Companies are then able to make data-driven decisions based on these reliable metrics. 

Cost savings and compliance: By implementing VMS, businesses can gain better visibility into vendor spend and contingent workforce pay, negotiate favourable contracts, and eliminate rogue spending. VMS also ensures compliance with legal and regulatory requirements, reducing the risk of penalties and legal issues, which saves costs by minimizing penalties and additional legal fees. 

Enhanced efficiency and productivity: VMS automates manual processes, reduces paperwork, and streamlines workflows. Reducing manual processes saves managers critical time and time on human errors that hinder workplace efficiencies. This results in improved efficiency, faster turnaround times, and increased productivity for internal and vendor teams.

A VMS can be advantageous for businesses seeking to maintain oversight of their management processes while benefiting from advanced features that offer improved visibility and performance metrics that may not have been accessible otherwise. This software empowers managers to have substantial input into the system and retain control over the management process. Therefore companies that do not want to rely directly on a human team should consider a VMS strategy. 

Which is the Best Choice?

Ultimately, there is no correct answer regarding selecting the specialized service for your management process. Each company will require and prefer different strategies, and the most important thing you can do is weigh your options and do thorough research. Consider the factors above and do additional research to ensure you make an informed decision. Companies can often benefit from a combined strategy of utilizing an MSP and a VMS. 

Chose a VMS if you seek to:

• Automate and standardize workflows related to requisition, on-boarding, timesheet management, and invoicing.
• Streamline the procurement and management of contingent labor, focusing on strengthening vendor relationships.
• Remain compliant with contingent workforce features, including tracking certifications, background checks, and regulatory compliance.
• Enhance visibility.
• Find an existing system that seamlessly integrates with your existing HR, payroll, and financial systems.
• Optimize costs.