The Prophet‘s 2024 Procurement Prediction Number 9

SaaS Management Solutions Start to Eat Services Procurement Tech A+

More specifically “vendor management systems” (VMS) that are all about the billable hour.

As The Prophet asks, what happens when that billable hour becomes an SOW (either to skirt worker classification requirements or because it really is a complex SOW) especially when consultants, managed services or outsourcing providers need to blend and leverage AI, tech, data and other capabilities to deliver an outcome? You get joint SaaS/[IT] Category (management) solutions that become the new new norm of solutions for taking on certain business functions. And they won’t look anything like today’s VMS or SOW solutions, and will, as The Prophet notes, likely be new generation of todays SaaS/IT Category solutions which will either blend in more services or merge with / be acquired by new-age MSPs that build the offering around the new tech, and not the old tech.

But what will these solutions look like? Good question (that The Prophet did not answer).

More importantly, as The Prophet notes, this convergence will raise a ton of questions.

  • What metrics do you use to set up ideal outcomes in a blended services/tech/AI/data world?
  • “What” is negotiated (hint: it’s as far from the billable hour or a weekly “team” rate as can be)?
  • How do you capture and validate demand?
  • How do you reduce contract risk (including indemnifying (or not) for IP considerations, given recent AI lawsuits)?
  • How do you benchmark (drumroll please) an outcome?
  • What happens when an outcome becomes continuous, a metered service (like telecom) so to speak?

These answers may or may not dictate what the blended deliverable looks like, as the developments are just as, or more likely, to be developed taking into account whatever regulations currently exist or get introduced around the services, data, technology, and/or AI utilized. Plus, the smaller players will likely try to build off of whatever is getting traction from the big players but in a more innovative, effective, and cost effective fashion. (Remember, the big players like to charge you way more than a service can be profitably delivered for. Case in point: spend analysis. Large engagements, which usually start with a massive data cleansing effort, require a lot of analysis and reports, and modern solutions, will usually get quotes starting in the 7 figure ranges when there are a number of mid-sized, niche, consultancies, that can usually do the same work, faster and better, for 250K or less. [Remember, analytics is one of the the doctor‘s area of expertise, he knows the vast majority of vendors, and talks with the best regularly. Solutions 10X better than anything a Billion Dollar Suite or ERP will throw your way cost 1/10 of what they did a decade ago — but we’ll save this rant for another day.] The point is, they’ll let the big players create a market around a new offering, and then swoop in with a better, more cost effective, alternative.

the doctor has to admit this is one area where the answer has not yet revealed itself, one of the few areas where he’s not sure what the first solutions will look like (beyond a blend of current SaaS tools pre-integrated with third-party data feeds, semi-dedicated personnel performing regular tasks, account managers monitoring progress, and consultants doing quarterly checkups and advisory), and how long it will be before new workforce regulations get passed that change how such services can be offered (or how workers must be paid).

It will be an area to watch, and the doctor bets that Andrew Karpie will be watching it closely, so be sure to read anything he writes about it. It will be the first shakeup the VMS industry has had in decades.