Essential Elements In Outsourcing

Not so long ago, the term "outsourcing" struck fear into the hearts of facility professionals. Today it is a way of doing business and part of corporate life. Outsourcing has come a long way. Errors and successes paved the way for this concept to mature as a form of asset and facilities management (FM).

Cisco Systems defines the purpose of outsourcing as enabling "businesses of all sizes, from enterprise level to small operations, to alter their resource allocations. This can bring significant revenue benefits, while providing an immediate increase in the flexibility and agility needed to remain competitive."
The Changing Face Of Business

Major external drivers are changing the way business is conducted. At the World Economic Forum in Davos, Switzerland, the author Herb Meyer presented a paper entitled "What In The World Is Going On? A Global Intelligence Briefing For CEOs." In the January 2008 presentation, Meyer analyzed the four major transformations shaping political, economic, and world events.

According to Meyer, these issues "will have profound implications for American business leaders and owners, our culture, and our way of life." Meyer names these influences in the following order:

1. The War in Iraq,

2. The Emergence of China,

3. Shifting Demographics of Western Civilization, and

4. The Fundamental Restructuring of American Business.

Aside from being constantly reminded by the mainstream media, facility managers (fms) should be able to recognize these signs and their impact on operations. These elements are shaping the FM industry, and professionals involved in this field should know how to prepare themselves.

One tool is technology. Clearly, technology is helping the world get flatter. As a result, companies are becoming global and so is the corporate real estate and FM business. Frank J. Casale, founder and CEO of The Outsourcing Institute, reiterates, "the marketplace is now global, and there are more FM contracts than ever before."
The Early Days Of Outsourcing

Back in 2006, the Executive Development Program of CoreNet Global conducted a seminar that illustrated the different ways service providers could satisfy buyers. Clearly, there was no such thing as a "one size fits all" approach.

However, this was a common mistake in the early days of outsourcing. Service providers were not knowledgeable and did not understand the process. Many jumped onto the outsourcing bandwagon, and eventually they lost out.

Today, service providers are different. They have learned from their mistakes and have acquired (and invested in) sophisticated technologies to monitor and manage every aspect of the business.
Better Equipped To Serve

The next wave of outsourcers continues to grow in size and capabilities through mergers and acquisitions. In this case, size does matter. It represents the span of a client base which, in turn, translates into a distinct pool of knowledge and best practices. This knowledge bank is very valuable to customers, because it means they can benefit from the experiences of others.

Service providers of the 21st century also invest in their own research and development of delivery solutions. Sophisticated providers not only train their own staff and their networked suppliers, they also provide education for their clients, thus enabling them to understand the process better.

Fms are also getting increasingly sophisticated. They are seeking out the best solutions to meet their demanding business needs in the changing world. Consequently, they are building strong, long-term relationships with the service providers they value most.

From an administrative standpoint, Requests for Proposals (RFPs) consume a lot of time and energy from the fm department. In many cases, this can be disruptive to operations. Contracts are very expensive to change and re-execute, so fms want to make the best possible decisions when selecting vendors.

In the best cases, service providers become true partners, sharing the same vision and mission as their clients-their fm counterparts. The ideal vendor is not just an extension of the fm's management arm, but it is truly an integrated business operation.
Sure Fire Failure

One outsourcing taboo is to prevent the service providers from talking to employees (also known as internal customers). Control (or loss of control) is the big challenge in any outsourcing exercise.

Today, many fms say they have outsourced, but in fact they are only partially outsourcing. Most managers continue to want full control of the link between service providers and customers.

In order to reach true integration and reap the benefits of the dynamics of outsourcing, some organizations have ventured into an arrangement to allow full operations management by the outsourcer. A case in point is the real estate division of Nortel. This company allows internal customers to have direct access to their service provider for their needs in the facility.

David Dunn, group lead of workplace planning, innovation, and construction for Nortel Real Estate, actually developed a comprehensive set of guidelines to establish roles and determine boundaries of operation and service processes. The company is now reaping the full benefits of outsourcing.
The Outsourcing Process

The six phases towards outsourcing (established by The Outsourcing Institute several years ago) are still valid today. The success of an outsourcing exercise depends on whether the entire process is being followed.

Within the six phases, there are three major steps that should be emphasized. Many outsourcing failures are due to either party falling short in terms of doing its homework.

The first step for fms on the path to outsourcing is to understand their organizations and the businesses behind them. It is amazing how many people think they have a handle on this when they really don't.

Outsourcing fails when the RFP lacks clarity. This happens when customers (fms) do not have a good understanding of what they have, what they don't have, and what they want in the first place.

Good outsourcers will patch along the way as they stumble through the mess. Bad providers will fail and take the fm down with them.

Jeffrey Budimulia, facility manager for the International School of Beijing, suggests, "For preparing a location for FM outsourcing, we need to ask who can do the job professionally and more effectively. It takes months of planning, including studying both internally (what can be outsourced) and externally (who is available)."

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Essential Elements In Outsourcing