The face of Facilities Management has changed many times over its relatively short life. We have seen FM models evolve and die but recently the Integrator model has received much attention in the UK. At face value, this appears to be a new FM business model innovation, but is there less to the Integrator than meets the eye?
The 2015 James Bond offering, Spectre sees actor Christopher Waltz playing Ernst Stavro Blofeld the evil head of a villainous global empire. This is not a new character in this spy genre. The original Blofeld with his hallmarked scarred face was played by Donald Pleasence in ‘You Only Live Twice’ in 1967. In the the most recent movie, Waltz’s incarnation of the character is only disfigured in the last scenes when his operations centre blows up before being captured after his helicopter crashes on Westminster bridge in London.
The chronology of these two movies leaves us with a Star Wars’esque impression that the movies have been released out of sequence with the later rendition being the prequel to the earlier version. This cleverly leaves the audience knowing that Blofeld will survive and appear in the movies to come, thus creating intrigue, expectation, and desire that will keep the franchise alive.
What has this to do with Facilities Management? Well according to UK based FM company KBR, there is a new twist on an old theme when it comes to the latest incarnation of FM models. KBR have called their creation the Integrator Model. The Integrator Model seems to have it roots in the evolution of FM but one that KBR believe may yet bridge the seemingly intransigent divide between Outsourced and In-House delivery. It promises much and expectations are high, but is it hype or hyperbole?
Well much like FM models there have been many incarnations of Blofeld over the years. Actors such as Telly Savalas (on her Majesty Secret Service), Charles Gray (Diamonds are Forever), Max von Sydow (Never Say Never Again)* and Anthony Dawson (from Russia with Love) have all played the head of SPECTRE. Similarly over the past two decades, the FM market has also developed in many guises. From typical in-house delivery of FM services to a Total Integrated outsourced model.
Twenty years ago the conventional wisdom had been that organisations get the most competitive solutions by spreading the sourcing of their Real Estate, Facilities Management and project services across either their in-house team or a range of single outsourced service providers based on vertical functionality. Now, more forward thinking organisations are taking it a step further by bringing FM together under one supplier.forward thinking organisations are bringing FM together under one supplier Click To Tweet
The Evolution of FM Models
1. In-House FM
This is where facilities are delivered by an in-house delivery team who remain on the payroll of the receiving Client. However where organisations got bigger and their facilities became more complex and the servicing requirements more technical a proportion of these services needed to be delivered by outside specialist suppliers. In the first instance, this was often the cleaning service or the handyman, where outside contractors were better equipped and able to undertake the service more efficiently and cost effectively.
2. Single Service FM
As the organisation grew, in-house FM management started to rely more and more on some specialist providers to deliver services such as cleaning, catering waste management, etc. This, however, came with an increasing burden of in-house resources needed to manage a plethora of external providers not only from a service delivery perspective but increasing levels of financial and performance management.
3. Managing Agent
With the growing complexity of service provision and the increasing need for companies to focus on their core business instead of committing valuable management time to non-core activities, companies began to employ an intermediary to manage the service delivery on their behalf.
This model survived intact for some years. However, service providers became more mature, agile and had access to improving technology which enabled them to adequately take on the management and reporting of multiple services thus making the role of Managing Agent largely redundant.
One of the constraints of the Managing Agent model was that in most cases the Client still contracted directly with the service providers themselves. Unscrupulous suppliers used this to their advantage to drive a wedge between the managing agents and the Client who remained and legally liable for the commercial terms and performance intervention.
The managing agent model died out in most forms due to these issues as well as the perception of the additional layer of cost introduced for very little value add. Also, the increasing level of sophistication and management capability of service providers provided the last nail in the coffin of the managing agent.
4. Bundled FM
With the growing number of external vendors and consequent complexity and management time required, service providers started to conglomerate and deliver multiple service lines by bundling these into portfolios of similar functions. Typically these would be divided along the hard and soft services lines. The benefit of this approach was the reduction of cost by removing the multiple layers of management required to manage single service lines.
5. Integrated FM Services
Combining services was a natural progression of the bundled FM model whereby services were grouped together and delivered by a single organisation under one management lead. Thus avoiding the need to employ a separate Managing Agent by the Client. Also, reductions of in-house management capacity could be achieved by outsourcing these staff to the provider.
6. Total Integrated Facilities Management
Decades of outsourcing in-incremental functional and geographic silos led to fragmentation in service providers and technologies. Now the C-Suite, procurement professionals and corporate real estate executives are demanding a more integrated process together with analytics, management information, real time reporting, greater collaboration and innovation.
Total Integrated Facilities Management as a function includes the integration, administration and delivery of all support services for a facility and so by definition it is ‘Total’. The different outsourcing models refer either to the amount of FM that is outsourced or to the method by which the contractor delivers the service and this provides one point of responsibility for all the outsourced services.
The Total Integrated Facilities Management model is where the entire sphere of service delivery is outsourced to a single provider under a single contract. In turn, the provider may subcontract, or self-deliver some or all of the services. Together with all of the professional management associated with the multiplicity of service lines.
Next Generation FM?
In their paper “An emerging FM delivery model” KBR emphasise the pressures within the UK economy of Brexit and ever decreasing the levels of government spending having given rise to the flexible nature of the Integrator model.
The paper alludes to the fact that the Integrator model is an adapted version of the managing agent model. From my perspective, the changes appear to be remarkably nuanced with the only real change to the more traditional version being that the Integrator can and does in some instances perform some of the services themselves.
