Tag Archives: Facility Management

“The Duality of Competition” Soliciting the Best Service Provider Participation in Your FM Sourcing Initiative

Introduction

I’m sorry, but we’ve decided not to bid for this opportunity.”

Even multinational enterprises looking to outsource services valued in the hundreds of millions of dollars are hearing these words more often.  While the sourcing teams from Global 1000 companies are often shocked to have their opportunities declines, this is not really surprising given the evolution of the facility management industry.  As deals get larger and more complex, more business risks are transferred from the occupier to the Service Provider.  In addition, account margins have become notoriously thin and contracts are managed with more sophisticated cost controls and reporting requirements.

With business development costs rising Service Providers are increasingly more selective about which opportunities to pursue and are particularly careful to avoid expensive pursuits with low probability of favorable results.

The Decision to Move Forward

Most Service Providers make a decision to pursue an opportunity based on their assessment of three critical questions:  (1) what’s the opportunity worth?  (2) what’s the likelihood of success? And (3) what’s the cost of pursuit?  Of course the answers to these questions are likely not well known at the outset, so a number of more quantifiable factors will be considered including:

  • Whether a pre-existing relationship exists with the Client organization
  • Potential for direct interaction with the key Client stakeholders throughout the sourcing process
  • The role of advisors in the sourcing process
  • Likely or perceived pursuit costs
  • Potential near- and long-term value of the business (including expected margins and the likelihood of growing the account over time)
  • Alignment with capabilities and core competencies
  • The competitive environment and in particular, the presence of incumbent competitors
  • The perception of the “sincerity” of the outsourcing initiative (Will the sourcing event actually occur)
  • Whether the outsourcing is first or second generation event
  • Other opportunities available in the market place

Outsourcing clients must understand that Service Providers treat each “pursuit” as an investment with a potential return.  While the direct costs of a pursuit can be significant – over a million dollars for some multi-national opportunities – it is important to understand that these pursuits also represent the allocation of a limited resource of talented personnel.  Service Providers need to make the savviest possible pursuit investments.

Generating Participation

Knowing how Service Providers evaluate opportunities provides can inform Client organizations on how to position and create the most attractive possible sourcing events.   Clear, open communication to the market place is essential.  The better Service Providers are able to understand the nature of the opportunity, the competitive process, and the underlying Client business drivers for outsourcing, the better they are able to qualify the opportunity and evaluate their participation.  Client organizations that provide multiple opportunities for interaction, personalized as opposed to group communications and personally (as well as personably!) engage with the Service Provider teams achieve better and more engaged participation than Clients that operate their procurement through a secretive or blind, “arm’s length” process.

Additionally, the role of consultants needs to be carefully considered.  Hiring an advisory firm can send a clear message to the market the Client or Occupier is very serious about the opportunity and ultimately help accelerate the process.  However, if the advisor’s role significantly constrains direct interaction with the Client team, Service Providers may see the lack of interaction as a reason to not pursue the work.

Excessive competition also discourages participation.  When a provider is one of ten or twenty candidates it’s difficult to justify a significant business development effort even if the potential opportunity is large.  Having the wrong competitors can signal that the client has not prepared well.  Initial market research must efficiently allow Client organizations to identify a selective short list of potential candidates.  For an IFM sourcing opportunity, a field of three to five Service Providers is generally ideal.  Effective prequalification should focus on verifying a Service Provider’s market presence, experience and capabilities to delivery services as opposed to early solution development.

Lessons Learned

Finally if your organization follows this advice and still finds a desired Service Provider declines your opportunity, remember this isn’t necessarily a bad thing.  It may simply be that they have determined that this fit is not appropriate for their business.  Better to move on and focus on building relationships with organizations that, from a well informed perspective, see your opportunity as being highly desirable.

Organizations that have run the most successful FM sourcing processes had a thorough understanding of both the marketplace as well as the drivers of Service Provider participation.  They quickly identified the right potential partners in the market place, openly communicated their initiative and structured a sourcing process that, in essence, competes for the best participation from these Providers.  This “Duality of Competition” ultimately drives the intensity, focus and openness required from both parties to find and develop the best possible FM sourcing relationship.

Writing Winning Proposals: Five Tips for FM Service Providers

Business development represents a significant investment for FM Service Providers.  Pursuits for global accounts can reportedly cost over a million dollars and even a smaller account can be punishingly expensive to pursue.  The most tangible output of this business development activity is the proposal, so how can Service Providers ensure these proposals are a effective as possible?

(1)    Winning proposals are about the Client, not the Service Provider.

