VMS and ERP System Integration

®

The Importance of Strong
Integration between VMS and
ERP Systems for Human
Capital Management

Co-Authored by ProcureStaff Technologies
and Crescendo Consulting Solutions

Copyright © 2010 ProcureStaff Technologies. All Rights Reserved.
Copyright © 2010 Crescendo Consulting Solutions LLC. All Rights Reserved.
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All services procurement Vendor Management System
(VMS) suppliers promise smooth and comprehensive
integration with prospective clients’ Enterprise Resource
Planning (ERP) platforms. Yet too often, an organization
implements a VMS solution only to discover significant
shortcomings in the integration, yielding exposure to risks
in such areas as regulatory compliance, cost avoidance,
governance and overall program performance.

While all mainstream VMS solutions job descriptions, locations, cost
can legitimately claim some measure centers/GL codes, etc., users
of integration capacity, organizations gain a more streamlined human
come to the purchasing process capital management approach.
lacking a clear understanding of 2. Compliance: Entering
what integration means for their information, especially
particular ERP platform and its corrections, in one system with
unique configuration. This paper automated data flow vs. entering
will look beyond the generalizations into multiple systems ensures
typically discussed during the VMS data integrity and consistency.
selection process to illustrate the This creates a tighter, more
detailed integration considerations compliant environment.
organizations must entertain 3. Ease of use/Increase in user
when soliciting information from adoption rates: Having a
prospective VMS providers. We single user friendly interface
will identify the most important or dashboard that addresses
considerations regarding integration all aspects of the process for
followed by a practical example acquiring and managing human
of one very risky, avoidable and capital encourages compliance
commonly occurring gap in the with the procurement program.
traditional integration process. The greater the program
adoption rate, the greater the
Benefits of Integration savings.
4. Cost savings: More spend run
These are the minimum benefits
through one centralized tool
an organization should realize from
creates greater visibility into
successful integration:
all spend, and enables better
1. Efficiency: By limiting
business decisions.
redundancy of information entry
such as timecard information,

Copyright © 2010 Crescendo Consulting Solutions LLC. All Rights Reserved. Page 1
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Minimum Touch Points for have a report-to hierarchy. This
Successful Integration is often derived from the same
set of user data. Integrating both
Custom integration between systems systems ensures only one entry
should span the following areas: point so, as data relationships
1. On-boarding & Off-boarding: With change, they change in both
appropriate integration, the VMS systems.
should connect with systems 5. Accounting Codes & Customer
that initiate and/or extinguish Specified Fields (CSFs): As
security clearance and badge accounting codes are created
access, track certifications, and changed, the information
initiate equipment distribution should be fully integrated to
and collection, and immediately eliminate mistakes and keep
disable access to computer and spend records across divisions
security systems from terminated accurate. CSFs are most
contractors. Additionally, the commonly used for any field
best VMS tools integrate with upon which billing, timecards,
multiple (disparate) security and or reporting can be distributed.
notification systems without Accounting Codes typically flow
manual intervention. from either an AP system or from
2. Users: User information should a project tracking system as
flow from HR & ERP systems project codes.
eliminating inconsistencies and 6. Purchase Order (PO) number
manual entry. assignments and approvals: A
3. Locations: Work locations should punch out to the ERP can assign,
flow from system to system route, and approve POs, making
keeping information current and it easier for hiring managers to
nomenclature consistent. assign PO numbers and maintain
4. Approval Workflow (Groups): consistency between systems.
Typically HR or Procurement 7. Timekeeping: Eliminating
systems in most organizations double manual entry will

Various Client
ERP Systems VMS

Order
Users Process
Client
PO Request
Procurement
Purchase PO System
Locations Order
Processing On/Off
Client HR
Boarding System

Approval Timekeeping Project
Workflows & Service
Timecards Tracking/
Entry Process Timecards
Timekeeping
Reporting

