Why Automation is the Secret Ingredient for your Field Service Workforce
An Industry Perspective Report brought to you by
Field Service and WorkMarket, an ADP Company
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Table of Contents
- - Challenge Analysis
- - Illuminating the current state of the market
- - What are the major “Pain Points” in contingent labor adoption?
- - Understanding the role of a Freelance Management System (FMS)
- - Quantifying the impact of a fully-optimized contingent labor program
- - Key Recommendations
- - About the Authors
Challenge Analysis
The service industry is undergoing changes stemming from an aging pool of technicians, an increasing prevalence of connected, and thus more complex products in the field, and the growing demand for a high-standard of service that emphasizes predictive strategies and enhanced uptime. This translates to an environment where sourcing for talent is becoming more challenging, yet the need for responsive service is growing.
In these market conditions, the value of utilizing contingent labor increases. A contingent worker network that includes reliable talent addresses the need for a responsive and widely distributed workforce while helping to mitigate associated costs. When combined with mobile solutions that can connect contingent technicians with a core staff of seasoned and highly-trained
employees, the result can be flexible, yet efficient coverage across the regions within your service base.
With these ideal conditions in mind, it still deserves to be stated that a poorly managed contingent labor program has the potential to create more issues that it solves, reducing the total competencies and reliability of your technician pool. To explore the benefits and challenges related to developing a successful freelance management strategy, WBR Insights interviewed Scott Lancet, Senior Director of Enterprise Accounts at WorkMarket, an ADP Company. This report focuses on the insights, use cases, and major pitfalls to avoid when optimizing your freelance management strategies gathered during our interview.
Illuminating the current state of the market
“A Freelance Management System, or FMS, is a cloud-based workforce solution that combines powerful analytics with efficient, self contained management of individual contractor relationships across the on-demand workforce. Users are able to organize and segment their workforce, engage in real-time, and effectively pay them using a single billing tool.”
Scott Lancet
Senior Director of Enterprise Accounts
WorkMarket, an ADP Company
As service strategies are shaped by the growing importance of service as a source of revenue within many business models, organizations are under growing pressure to outcompete and progress with the integration of next generation technologies. Within an environment characterized by growing technical complexity, it may not follow in a linear manner that increased use of freelancers is a wise strategic decision. Yet, this is what many service organizations are doing. In this report, we will explore why that is the case.
The behavior of any organization is dictated by how they can best deliver high-quality outcomes in the fastest amount of time, and for the least amount of investment. These three elements are the keys to understanding what pushes so many service organizations in the direction of the on-demand workforce. Today, a traditional methodology of hiring
W-2 workers and using vendors for contract labor can no longer be relied on to deliver cost and time-efficient outcomes, regardless of quality. Within an older workforce model where companies hire W2 resources on a seasonal basis, organizations commit to a significant amount of overhead by default.
One of our large clients had 400 W2 field technicians, prior to using WorkMarket. While these technicians were strategically located throughout the United States, they still needed to cover 8,200 retail locations. The problem our client faced was around utilization of these resources.
"For example, a high level technician with 20 years of experience doing a server project for a week in Columbus, Ohio, would then have to drive three hours to Cleveland to fix a printer for another call. They weren’t able to scale the work, and in the end, it wasn’t logical to manage that way.
What many companies in this situation have done is to leverage solutions to build and manage
an on-demand workforce of technicians. They can go directly to this resource and reduce travel time by sourcing contractors that are already much closer to their target location.”
–Scott Lancet, Senior Director of Enterprise Accounts, WorkMarket, an ADP Company
Within a typical organization that is leveraging contractors today, it is common to rely on third party companies to meet talent needs. An example might be a national retailer using a number of regional vendors — those vendors are acting as project managers and middle men, owning an outcome that the organization could actually own themselves if they had direct access to the talent required.
By contrast, using an on-demand workforce model allows companies to go directly to those freelancers and avoid margin stacking through third-parties. Removing the intermediary elements in talent sourcing allows companies to eliminate a significant amount of overhead when they adopt an FMS.
The ability to streamline communication with freelancers through a centralized solution enables companies to take a job from assignment to resolution faster. This is especially true in the case of break-fix site work, where a rapid response is critical to restore device uptime. When mobile technology is incorporated within an FMS, it becomes possible to see workers responding to job requests and receive updates on their status in real-time.
