Most terms used in HR and HR Technology are ill defined and used to grind the axe of the speaker. “Talent Management”, for example means everything from ‘succession planning’ to ‘the full complement of tools and organizational processes required to harvest the maximum value from Human Capital’. One extreme is tiny and precise while the other is overwhelmingly comprehensive.
Vendor Management is another one of those terms.
The Training and Learning silo usually coordinates a slew of different vendors and consultants. Here, the idea of a VMS applies to course, content, billing and scheduling coordination. Some of the functionality appears in Learning Management Systems.
In the Compensation world, vendor management systems (and there are only a few) are used to meet the needs of compensation analysts for building services that reference three distinct data points for each decision.
In Benefits-land, a VMS integrates data across providers to give a single point of information for the company regarding the status of benefits, benefits plans and so on.
Applicant Tracking and Recruiting tool providers think of a Vendor Management System (VMS) as a tool for coordinating the acquisition and expenses for various labor market services. When you hear an ATS provider or a staffing company talk about VMS, they are referring to tools used to coordinate data in the staffing function.
Less attention has been paid to the coordination of Background checking and screening information. But, in that arena as well, Vendor Management is an essential component of getting things done.
At the point that HR meets the outside world, there is a flood of data in a variety of formats. Vendor Management Systems (of each stripe) try to sift the material for apples to apples comparisons and seamless data integration. Few, if any VMS tool sets offer a full range of management capabilities. Somehow, HR doesn’t have the muscle of the purchasing department.
There have been any number of initiatives to deal with the explosion of data. Most try to force standards into places where standards don’t work. Funneling data through any sort of middleman always impinges competition. Savvy vendors don’t stand still for this.
The HR-XML initiative (now rapidly receding and nearly dead) is a great example of the problem. Without participation by the industry’s leaders, so called ‘voluntary’ standards become a game with no conclusion. Without adoption and endorsement from all of the industry, the standards initiative chokes on its own irrelevance. Industry standards that define specific data structures stifle innovation.
In the HR-XML case, two hurdles suggest the difficulty of the task. With over 40,000 discrete background checking vendors delivering data in a variety of forms to regional customers, voluntary standards are unworkable unless enforced by the purchasing company. No Purchasing companies (employers) belong to the HR-XML consortium. In the staffing world, the same dynamic applies. 50,000 job boards and an ant pile of small staffing firms make an initiative that is not led by employers unlikely to succeed.
The HR-XML imitative tried to solve the problem with a Rodney King (can’t we all just get along) approach. The assembled group represents members who compete for dollars, sometimes directly, sometimes indirectly. Key to the imitative are companies that represent job boards and their enormous data flows.
The problem that everyone wants to fix is the temporary nature of data integration without standards. Without binding agreements for the management of data interfaces, the chore at middleman companies is enormous. Workloads are unpredictable and service levels are hard to maintain.
I’ve been taking a look at HR-Integrations, an emerging company that solves this problem through the development of a universal interface. Their approach is to overcome the problem of employer involvement by limiting their scope to the vendor management problems of the large scale software providers. Focus (and a commitment to never boil the ocean) gives them a shot at success.
The brainchild of two background checking data industry veterans, their initial efforts focus on familiar turf. Rather than solving all problems for all people at once (the operating problem with an ill defined voluntary membership organization), they focus on delivering specific value in specific cases. Their goal isn’t to standardize anything. Rather, they want to eliminate repetitive integrations for their customers.
That probably bears a deeper explanation.
Let’s say you are one of the many companies that ships data between job boards and applicant tracking systems. Each job board offers competitive differentiation by adding or subtracting data from what you might think of as a standard bucketful. Matching job systems add matching data. Their outputs are distinct and different from, say, Craigslist. Every value proposition in job board land implies differences in the data. Even worse (from a logistics perspective), every new feature means that the output is once again varied.
On the other side of the transaction, the ATS providers modify their data in two ways. At the level where job boards input data, the ATS providers are rarely contracted to keep their input reception buckets stable. A change implemented to solve a problem for a favored provider often turns out to impact the littler players. To further complicate the process, ATS output, which often includes posting jobs to their client’s employment site, is likely to change for what seems whimsical reasons. The middleman is forced to change the data interfaces on the flay in order to fulfill their mission.
Each agreement between a job board and the middleman, between the middleman and the ATS and between the ATS and the job boards on the back end requires an ‘integration’ to get started. It requires a modification every time there is an iteration. If you are in charge of the integration process, you spend a lot of time pulling your hair out. The quality of every customer’s experience depends on your ability to manage the completely unpredictable.
- To make transactional HR services accessible over one trading exchange (hub), eliminating custom data and service integrations
- To simplify and facilitate expansion of services and commerce between HR solutions providers for employers
The idea is pretty simple. Rather than committing to a series of integrations with no ability to control ROI or ongoing maintenance costs, HRNX offers a sort of intermediary docking station. You integrate with HRNX, they integrate with everyone else. Instead of waging endless debate in a voluntary consortium, you sign on with HR-Integrations and they bear the brunt of the hassle.
Over 70% of employers require custom integrations from their ATS and HRIS vendors. The HRNX solution would amount to a shell game if HRNX didn’t include one powerful feature. The big players can use the HRNX widget to ensure maintenance free integrations at nearly zero cost. The widget provides a data interface for users and a data transport for internal system workings.
It’s hard to believe that any of the middleman will be unhappy to let go of their hair pulling legacies. From here, HR-Integrations looks like a solid play in a dense technical area. Old school notions of data standardization seem to be less important in the Google/Facebook era.
I’ve got more conversations scheduled with them and will fill you in on their progress. It’s a big idea and I’m sure to learn more quickly. Meanwhile, this seems like the right team at the right time.