Accounting Invoicing Invoice
Client AP
Codes Process Remittance System

Figure A
© ProcureStaff Technologies
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create efficiencies and ensure security practices are addressed
corrections are made throughout up front
all systems. 6. Strict adherence to existing
8. Invoicing: Integrating systems process steps to avoid disrupting
will ensure invoices are correct status quo, even when an
and allow for automated multi- existing process may not be
system corrections improving optimal
compliance. 7. Rigid integration requirements
on the part of VMS provider
Figure A illustrates the typical which require a “one size fits all”
touchpoints for a well integrated approach to data integration
solution.
Responsibility for Integration
What Makes Integration
Challenging? Things to look Who is responsible for shepherding
out for. the integration process? VMS
and ERP systems were created
Integrations between existing ERP separately to handle disparate but
systems and a VMS are challenging interdependent functions: VMS for
for several reasons: services procurement and ERP for
1. Multiple existing ERPs in a client overall supply chain management.
organization across business These two types of applications are
units and/or countries (or most productive when tightly joined.
multiple/different instances of the Yet, the individual applications
same ERP) were not designed to do so. In
2. Existing fields in the ERP that do some instances, the ERP provider
not exist in the VMS require data has a services procurement
mapping enabling successful module that limits their interest in
process flow accommodating VMS platforms.
3. Multiple punch out points needed However, these modules often have
to successfully accomplish limited functionality to address the
PO assignment, routing, and complexities of contingent labor
approval in the ERP need to be spend management. For this
effectively administered through reason, many ERP manufacturers
the VMS are not interested in changing
4. Updates/Upgrades to the ERP their established models to
may nullify the integration points accommodate integration with newer
with the VMS (i.e., if new fields VMS technology. It falls to the
are created, if new approval categorically smaller VMS providers
routings require new punch outs, to accommodate integration of their
etc.) and/or impact deployment systems and data with legacy ERP
schedules due to system “quiet systems. Not all VMS providers
periods” invest the same level of time, effort,
5. Lack of allocated resources (e.g., or expertise to help their clients
technical and lead resources with the integration process. Client
representing ERP, IT, Finance, organizations need to understand
HR, and Procurement) – it is vital all the key challenges posed by
that all systems and information integrating their new VMS with their
existing ERP.

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Crucial Steps for Working with relevant departments as a standard
Your Chosen VMS Provider to procedure within their broader
Ensure Effective Integrations integration methodology. The VMS
provider must demonstrate flexibility
Pre-Engagement – Due Diligence & in their architecture to integrate
Transparency and scale with the client’s legacy
platform.
Integration weaknesses between
VMS and ERP begins during the Transparency must exist in order
due diligence and selection process. to properly scope integration
Some VMS providers are quick to requirements. Sharing details of
say “we can integrate with all ERP client processes and systems with
platforms”. However, as with most a capable VMS partner will serve
organizations, the ERP is customized both parties well. Understandably,
to the client’s unique specifications. many organizations are reluctant to
Scoping the integration points, share extensive system architecture
tables, and fields is critical and one documentation due to intellectual
of the primary risk areas during property concerns. However, with
implementation. Providers claiming an NDA in effect, clients can greatly
to have this capability without benefit by sharing this information to
significant participation from the ensure the integration is as efficient
customer’s relevant functional as possible. Unfortunately, many
areas should be questioned about organizations have been negatively
their capability to accommodate impacted by a lack of detailed
integration tailored to the unique client systems’ documentation,
ERP instance. There is no “one size resulting in slower, less effective
fits all” integration methodology implementations leading to general
that applies to every customer. dissatisfaction with the solution.
Instead, organizations should
seek a provider that engages the

Program Governance
• Set program goals and operating
Executive Leadership / Sponsorship principles
• Set strategic direction: approve
assumptions and overall plan
Client Executives
• Review overall project status
VMS Partner Executives
Program Management Office • Resolve issues escalated by the
(PMO) PMO
• Approve investments
• Allocate resources as appropriate
Change Planning, Control &
Management Reporting

