A Step-by-Step Guide for Procuring a First Gen MSP

A first-generation MSP refers to a Managed Service Provider (MSP) program initiated by clients who have not previously implemented such a model. As leaders within your company, you undoubtedly grasp the importance of refining processes, maximizing resources, and maintaining competitiveness. Or at least, I hope you do. It's noteworthy that around 68% of reported MSP contracts fall under this category, indicating a notable surge in interest towards MSP adoption.

Implementing a MSP can be a game-changer in achieving these objectives, but the journey towards selecting and integrating the right MSP requires careful planning and execution. Here’s a step-by-step guide to help you figure out this tricky process seamlessly:

1. Identify Your Needs: It's time to start asking the big questions: What do YOU want? Before diving into the MSP selection process, it's important to have a crystal-clear understanding of your contingent hiring needs. Consider factors such as project scale, talent type, geographical requirements, compliance issues (are suppliers out of control like the weeds in your backyard), budget constraints, and other industry nuances—like if your policies are up to date and whether or not your current contractors are correctly classified. Moreover, contemplate the level of involvement you desire from the MSP; would you prefer comprehensive management or partial self-management?

2. Market Research: Conduct thorough market research to identify potential MSPs specializing in contingent workforce management. Look for providers with a proven track record, robust industry experience, and a portfolio of successful implementations. Utilize recommendations, attend industry events, leverage online resources, and explore client testimonials to gather valuable insights into each MSP's capabilities.

3. Request for Proposal (RFP): Create a detailed RFP outlining your specific requirements, expectations, and evaluation criteria. Ensure the RFP covers essential aspects such as service scope, pricing models, performance metrics, compliance management, reporting capabilities, and implementation timelines. Additionally, consider incorporating a section for MSPs to propose innovative solutions based on their expertise.

4. Proposal Evaluation: Review the proposals received from potential MSPs meticulously. Utilize a weighted scoring system to objectively evaluate each proposal based on factors like alignment with your requirements, technological capabilities, financial stability, reputation, and innovative approaches. Shortlist the MSPs that best align with your organizational needs and strategic objectives.

5. Interviews and Due Diligence: Arrange face-to-face or virtual interviews with the shortlisted MSPs to go deeper into their proposals. During these interactions, discuss their approaches to risk management, contingency plans (you'll need them), and commitment to client satisfaction. Additionally, conduct thorough due diligence by checking references, reviewing case studies, and assessing financial stability to ensure you're partnering with a reliable and trustworthy MSP.

6. Contract Negotiation: Upon selecting the preferred MSP, engage in comprehensive contract negotiation to establish clear terms and conditions. Work closely with your legal and procurement teams to ensure the contract includes robust service-level agreements, pricing structures, compliance requirements, data security provisions, termination clauses, and any project-specific considerations. Emphasize the importance of regular performance reviews and flexibility for contract revisions if needed.

7. Implementation and Monitoring: Collaborate closely with the chosen MSP to facilitate a seamless implementation process. Establish effective communication channels, implement necessary systems and processes, and define Key Performance Indicators (KPIs) to monitor the MSP's performance. Conduct regular performance review meetings to evaluate the MSP's alignment with your changing demands of the organization and its strategic goals.

Considering Payment Structures

MSP engagement has various payment structures, each with its unique benefits:

• MSP Managed: This is the most common approach involving consolidating all invoicing through the MSP. Can you do it on your own? Yes. Do you want to? Short answer: Probably not. The payment process for suppliers for all those contingent workers you hired will require streamlining, and any delays in payment to staffing suppliers may pose financial strains. Best to let someone else take on that migraine.
• Pay Directly to Suppliers: Some companies prefer direct invoicing relationships with staffing suppliers, promoting tighter relationships and providing insulation in case of MSP issues.
• Pay Directly to Diversity Vendors Only: For diversity spend recognition, a hybrid approach allows direct invoicing and payment for certified diversity suppliers, while others route invoices through the MSP. This can get ... confusing.
• Company Owned Agreements: Direct agreements with staffing suppliers offer control, security, and program flexibility, reducing disruption in case of MSP replacement.
• MSP Owned: Outsourcing agreements entirely to the MSP removes administrative burdens associated with paperwork management.

Implementing your first-gen MSP requires careful consideration and strategic planning. By following this step-by-step guide and considering various payment structures, you can effectively procure an MSP that integrates with your organization, drives operational efficiencies, and facilitates agility in contingent workforce management. Remember, the journey doesn't end with selection; ongoing evaluation of the MSP's performance and alignment with your organization's growing needs is paramount for sustained success.