“They just seem to understand us”, when we hear those words we know our clients have made their decision.  It’s the trump card that can often triumph over weighted decision matrices and other formalized evaluation criteria.  Clients want to partner with Service Providers who “get it”.

Unfortunately, most Service Providers spend the bulk of their proposals buried in “Self”.  There are long descriptions of past successes, the story of the company’s founding fathers and long lists of other, presumably very satisfied, clients.  While these may be impressive, the potential client is left with the task of connecting the content to their own needs.

The place to start is the cover letter.  Many proposal cover letters will spend  three to five paragraphs focused on the service provider, their commitment to the client, their long history with other clients, and other inward-facing “points of distinction”.  A client isn’t even referenced until the closing sentence, which is usually a please for favorable consideration.

Winning cover letters convey an understanding of the client’s business condition and specifically connect the Service Provider’s solution to the client’s needs and requirements.

For example, instead of writing:

Our company has been in business for fifty years and is a recognized leader in the field…

Write with a focus on the client:

Business pressures require that Occupier Incorporated reduce support costs by at least 10% over the next three years.  To achieve these objectives while retaining expected services levels requires a solution that…

Quick test:  Count how many times you reference your own organization versus the client organization in your proposal cover letter.  A cover letter that resonates typically has a 1:1 ratio of client references to self-references .  When that ratio becomes 1:2 or 1:3 (which is not uncommon) you’ve lost sight of the client.

(2)    Winning proposals show how solutions will directly impact client.

Most proposals give “magazine article” responses.  Lots of information about the general approach and typical benefits, very little information about how the approach will be applied to the client organization or expected measurable benefits.

Winning proposals include a short discussion about the general approach and then emphasize client specific detail about how it will be applied and expected results.  For example:

Based on an initial review of the asset base, the RCM principles will be applied first to the high voltage electrical and HVAC systems.  It is expected that this will reduce the total volume of preventive and maintenance work by 10% by the end of year one.”

(3)    Winning proposals clearly explain cost savings

The lowest priced proposal often does not win a competitive bid, typically because they are perceived as being “risky”.  While the client wants cost savings, they don’t really understand how the proposed savings will be achieved and are nervous about the potential business impacts.

Winning proposals very clearly outline and summarize expected savings and the potential business impact, if any, on the client’s organization, for example:

This proposal reduces total cost of operations by 15%.  These savings are achieved as follows:

  • 3% from more efficient management of sub-contacted vendors and leverage of global purchasing agreements
  • 2% from enhanced technician training to eliminate high cost call-outs
  • 3% from rationalization of service levels across the portfolio
  • 4% from increased productivity through better work management
  • 3% from reduced workload through better asset management

When the client has clarity about cost reductions, they are more confident about the effectiveness of the solution and more willing to embrace bold proposals.  Of course this is most easily achieved when the first two tips have been followed

(4)    Winning proposals have a consistent message.

Many of the proposals we have reviewed over the years are internally inconsistent.  On one page the technology strategy may have five key dimensions, on the next, it may have four.  The same may apply to descriptions of key business processes, organizational charts and other key aspects of the solution.  In some cases the entire look and feel of the proposal changes as the client moves from section to section.

In speaking with business development teams we have come to understand that this occurs because several people may be involved in assembling a proposal and it may leverage varied source material.   Unfortunately, the message to the client is that of a fragmented, poorly considered, approach.

A proposal that is consistent in its message, lexicon, use of graphics and overall look and feel gives the client confidence that they are receiving a well-considered, unified approach to service delivery.

(5)    Winning proposal are shorter

FM proposals frequently run hundreds of pages, with substantial “expository” and “value added information” which is burdensome for the client to read and ultimately obscures the central message.  Ruthlessly edit the proposal.  Reduce that the original word count by 30 – 40%.  The most powerful thoughts and ideas will come shining through and the entire proposal will be more compelling.

Conclusion

Interestingly having the “best solution” is usually not the most important consideration in the final selection.  When the Client feels that they are receiving a well-considered approach from a capable Service Provider that truly understands their business they will partner to find the right solution.

Encouraging “Green” Behaviors in Occupants of Green Buildings

Sustainability has become a global trend in facilities–both in existing buildings with upgrades and in new developments worldwide.  Truth is, however, no matter how advanced, innovative and environmentally forward these design plans may be, without tenant attention to their overall performance goals, achieving maximum performance is impossible.

In fact, in a study conducted by Lucid Design Group, they found that up to fifty percent of energy consumption in a building is directly linked to occupant usage, by what’s deemed “plug loads,” which is essentially energy that cannot be moderated by high-tech Building Automation Systems (BAS).  So what can facility managers do to encourage compliance among occupants?