Collaborate with PMO to…
Execution & Business Units /
Facilitation & • Manage business unit work effort
Implementation Communication Functional Areas
• Develop implementation plans
• Review implementation risk and
develop mitigation plan
• Report status and escalate issues
HR Finance
• Define resource requirements
• Identify systems integration
requirements
Risk
Procurement Management • Execute the plan

Security IT

Legal AP / AR

© Crescendo Consulting Solutions
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Implementation a strong program management
utility to facilitate successful start-
Strong governance defines program up, current state assessment,
strategy, organizational relationships, future state planning, gap analysis,
escalation and decision making implementation planning and
processes, communications and execution. Working to achieve
change management, performance program success, program
measurement and management, and management experts coordinate
fosters innovation and value creation. execution across the supplier,
consultants, IT, Finance, HR,
It defines the appropriate leadership
Security, subject matter experts,
and stakeholders from the VMS
ERP systems staff and program
Partner and Client required to
sponsors. It is important to
effectively oversee the program. It
remember – implementing a new
ensures appropriate representation
system assumes users will change
and alignment of business objectives
their behavior. Communications
through leadership and escalation
and change management are critical
of critical issues for prompt
yet overlooked (or under executed)
resolution. More importantly, if
components of a successful
done well, program governance
implementation.
continuously monitors program
status and identifies opportunities for The best VMS companies
improvement. Strong governance provide integration specialists
also mandates scheduled data who understand that it is critical
quality audits and performance to arm the new customer with
assessments including data integrity a framework for understanding
between the VMS & ERP. which systems, touch points and
It is a leading practice to establish functionalities will be impacted

Program Management Responsibilities

Foundation Methodology

Change Management Planning, Control & Reporting

• Def ine the change • Establish operating principles / f ramework f or program including scope, goals,
management plan charter, roles, etc.
• Facilitate developing workstream project plans and suite of reporting
• Identif y and train change
• Identif y and monitor critical path milestones
agents
• Consolidate cross -f unctional risks / interdependencies, create a mitigation plan and
• Perf orm resistance analysis escalate where appropriate
and identif y risks / • Identif y business and systems integration requirements
opportunities • Surf ace program issues and coordinate resolution across f unctions / workstreams
• Monitor perf ormance metrics
• Employ best practice • Create program dashboard, executive summary and program reports
methods where appropriate

• Provide thought leadership
Facilitation and Communication
and recommendations f or
outsourced solutions where
appropriate • Provide advisory and f acilitation services to workstreams and business units as
directed by leadership
• Assist workstream leaders • Provide timely and consistent communication of project status, direction, deliverables,
with def ining new processes, process, and timelines
policies, etc • Prepare communications f or senior leadership as well as staf f

• Def ine methods f or
socializing f uture state value Execution and Implementation
proposition
• Complete current state assessment and f uture state planning
• Communicate challenges and • Allocate PMO resources to support workstreams as directed by leadership
successes • Monitor resource allocation and distribution
• Monitor workstream timing and completion of deliverables

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during the implementation process. environment. This is important to
Sharing this information upon capture existing requirements and
engagement prepares the new client also understand what process
for comprehensive current state and system modifications may be
assessment that will ensue. The needed to implement the vendor
Integration Specialist should possess management application while
deep subject matter expertise and capturing the highest possible levels
act as liaison between the customer, of efficiency. Once the customer
the Solutions Architect and Project has been sufficiently briefed and
Management Team. engaged in the preliminary process,
the implementation team should use
Integration Assessment a quality methodology (such as Lean
Six Sigma) to lead the client through
An appropriate Data Sufficiency
a thorough analysis of their current
Document provides the client
state process.
an overview of the key elements
examined in decision making with Collaboration between the supplier
regard to system functionality related and customer is essential when
to integrations. An inventory of identifying gaps between current and
common touch points, common future state. The future state should
source and destination systems, data be predicated on the customer’s
relationships and dependencies, overarching business objectives. A
and project timing considerations detailed review of the Integration
should be included in the Data Assessment phase of the program is
Sufficiency Plan. Depending on as follows (see graphic below):
size and scope of the engagement,
it is recommended clients spend
a minimum of 2 – 4 weeks with
their chosen VMS provider
documenting their current state