In other cases whether due to capacity, complexity or otherwise these are outsourced to specialist providers. While this may appear to be a more flexible rendition of the managing agent model this is no different to how a totally integrated outsourcing provider operates, and probably why the evolution of FM has seen the rise of the integrated service provider over that of the other variants.The evolution of FM has seen the rise of the integrated service provider. Click To Tweet
Another benefit claimed by the Integrator model is that the service contracts can be forged directly between the supplier and the Client. The only seeming control this may give the Customer is to retain the contractual relationship between the Customer and supplier should they wish to terminate the arrangement with the Integrator. What is not stated and thus remains unclear, is under what circumstances this would be desirable? While continuity of service is undoubtedly required, who within the Client organisation would manage this or would a new incumbent be expected to step in to what seems to be a prescribed model.
A further benefit KBR state is the integration of SMME’s into the supply chain; again the uniqueness of this benefit seems overstated. There is nothing to stop the inclusion of SMME’s, EME’s and QSE’s in the totally integrated model. What’s more, I have had many experiences of enterprise development initiatives being rolled out as part of a Total Integrated FM contract whereby incubators and such are formed with small business enterprises who are supported in their development with both business and functional skills. I struggle to see how this level of support and mentorship could be achieved with the Integrator model.
KBR has forged contracts with both the London Fire Brigade and the Home Office, and have attributed significant multi-million pounds savings in those contracts to the adoption of the Integrator model. I am not in doubt that the saving have been made but it is not made clear how the Integrated model alone caused these to be achieved.
Another vaunted claim is that with the Integrator approach a Client may still opt to use any delivery models from in-house FM to Total Integrated outsourced FM. The inference from this claim is that the Integrator model could be used to manage both in-house and outsourced services. I see no reason why this could not be achieved in theory. In practice, however, the additional cost of the unnecessary layer of management as well as the potential inability to performance manage in-house providers, would see this as unworkable.
While there is nothing new about outsourcing, it undoubtedly needs to evolve. It would be true to say that there is much more focus today on value and the ability to free up in-house teams from the nuts and bolts of FM delivery than previously. This allows FM teams to deliver greater degrees of strategic value, but nobody outsources facilities with the intention of it costing the more.
A reputable outsourced provider will make significant investment in systems, processes and technology and is better able to absorb the management costs of these investments by rationalising them across a multitude of service lines and contracts. Better I would suggest than a standalone Integrator.
With an integrated service provider, the ability to increase productivity and efficiency is embedded in the processes and does not rely on an external party looking in from the outside to try and streamline the organisation, processes and performance.
For many organisations, it’s about making sure your business is lean and not having too many ‘doers’ in-house. In a fluid environment where businesses can grow and shrink rapidly and where they often have a range of options when deciding where to locate, agility in service delivery is important.
There are significant advantages to a Total Integrated FM outsourcing approach. Consider the number of areas the average facilities executive has to be across from the cost of least space, the lifetime of plant and equipment, Energy consumption, technical maintenance, the user experience, Business plans and HR. For under resourced and under capitalised in-house teams it can be a challenge to be anything other than reactive.
For businesses today looking for FM expertise and support that avoid the overheads and complexity of employing an in-house team, the right outsourcing ‘partner’ will deliver a local highly bespoke service backed by the resources of an expert service provider. The best-outsourced providers act as an extension of the Client’s strategic guidance providing service delivery and technology platforms that enable a personal and customised approach that only an expert provider can deliver.While there is nothing new about outsourcing, it undoubtedly needs to evolve. Click To Tweet
For complex property portfolios, Total Integrated FM outsourcing can offer rigour and new ways to drive efficiency. Internal procurement and real estate teams benefit from integrated services through a centralised operation that can be easily explained to their business partners. Consistent standards and evidence of cost competitiveness will come as standard. A reputable integrated FM partner will bring stable service delivery benchmarked at the best possible value ensuring the optimum outcome.
Increasingly outsourcing is moving up the value chain regarding what it can deliver. The top echelon of service providers can provide Total Facilities Management, business integration and management information to enable and enhance strategic decision-making in respect of a Client’s facilities.
This all allows the in-house teams of procurement, HR, finance and operations to focus on what they are good at while the service provider delivers both critical maintenance as well as things like health and safety management, hard, soft and business services as well as energy and utility management. Integrated service providers are delivering what some might call ‘business function outsourcing.’
The evolution of outsourcing isn’t limited to just the management of facilities. To activate these services and to quality manage them from inception to completion the outsourced FM provider will run the help desk call centre operations, providing total coordinated catch, match and dispatch functionality together with quality management, Business continuity, management information, Customer relationship management procurement administration and workplace planning to boot.
This collaborative approach requires a degree of maturity in both parties, but the benefits are extensive with an expert service provider in control of your non-core services but ensuring that the support your core business by taking a more active role within the organisation and delivering greater levels of value and competitive advantage for the Client.
The integrator model remains a new concept and should be allowed to prove itself, and as such, I do not wish to write it off before it has had a chance to prove itself, but I remain sceptical as to the causation of savings and the inferred additional flexibility for all the reasons mentioned.
* Yes I know some of you 007 Fundi’s will differ with me, saying that Never Say Never Again was not a genuine Bond movie as it does not come out of Cubby Broccoli stable, but it did star the orignal and best JB ever in Sean Connery!
This week’s Question: How do you think that FM models will evolve over the next five years? Please leave your comments below