Ensuring the delivery of better outcomes is the final piece of the puzzle. Many companies understand the speed and the economic benefits of using on-demand labor, but have concerns around protecting their brand and gaining assurance that non W2 resources are doing a high-quality job.
Integrating an FMS can answer questions of quality assurance by allowing end-users to build a custom marketplace for labor using their own criteria and vetting standards. These criteria can include elements such as background-checks, drug tests, and certifications. Many companies are using skills tests, interviews, and historical data such as customer ratings and on-time percentages to develop a curated network of on-demand talent resources that will drive predictably high-quality outcomes.
“Let’s revisit my past example of one of our large clients. Their organization went a few steps further than many others while building their on-demand network of labor clouds. When deploying new contractors on their first several jobs, they will be accompanied on site by a W2 technician. The W2 technician will demonstrate how the organization expects work to be done, and will provide guidance and added oversight. They will then rate the prospective technician and provide feedback. While most technicians pass this round, some will be removed from the labor cloud because the W2 technician that they were on site with does not feel that they met the standards of the organization.
A pleasant surprise for our clients is that many of the workers in the marketplace have a strong repertoire of IT service skills. Because they’re working with a diverse set of clients and technologies, they are typically skilled in many different types of work. There’s a lot of diversity from a skill perspective within the contingent labor market.”
- Scott Lancet Senior Director of Enterprise Accounts
WorkMarket, an ADP Company
What are the major “Pain Points” in contingent labor adoption?
Many companies realize that they can gain strategic advantages from contingent workers. Without instituting the right technologies they experience the following pain points:
It is common to encounter a lack of transparency around the work that’s being done and the resources that are representing the company in the field.
A lack of data collection leads to difficulty in managing the on-demand workforce based on outcomes. Without being able to measure performance and retain historical data, future decision making will be adversely affected.
When long periods of inactivity separate a company’s engagement with a technician, this can lead to a lack of transparency into whether or not they are currently active inside of their labor cloud. This leads to problems with talent retention, as it can become unclear how many resources are available at a given time.
Capturing rogue spend becomes more difficult without a formal system in place. Across different lines of business within a big organization, many people will be engaging with and using contractors. Without having technology in place properly tracking that activity, HR departments and nance departments may not know where those financial resources are being allocated, and billing activity becomes decentralized and inefficient.
Understanding the role of a Freelance Management System (FMS)
Given the development of service strategies that rely on managing a network of freelancers, it makes sense that more organizations would begin to seek out dedicated Freelance Management Systems to help to optimize their use of on-demand talent. Apart from addressing common pain points associated with a disorganized
approach to freelance management, it’s important to understand where an FMS drives utility for the organization beyond addressing common challenges, which will vary depending on the current state of the organization and its current use of on- demand talent.
"The way that an FMS will impact an environment upon integration will depend on the organization.
At WorkMarket, we will typically assist two types of company.
There are those that have already been using freelancers or contractors as a core part of their business, but don’t have an efficient tool to manage them.
The other type of company we encounter may already use freelancers to a degree, but the program is not a part of their core business model. They’re looking to add a layer of flexibility into their business, and they have to go through a transformation in order to do that.”
–Scott Lancet, Senior Director of Enterprise Accounts, WorkMarket, an ADP Company
An effective FMS implementation starts by identifying where the organization has been sourcing contingent resources in the past. Many companies will have existing relationships with contractors that they’ve worked with before and would like their FMS to tap into a marketplace that they have already been using to source freelancers. This can be especially true in the case of IT field services.
By tying the dynamic of a marketplace to labor clouds and building a custom on- demand marketplace for talent, end-users will see significant benefits. Companies are able to integrate an FMS into a variety of different solutions including CRMs, ERP systems, eld service software and others, which allows them to derive much richer information and maintain a centralized strategy. For these reasons it is fair to state that the ultimate role of an FMS will depend on how an organization is deploying their eld services and what systems they’re using today to manage their operations.
Quantifying the impact
of a fully-optimized contingent
labor program
Creating buy in for an FMS integration is made much easier by pointing to the positive impact that it can have on key metrics. Given that a developed freelance management strategy is vital to many organizations as
their reliance on contractors grows, how can you quantify the bene ts of an on-demand workforce managed through an FMS in comparison to a more ad-hoc approach?