Integration Assessment Roadmap

Initiate
Program Determine
Current State
Processes
Create Future State
Blueprint
• Articulate goals, scope,
process, and resources Identify Gaps &
• Create the project plan
Solutions Develop
• Collect and review Workflow Integration Plan &
current documentation, • Identify critical Initiate Build
process flow maps and touchpoints, workflow • Initiate small group
anticipated IT platform planning sessions to
• Map current state create the future state
• Identify and describe in- • Complete time & task • Identify integration
scope functions and analysis • Determine baseline data gaps (current v. future
and reporting state) • Create integration
systems • Review other areas that
requirements plan component of
support in-scope • Define build /
• Assess current reporting/ larger program plan
functions • Agree on performance customization
data collection capability
• Detail business targets for transition requirements • Initiate builds /
• Assess legal, risk and requirements (e.g., period and future state customizations (VMS,
compliance • Agree with supplier on
services, reports, etc.) ERP, client IT)
requirements • Identify VMS & ERP scalable platform and
• Gain understanding of requirements (short build across region, • Deploy solutions per
• Charter workstreams; prioritization, criticality mid-and longer-term) language, payment calendar as agreed
select leaders based on location, processes, etc. by leadership
region, etc. • Identify opportunities to
• Gather detailed roadmap IT scale the solution (e.g., • Agree on reporting • Document SLA / KPI
of client IT architecture spend types, regions, requirements and
• Determine current currencies, etc.) create baseline reports • Execute per plan and
(HRIS, Finance,
technology platform monitor performance
Security, etc.)
including known and • Gain approval on • Establish performance
• Conduct kick-off potential integration blueprint from metrics and service • Produce reporting /
meetings touchpoints appropriate leadership standards Executive Dashboard

2 – 3 Months Duration
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Checklist: Selecting the Right A Practical Example: Invoice
VMS and Timecard Changes
Things to look for in a VMS provider Many Vendor Management Systems’
with respect to integration: (VMS) integrations with Enterprise
• Is the VMS company ISO Resource Planning (ERP) systems
certified? are flawed. This shortcoming can
• Are they subject to annual negatively impact the efficiency,
audits? savings and regulatory compliance
• How can your VMS prove that of an organization’s human capital
they are monitoring critical supply chain management. Despite
interfaces properly (such as all the advances made to simplify
processing financial payments) if the complex field of human
not audited regularly? capital supply chain automation, a
• Does the VMS provider have commonly occurring event exposes
experience with documented this Achilles heel in many solutions.
quality processes such as Six This weakness is exposed every
Sigma? time last minute invoice or timecard
• VMS programs are long term changes are required. With so much
commitments: Does your VMS time, effort and technology dedicated
provider have a history of to automating and streamlining
supporting complex integrations the human capital procurement
for long periods of time? process – from requisition to check
• As ERP systems are updated/ – it is ironic that such a commonly
upgraded, does the VMS have occurring event could have such
the capability to update their a negative impact on cost savings
integrations? Do they have and regulatory compliance. As with
processes in place to properly any challenge, understanding and
document interfaces/integrations acknowledging the problem is the
so that they can be supported first step towards fixing it.
over time (even when turnover in
the client organization occurs)? Current VMS architecture has
• Can the VMS support multiple grown very efficient at organizing
system integrations including the numerous, separate data flows
multiple ERPs/different instances associated with the acquisition,
and/or disparate systems management and compensation
in addition to ERP systems of an external workers and service
in different business units/ providers. Accounting codes for
countries? Finance, requisition approvals
• Can the VMS provider handle for HR and rate approvals for
the scale to match the volume Procurement are the three primary
going through the client’s ERP data flow processes automated
system (i.e. 250,000 users in the by the VMS. Once configured,
ERP system, will the VMS be the VMS manages the interplay
able to handle that amount of between these data flows and
information flow from one system enables the generation of approved
to the next on a nightly basis – time & expense documents to be
user updates, job descriptions, transmitted to whichever Accounts
etc.) Payable / Accounts Receivable (AP/

