If your facilities team seems a bit work weary and can’t stay on top of work orders and other requests, you might want to consider contracting experts to handle some areas of your business. In the past decade, outsourcing has come into its own as a viable business model, enhancing the bottom line for once struggling facilities management teams.
A 1999 study of 4,000 North American members (539 actual responses) by the International Facility Management Association (IFMA), Houston, revealed that outsourcing is part of most companies’ strategic plans and that it often originates in the facilities management department.
Survey respondents noted that almost all facility managers outsource services requiring specialty skills that are unavailable in-house or are not cost efficient to handle in-house. They also outsource so that they can focus on their core competencies.
According to the survey, the 10 services most often outsourced are architectural design, trash and waste removal, housekeeping, facility systems, landscape maintenance, property appraisals, major moves, hazardous materials removal, major redesigns, furniture moves, and food services. “One of the things we found with many of our clients is that once we got in and began to deliver the outsourcing model we were contracted to provide, the level of service for the cost was higher than the level of service they could provide internally,” says Mike Williams, director of Asset Services for Cushman & Wakefield’s Mid-Atlantic area, McLean, VA. Williams’ firm not only provides traditional property facilities management services on an outsource basis, but also offers office management services such as mail room, loading dock and file room management, and switchboard operation, among others.
IFMA survey respondents noted that outsourcing not only has helped to conserve their budgets, it also has been important in improving the quality of the overall facilities management performance.
As cliché as it might sound, no two outsourcing deals are the same. But, there are critical factors to keep in mind when you’re seeking to ensure a successful, lasting relationship.
And not heeding these simple rules can result in failure, says Larry Vanderburgh, senior industry and academic advisor at BOMI Institute, Arnold, MD. “They’re old news, but I keep emphasizing them because facility managers and facility management service providers keep fouling up,” Vanderburgh says.
One of the most important steps is to take the time and effort to write up a clear, tight scope of work. Define what you want as clearly as you can.
“Assume nothing,” Vanderburgh says. “Faulty scopes will create endless headaches down the road.”
In the publication Outsourcing: The Real Deal, the consultants at Stamford, CT-based Gartner Inc. say that developing a “sourcing strategy” can help you identify the capabilities that your company wants, the right mix between internal and external supply, the governance structures required, and the business case supporting the need for outsourcing.
Think of a sourcing strategy as your roadmap. It should describe what you need, how you plan to get it, and the associated risks, as well as how you plan to define your success. “Make sure you have some data. Make sure you have a good baseline of information, whether it be mail volume, response time to service calls, or whatever,” says Joe Schechtel, senior portfolio manager at Cushman & Wakefield, McLean, VA, office. “You need to have some metrics to compare to what the outsource provider can provide on an ongoing basis. If you have no basis for comparison in your own operation, it makes it difficult.”
To achieve this kind of success in working with an outsourcer, always be sure you understand contractor selection criteria procedures. Gartner consultants stress the importance of working with an experienced advisor in finding the right service providers. According to Gartner, an expert seasoned in selecting outsourcers can help you avoid the pitfalls, ask the right questions, learn the best practices, and improve communications with the service provider.
As noted in the Gartner publication, “outsourcing is too complicated and too risky to do alone.”
“If you haven’t contracted before, get help from someone who has done it successfully,” Vanderburgh urges.
Once a contract is created, be sure to read it fully – every clause, every word – before you sign, Vanderburgh says. Why? Because what’s written becomes the basis for the relationship, and a contract is a legally binding agreement.
Another factor in the success of an outsourcing agreement is people. Make sure both parties involved designate someone who will actively manage the contract after it is signed.
“Contracts don’t run themselves well by remote control. They need attention,” Vanderburgh advises.
And if decisions must be made during the administration of a contract, know in advance who will make them.
That person is usually a general manager, CIO, or the head of a facilities department, depending on the size and scope of the company seeking outsourced services.
The experts at Gartner suggest delegating outsourcing relationship management to someone on a leadership level. Too often, executives put the responsibility of deal making on a subordinate’s plate. This person must then translate the executive’s wishes to the rest of the team. Often, it isn’t done well.
“Part of the concern about outsourcing is there’s territory that is up for grabs. The people who are on the ground level in this decision, in many cases, are the people who are providing the service now and will be impacted. There might be some territorial reason why they don’t want to go to outsourcing,” Williams notes. “We’re often able to integrate people into our model, and it works well. Their institutional knowledge helps all of us and allows us to give them a different career track.”
According to Gartner, the average outsourcing deal runs five to 10 years. And in that time frame, it’s likely you’ll encounter changing technologies, changing staff, and changing business practices.
Therefore, flexibility is important. Any modern outsourcing arrangement should provide for change and, in fact, really serve as a “platform for future deals – mini deals that transform the master deal as change shifts the landscape,” says Gartner.
And it also is important to remember that outsourcing on a grand scale isn’t for everyone.
“Our core business is real estate. People come to us because their core business isn’t necessarily real estate,” Williams says. “And not all of these people need the full complement of services we can provide. Our goal is not to go in and outsource every client. We want to see if it makes sense. If it makes sense from a financial standpoint and there’s management buy-in, then we go ahead.”
Robin Suttell, based in Cleveland, is contributing editor at Buildings magazine.