“When quantifying ROI, it’s helpful to think of both “hard cost” and “soft cost”. Hard cost is focused on either paying more or paying less relative to obtaining the same result in dollars. As it pertains to IT field services, when hard cost dollars are going directly to freelancers without a middle man, that leads to between a 25% and 35% percent cost savings for our clients on average. That’s a compelling point in the favor of FMS integration. Those savings are coupled with reduced travel costs for workers and an increased organizational footprint which allows organizations to service more clients and expand their geographic reach.
It’s equally important to consider the time it takes to manage a job, and where automation can win time back for the organization from a soft cost perspective. Companies differ in how effectively they manage their internal processes, and it’s not uncommon to encounter disjointed processes in areas without a centrally managed strategy in place.”
- Scott Lancet Senior Director of Enterprise Accounts
WorkMarket, an ADP Company
Companies that do very industry specific work such as higher level engineering often believe that the complexity of their missions makes all of their work too high-level to outsource. However, even in a highly technical environment it is usually possible to segment out less technical work within the context of a larger job. For example, within the scope of work of a highly skilled oil rig job, there is often still a need to run cable, install a router, or perform other, relatively lower-skilled jobs. High-level W2 employees should not be sent to work on these tasks when they can be better utilized by exclusively focusing on highly skilled jobs. Having W2 employees focused on higher-level tasks not only elevates the skill-set of a team, but also creates another opportunity for savings. Even if it make sense to use independent contractors for just 10% of total work, in a situation where 40% savings can be created on 10% of work, that leads to a 4% increase in margin year-over-year.
Time savings are another important metric for quantifying the impact of an FMS. Within a typical service environment, its common for individuals to rely on spreadsheets and emails to keep track of their freelancer relationships.
Because each freelancer invoices differently, organizations can struggle to keep up with volume. When there is no standard process in place across all contractor relationships, just to dispatch a job can take up to 30 minutes of processing. After FMS integration, time to dispatch can be reduced from roughly 30 minutes to 2 minutes, on average. Time savings of that magnitude can add up signi cantly in terms of real dollars when scaled across the on-demand workforce.
Once integrated, an FMS will simplify the management of the accounting involved with using contractors on the back-end as well. In a scenario where an organization is managing as few as 100 contractors per month, the multiple documents and processes related to billing create an exponential workload. That activity is greatly streamlined by the FMS; it’s common for companies to send one or two payments a month to ful ll their billing obligations. The FMS then distributes the payment to the individual resources on an automated basis. With the accounting work done, the organization gains back time to focus on more important and less mundane work while removing human error.
Key Recommendations
Integrating the flexibility that contract workers can bring to an organization can come at the risk of increased complexity for back-end operations. For some organizations, the complexity of their operations makes them
reticent to consider the use of contractors, as they have questions about their ability to provide oversight to them and monitor their quality as representatives of their brand.
Many companies realize that they can gain strategic advantages from contingent workers. Without instituting the right technologies they experience the following pain points:
Identify what portion of work can feasibly be managed by freelancers.
It’s common for service organizations to have a core group of highly experienced and skilled technicians that handle their most complicated jobs. That stated, outside of this core of highly skilled work there is sure to be some work that is low- skill or routine enough to the point that it could be outsourced if need be. Understanding what portion of work is core, and what portion can be treated as an area to win back savings is key to the development of an efficient contingent labor program.
Seek a solution that allows transparency and efficiency when sourcing for contingent talent, so that organizational standards can be upheld.
Aside from skill requirements serving as a reason for organizations to shy away from the use of contractors, another challenge is gaining the confidence that the contractors out representing your brand are performing up to your standards. By developing a cultivated talent pool, as well as providing stringent criteria for onboarding, FMS solutions can provide assurances that the contractors in your database are performing up to your standards.
Facilitate a move towards leaner inventory management.
Data provides the means for working on the amount of reserve inventory needed to satisfy emergency requirements. Traditionally, excess inventory has been the safeguard against unpredictable demands. The companies that are best able to move towards a leaner approach will be able to reduce a major source of overhead cost.
About the Authors
WorkMarket, an ADP company, is an enterprise software platform used by companies to efficiently and compliantly organize, manage and pay their freelancers. Our Freelance Management System (FMS) is used and trusted by some of the biggest companies on the planet. To learn more, visit www.workmarket.com
We are a team of writers, researchers, and marketers who are passionate about creating exceptional custom content. WBR Insights connects solution providers to their targeted communities through custom research reports, engaged webinars, and other marketing solutions. Learn more at www.digital.wbresearch.com