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AR) application the solution uses modified time & expense file in
for the generation of consolidated the VMS is supposedly performed
billing. It is at this critical step of manually (paper based). Human
the process where the numerous capital procurement systems
individually approved timecards and are intended to eliminate the
expense reports are compiled into a paper based processes they
single invoice to be delivered to the replace, specifically to avoid the
client’s accounts payable system. errors inherent in non-automated
As consolidated billing users know, processes. Individually, each of
the single invoice is paid into the these discrepancies represents
AP/AR system that then makes the a rather minor sum. But viewed
required distribution to each supplier cumulatively, over the course of
who ultimately pay the individual a business quarter or fiscal year,
contractor. The complex series these discrepancies can add up to
of approvals, invoicing and funds significant sums. While the resources
transfers is effectively simplified and have been properly compensated
streamlined through this automation. and the customer has not been
But what happens if, for example, a invoiced for services rendered, the
contractor’s approved timecard does spend visibility and financial controls
not reflect the actual number of hours promised by the VMS are effectively
worked in a given pay cycle? compromised. Over time, the failure
of the manual “workaround” for
As any HR professional will confirm, addressing last minute changes to
contractors and contingent workers timecards can pose serious risks.
miss work for several reasons;
illness, family emergency etc. In Procurement and Finance rely on the
these cases, typically the change VMS to derive accurate spend data.
is made to the invoice after it has Using the data collected this way
been processed through the VMS is fundamental to an organization’s
but before it is processed by the ERP ability to make informed purchasing
program. The short term goal of and resource allocation decisions
this activity is to amend the invoice going forward. If the underlying
so that the absent worker isn’t data is faulty, then even the most
compensated for hours or expenses diligent procurement practitioner
he/she did not incur and so that will arrive at faulty conclusions. The
the consolidated invoice provided costs of such erroneous planning
to the customer accurately reflects can be significant. Additionally,
billable events. While this practice faulty information frequently results
does have the intended effect of in lack of faith for the system and
preventing payment for services not ultimately poor user adoption rates.
rendered, unless the original time From a regulatory compliance
& expense information is amended standpoint, having discrepancies
in the VMS system to reflect the between the financial information
change, the resulting discrepancy reported through the ERP system
frequently goes unnoticed. Since and the information reported through
there is not an automated process the VMS can raise issues with SOX
in many solutions to address this auditors. The discrepancy may be
common occurrence, making the of a benign nature, but to an auditor
amendment to the approved but who is accustomed to rooting

