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Market demands more innovation from FM

Published 14th November, 2012 by Neil Nixon

Market demands more innovation from FM

A cost-conscious, service-led approach to outsourcing facilities management is delivering value but may be failing to achieve the levels of innovation required, according to the FM Market Survey 2012, a new research study commissioned by Interserve and undertaken by Sheffield Hallam University in conjunction with i-FM.

The survey, in which 585 service buyers and providers were surveyed from across the UK, found that most organisations now have clear expectations when they outsource facilities management services, with cost reduction remaining the key driver. Yet innovation in service delivery is only reaching its objectives in just over 50% of cases.

Questioned around their reasons for outsourcing, respondents indicated that financial savings (70%), service level improvements (61%), access to better technical expertise (60%) and risk sharing (57%) all take precedence when choosing a supplier and, the study has revealed that more than 70% of organisations believe they have achieved these objectives in each case.

Innovation, in contrast, is falling short at 56%, with organisations citing internal pressures such as financial barriers, resistance to change and a lack of board level support, alongside issues such as a lack of supplier investment as the main barriers to delivering innovation.

Bruce Melizan, executive director at Interserve, said: “All business disciplines are under pressure to perform and facilities management in particular is often required to deliver ‘more for less’ in the post-recession economic climate. Over 85% of the respondents in this survey are experienced buyers that have been outsourcing for more than three years, and so it is encouraging to see that organisations are now reaping the benefits of improved cost and service efficiency through an outsourced facilities management model. However, there is also a clear expectation that facilities provision should now be delivering much more than cost savings alone, meaning that our industry must ensure it continues to adapt by providing a service that adds value to the client’s brand, business performance and reputation.”

The survey also revealed that:

• Performance pressure is here to stay. When asked to rank objectives in order of likely importance in five years’ time, respondents listed the top five as: value for money, reducing costs, service quality, flexibility of service delivery and added value/innovation.
• Clients and providers need to develop better partnerships. The top three success factors in these relationships are: trust, communication and service quality. Value for money is rated fourth.
• Asked about the current balance of responsibilities in their jobs, well over half of respondents said they spend less than 30% of their time on future strategy with most of their time and effort being devoted to day-to-day and reactive needs. Asked how they would like to spend their time, most are looking for a better balance - with 50:50 being the optimum ratio for the largest proportion.
• The standard three-year contract term is being questioned. Although a third of organisations still opt for this term, almost a quarter are now using five years or longer and slightly more do not apply a standard term for their contracts.

The key findings from this research are available in a report called ‘Facilities management - an industry wide perspective’ which can be downloaded at www.commercial.interserve.com.