Why are more and more organizations bundling outsourced real estate and facilities management services under fewer providers?
As buyers of real estate and facilities management (REFM) services become more sophisticated, so too do the benefits they seek from outsourcing. Reducing costs is a base goal for buyers and a prerequisite deliverable for providers competing for their business. But organizations’ ultimate goals for outsourcing efforts — and the ways service providers differentiate themselves — are evolving beyond cost reduction.
More and more organizations are looking for their outsourcing strategy to support business growth, improved delivery and operating models and overall process improvement. To do this requires a re-think of the organizations’ expectations and requirements of their service providers, which in turn then needs to be clearly communicated to those providers.
Governance as well as quality and fit of providers form the foundation needed to support the achievement of a buyer’s goals. With every subsequent provider a buyer organization engages, the demands it faces to participate in governance activities rise exponentially. Such activities include coordinating with providers and reviewing their performance, as well as interacting with the business units that are receiving services and with internal and external stakeholders. These efforts can be compared to a juggler throwing multiple balls up in the air and trying to catch them at the right time without dropping any.
As outsourcing efforts grow increasingly complex, many buyers are moving towards a portfolio-based approach to governing and managing outsourcing efforts. Bundling services with providers that have the right expertise and skills while limiting the number of providers helps focus governance efforts and support the achievement of a buyer’s desired results.
Julie Sullivan is a Partner with KPMG’s Advisory Services in Toronto.