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out fraud and malfeasance, the in the consolidated invoice delivered
appearance of impropriety is often to the customer’s accounts payable
enough to justify costly sanctions department.
and penalties. On top of these
high level concerns, there is the Under this system, the customer is
unplanned cost of “rework” which a not billed for the resource in question
customer must spend to manually while the error is being corrected.
reprocess incorrect time & expense This eliminates the need to expend
files. In some cases, organizations time and resources reconciling
must maintain a full time resource overcharges on the next cycle’s
dedicated to rectifying errors in the invoice. Instead, the improperly
automated process as a result of billed line item is reprocessed
this loophole. This practice runs through the VMS – revisiting all
counter to the purpose of having an relevant approvals – at the corrected
automated system and eats into the rate and then pushed through the
savings the system is designed to billing process the following bill
yield. cycle. As a result, the accurate
spend is recorded in the VMS and
The solution to this underreported propagated through the entire billing
and frequently overlooked problem process correctly. In this way, what
lies in establishing a process and was invoiced and paid is clearly
systems efficiency best practices, reflected in the VMS and the ERP
calling for a regular schedule of system. This process supports the
automated audits. Specifically, most accurate record of actual spend
automated audits should be volume. It is a best practice that is
performed to compare VMS and ERP especially critical as a prerequisite
data each and every bill cycle, before to undertaking successful business
invoice consolidation is performed. intelligence (BI) activities. If however,
ProcureStaff Technologies’ VMS, an incorrect invoice and payment
Consol for example, engages a does get processed (notification
dozen audits of individual financial from the supplier of the error is not
controls per bill cycle. One of these send in a timely manner), Consol
audits is performed specifically to also has automated credit and re-bill
compare the data entered into the functionality allowing for that same
VMS with the data contained in the level of consistency and auditable
bill file as it is loaded into the ERP compliance.
system for consolidation. Whenever
a discrepancy is identified, the Paying additional attention to
adjustment is made in one system, the integrity of the billing error
Consol, which is then integrated reconciliation process can yield
with the ERP, and the change flows significant savings. Successful
through so that all systems reflect the execution of this integrated strategy
change. Consol also alerts the hiring can also result in significant cost
manager so that the discrepancy avoidance derived from the following:
can be reviewed and the proper
• The ability to avoid poor spend
bill information can be reapproved
decisions based on erroneous
and processed from the beginning.
data regarding past spend
The remainder of the correct data
• Elimination of expenses incurred
contained in the bill file is included

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through forensic accounting to
reconcile improperly billed time &
expenses
• Preventing fines and penalties
arising from SOX audits revealing
imprecise financial reporting and
controls

Conclusion

Organizations invest significant time
and resources into engaging complex
solutions to automate and streamline
their human capital acquisition and
management processes. Ensuring
these systems work seamlessly with
larger enterprise systems is essential.
Failure in this regard is not only
counterproductive, but extremely
costly. Finding a VMS provider
with the expertise, certification,
and experience to successfully
integrate is critical. More important
is finding a provider whose business
model includes spending quality
time collaborating with the client
to identify scope, business and
integration requirements. Integration
issues that previously undermined
the high level of effort required to
deploy and manage a human capital
solution are now mitigated through
VMS providers applying market
best practices. VMS technology
is ready and able to integrate
with the client’s ERP platform.
ProcureStaff Technologies and
Crescendo Consulting Solutions
have chosen to co-author this
White Paper to share their collective
experiences, challenges and benefits
of successfully achieving true
integration.

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®

About ProcureStaff Technologies

ProcureStaff Technologies, a subsidiary of Volt Information Sciences, Inc.,
provides specialized software applications to streamline and manage
procurement of temporary staffing, project work, consultants, and other human
capital services. ProcureStaff Technologies’ solution improves efficiencies
throughout the entire procurement lifecycle, including vendor management,
sourcing, spend management, invoicing, reconciliation and payment for
enterprise clients. Procurestaff Technologies offers an industry leading supply
chain management software (VMS) that can serve as the technical basis for the
human capital management programs at Global 1000 organizations. Working in
conjunction with any managed service program services a client may engage,
the ProcureStaff Technologies VMS solution is essential to liberating Human
Resources and procurement professionals from the intensive tasks surrounding
contingent workforce management, so they can focus on core business
processes.

www.procurestaff.com/resources

About Crescendo Consulting Solutions

Crescendo Consulting Solutions is a boutique professional services firm
specializing in program management, outsourcing advisory and human
capital solutions. Crescendo’s mission is helping clients optimize and execute
business process, technology and governance solutions to achieve significant
cost savings and sustainable business results. The firm has successfully
implemented global human capital management programs embracing the
latest VMS and ERP platforms.

www.CrescendoConsult.com

PS-WP314-062810

VMS and ERP System Integration

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