In March 2012 The South African Facilities Management Association SAFMA commissioned An Assessment of The South African Facilities Management Industry from Frost and Sullivan. After a break of almost 5 years, we are revisiting that survey and contemplating appointing a service provider to conduct another market-related survey to look at the future of facilities management here in South Africa. Meanwhile, Frost and Sullivan in the UK have just released their research preview for The future of facilities management entitled “A New Era of Service Integration, Energy Management, Business Productivity, Smart Technology, and Internationalisation Begins in FM”
The global facility management market is poised for a major transformation in the next 5 years. In many parts of the world, FM services are commoditising and there is a desperate need for innovation and new value propositions. This study looks to the future and identifies the 8 most significant transformational trends that will define the future of the FM market. It also presents the growth outlook for the market until 2025 and analyses the future of competition, market share evolution, service integration strategies, competitive trends, the impact of technology, the future of the workplace, and the market outlook for major regions, namely North America, Europe, Asia-Pacific, and Rest of the World. Despite the recent increase in demand on the African Continent for FM sadly, Africa does not feature heavily in the study but perhaps the report to be commissioned here in SA will fill in some of the gaps.
The new analysis from Frost & Sullivan, finds that the global market will touch $1 Trillion by 2025 with integrated FM (IFM) as the fastest growing segment. The study examines 8 trends transforming the FM market and envisions the industry in ten years’ time. The research offers growth projections, a vision of future competition, technology impact, emerging business models, and details the key Mega Trends shaping the market.
Changes in technology, in the future of work will affect the labour force,technology and the workplace. These changes will have a significant impact on FM, in terms of customer base, value proposition, and service needs.
- Increased influence from women, millennials, and older workforce will have different service requirements for the employees of today.
- A more mobile and flexible workforce will need to be supported in complex and varied settings.
Place of Work
- There will be a 17% drop in office space by 2020 and 15% fewer desks per worker.
- Choice, flexibility, and collaborative working will become key considerations in workplace design.
- Workplace optimisation will become recognised as a driver of productivity and a tool for attracting and retaining top talent.
- Connectivity will drive a wide range of employment models and be a key enabler of online collaboration.
- Human and robot collaboration in work will be commonplace by 2025
Partnership, collaboration, and mergers and acquisitions (M&As) will accelerate the consolidation we have seen in recent years, as the market moves towards service integration and sophisticated client advisory services focused on business productivity.
- The convergence of FM services, property management, and energy management (EM) is the key driver of the acceleration of service integration and growth in integrated facility management (IFM).
- Future skill requirements mean that partnerships, collaboration, and Mergers and Acquisitions (M&A) will become more commonplace. Accordingly consolidation will accelerate.
- In the more developed markets of Europe and North America, FM services are commoditising rapidly; suppliers need to innovate to maintain margins and growth.
- A value proposition shift to business productivity will move the focus from cost management to value creation. Successful suppliers will become client advisors on business productivity.
- The use of technology and new business models means that FM companies will need to build or acquire data analytics capabilities to complement excellence in service delivery.
8 Key Transformational Trends
The key transformational trends in the FM market will be
- FM will move to a focus on business productivity value propositions as suppliers seek to maximise client value.
- FM will widen it scope as Anything as a Service (XaaS) business models, enabled by technology, will accelerate growth in remote real-time services. This will attract new firms from outside the current FM space.
- Sustainability continues to grow as an area of competitive advantage for corporate clients and outsourcing will accelerate.
- EM services will represent one of the fastest growing service sectors, as EM converges with FM.
- Performance Contracting models will proliferate, as propositions move to guaranteed outcomes and more functions shift from CAPEX to OPEX.
- Partnership across the value chain will be needed to address the opportunities emerging at key points of convergence.
- Cloud services for real-time asset management will be driven by connectivity, IoT, and data analytics.
- Suppliers will increasingly target the C-suite to stay relevant in an increasingly competitive marketplace.
Conclusions and Vision for the FM Market
The shift from cost focus to total client advisory services and value creation will underpin the key transformations in the following sectors of the FM market.
The market for integrated facilities management services will increase from 9.7% of total global outsource FM market to 13.9% with the Middle East and Asia, Pacific and China (APAC) overtaking North America as the fastest IFM growth in the world by 2025. APAC will be the largest overall FM market by 2025.
Outsourcing models are pioneered by the public sector and critical infrastructure. Private sector will drive growth; technology and connectivity will mean ‘no customer is too small’.
Contract-based outsourced services have strong growth in service bundling, integration, and internationalisation. Circular business models enabled by technology and based on outcomes, such as Anything as a Service (XaaS), will open new and diverse opportunities.
Current day IoT solutions will develop into the Internet of Buildings (IoB) where every asset or device is fully integrated into a networked smart buildings. In addition the current talk around the applications of big data will develop from a focus on resource optimisation and process improvement into a critical element for addressing customer concerns in particular with regards to energy and reduction of total life-cycle costs as well as Business efficiency.
Labour and services are sold with a strong focus on cost optimisation. There will be higher customer intimacy, selling outcomes, and business improvements with a focus on value creation.
Customers are principally focussed on process and asset efficiency and problem solving. Customers will be focussed on human and building/facility assets to drive business productivity and profitability.
The environment is consolidated and dominated by incumbent suppliers with long market history, with increasing focus on international expansion. There will be further consolidation in the top tiers of supply and collaboration with multiple new entrants, especially technology and XaaS companies.
For complimentary access to more information on this research, please visit: http://corpcom.frost.com/forms/EU_PR_AZanchi_MBEB-19_Jul16
What changes do you foresee in the FM landscape over the next ten years? please leave your comments below….