Will 2017 be the year when digital-platform-intermediated work is ushered into the enterprise by procurement? That is the question.
I Remember When…
It has been nearly five years since I began my labor of love, i.e., research and analysis of technology-based platforms that intermediate work. These digital platforms allow business users to work with and utilize specific talent (freelancers, consultants, etc.) or purchase and consume services (e.g., project or ongoing services such as software localization, execution of a marketing campaign) of a platform-based or more traditional service provider.
Up to this time, these platforms (of which there are now hundreds worldwide) have been off the radar of procurement practitioners, considered novelties or, at the most, piloted. In the meantime, increasing numbers of internal business users have been accessing these platforms without procurement visibility and control, which, at an early adoption stage, may be a good or bad thing, depending upon how you think about it (see “ When Rogue Spend is Good: The Case for Online Services Platforms”).
Over the past few years, starting with what was initially called FMS (see “Freelancer Management Systems: The Origin and Destiny of a Species”), some new platform players (e.g., Catalant, Contently, Work Market, Upwork, Lystable) and some established workforce/services supply chain players (e.g., Beeline, DCR Workforce, MBO Partners, Randstad Sourceright) have been developing and/or positioning platforms and integrations that attempt to enable platform-intermediated work and services at an enterprise level. Some of these platforms have been tightly linked to the platform provider’s own platform-based workers or services. Some have been made to function purely as enterprise platforms that allow a business to organize and manage its independent workforce from many sources. But this is a topic unto itself — so for now, let’s just say it has been a notable trend.
Do I Have a Crystal Ball?
The answer is emphatically NO!
But clearly there has been movement, primarily on the supply side, and I think there’s no doubt that digital platform intermediation for work and services will eventually become a mainstream sourcing mechanism in the enterprise. Business users want it, and the economic and performance characteristics of such a sourcing channel seem very positive. Certainly, there are more than a few bugs to be worked out; however, at some point, it’s going to happen. But how and in what form is uncertain.
Here are a few long-range scenarios that I’ve thought about.
One or more new or established supply-side players will succeed in developing the enterprise platform solution that “works” – i.e., functions very effectively as a digital bridge between internal business users and external supply of work and services (individual workers, external platform-based populations of workers and sources of services). There are a number of different kinds of players that are attempting to achieve this position, including pure-play platforms (like Work Market and Lystable), VMS providers (like Beeline(/IQN), Fieldglass and DCR Workforce) and independent workforce engagement firms (like MBO Partners). At this point, it is still early days for these players, but they are actively pursuing their goal.
New platform players that aggregate their own workers on or provide managed services through their own platforms will continue and expand their “infiltration” into the enterprise. These players engage demand at the functional/departmental level of the organization (e.g. marketing, IT, post-sale support, finance) with category-specific offerings (e.g., creative services, software development, technical field services, business consultants, freelancers that work online). Indeed, there is nothing like immediately solving a business user’s problem, and that is what these platforms do. I don’t want to name names, but currently there are a pretty good number of platform players that seem to be getting traction in this manner within enterprises.
This scenario is that Scenarios 1 and 2 eventually converge, with three potential sub-scenarios:
- One or more new or established pure-play enterprise players’ solutions will succeed in becoming the enterprise hub and integrating the various platforms that have gained traction and acceptance in functional areas.
- One or more of those function/category-specific platform players that aggregate their own workers on or provide managed services through their own platforms will expand horizontally across the organization and produce a dominant enterprise hub solution (note: most of the platforms in Scenario 1 above started as marketplace/aggregation platforms).
- There will likely be a window of opportunity for a new player, with new technology and an innovative enterprise hub architecture, to come on the scene, disrupting the efforts of players in Scenarios 1 and 2 above.
Given all of the above, it should be understandable why any crystal ball will be fogged with uncertainty.
What Do I Expect in 2017?
I don’t expect that 2017 will be a massive breakthrough year. For the most part, the developments and trends that we have seen taking shape in 2016 will continue, and maybe accelerate or attract greater interest by procurement practitioners. There may be smaller breakthroughs for specific providers/solutions (e.g., more and deeper pilots of solutions or starts of real programs for enterprise adoption at some number of businesses). However, a breakthrough that opens the floodgates across a large number of enterprises seems unlikely to me in 2017.
Why? First, the necessary infrastructures will still be a work in progress. Second, organizations have a tendency towards inertia and only gradually absorb new ideas and models (if they are viable) to a tipping point (if there is one). And third, senior management is still wrapping its mind around the significance of contingent workforce, let alone the rise of independent workforce and platform models.
Beyond 2017 (2018, 2019, 2020), I believe there will finally be some full-scale breakthrough, resulting in mainstreaming of digital platform-based work and services across many large organizations. Think of 2017 as crossing a chasm of sorts.
Advice for Procurement Practitioners
Start, accelerate, expand your analysis and understanding of what is happening and be open to launching real-world pilots. Reach out to internal business users that are already down the road in order to educate yourself, not to meddle. Those who do all of this, will be up the learning curve and positioned to move forward in subsequent years and not fall behind competitors.
Advice for Solution Providers
Keep doing what you are doing, but realize that course corrections may lie ahead. You are in uncharted territory. You and your peers or competitors are all either striving to be a breakthrough player or carve out a niche in the emerging digital ecosystem. Keep one principle in mind: satisfying demand for critical resources/services is more powerful than a technology solution alone that does not immediately bring the resources or services to satisfy demand.
So there you have it. Make your New Year’s resolutions, and see you on the other side in 2017.