ECO-CHARRETTES: In the design phase for new facilities, the design team works closely together to establish environmental performance goals.  Once these goals are fully understood by the team behind a building, it’s time to host an eco-charrette, bringing together the design team and future occupants to engage them before they take occupancy.  By clarifying goals, explaining BAS and helping occupants understand their building, they’ll be more likely to actively partake, subsequently working towards meeting consumption goals.

UTILIZE DASHBOARD TECHNOLOGIES: With sustainability trends on the rise, software gurus have designed innovative facilities management software that can measure real-time usage and project in a user-friendly dashboard that occupants can easily digest.  Lucid Design Group introduced their Building Dashboard program that provides a platform for measurement, engagement and social networking capabilities.

ENCOURAGE COMPETITION AMONG OCCUPANTS: By implementing dashboard technologies and connecting the social networking capabilities, facility managers can create and encourage ongoing competitions between occupants. That said, these competitions can be among individual users, offices, different floors of a high-rise, or even among entirely different buildings or businesses altogether.  The social network implementations allow for up-to-date tracking that can be compared instantly.

KEEP THINGS SIMPLE: Energy is an abstract subject to many; factor in measurements (kilowatts, etc.) and it becomes even more abstract to the common user.  By simplifying things and keeping them transparent, users are more likely to understand the role their behaviors play in overall consumption. It’s unfair to expect compliance where there’s uncertainty of overall goals.

HOLISTIC MEASURE ARE LASTING MEASURES: Josh Radoff, Principal at YR&G Sustainability, believes that implementing a holistic attitude in sustainability measures will offer lasting effects.

“There’s a mistake of focusing solely on energy and water. While they’re important for a lot of people, they’re abstract ideas.  It’s hard to get too far only focusing on energy,” says Radoff.

Embracing all facets of healthy living–sustainable supplies, healthy food options and even composting, where possible–are all ways to demonstrate to occupants, that a facility’s performance goals encompass all means of carbon footprint reduction.

By Ashley Halligan, a CAFM software analyst, at a Web-based advisory service

Image courtesy of John McStravick.

Three Simple Ideas for Effective Space Planning – AKA what I learned at 30,000 feet.

“Tell me about your office” when my father was alive we would chat regularly about work and family, and at some point in the conversation he would inevitably inquire about my office.   Over the years, and with a minimum of embellishment, I described my progress from a shared workspace to private office and then a larger private office.  Speaking to a man who started his career in the 1940’s, an office communicated one’s status and power in the workplace.  As such he measured the progression of my career based on my work environment.  Perhaps he would know that I had truly “ascended” once I had a corner office, especially if it had a nice view and perhaps a liquor cabinet with a bottle of acceptable scotch and some crystal glasses.  Hopefully we’re conjuring up images evocative of Mad Men’s suave and successful Don Draper, or at worse Lou Grant and not a stumbling, intoxicated, Larry Tate.  Perception is everything.

You can imagine Dad’s perception when my company went “virtual” in 2003 and I started working from home.  Well, it’s not the 1940s or even the 1990s anymore and in today’s world the notion of office as a corporate throne room has waned, and yet we get mixed messages as to what constitutes the ideal work space.  I recently read three articles on the topic; the first asserted that “Generation Y” wants a “blended life” and that this mix of socialization and work required space that emulates a chic Seattle coffee shop.  The second decried the noise and distractions cause by open work environments and closed with plea for a quiet, private place to work.  The third, and perhaps most insightful, simply asserted that people were less productive when they had to work in a cardboard box.  They came to that conclusion by, quite literally, observing research subjects working inside a large cardboard box.

To cut through the confusion and contradictory viewpoints here are three simple ideas for effective workplace design.

(1)    Make the space functional

This became abundantly clear to me about ten years ago flying in a coach seat from Newark to Seattle.  As you can imagine I was in a particularly cramped seat made worse by the large passenger beside me and the individual in front who kept his seat in full recline for the whole flight.  Not ideal conditions as I tried to meet a pressing deadline on my generously sized early 2000s laptop.

Luckily, I was in an aisle seat and was able to cantilever my laptop off the edge of the tray table and into the aisle to achieve modest usability (except when the drink cart came by).  “What I wouldn’t give,” I remember thinking, “for two square feet of flat surface area and an electrical plug?”  I didn’t need a leather chair, ornate office furniture or scotch served to me in a crystal glass.  I just needed some unencumbered workspace.  A week later, I booked two hours in a quiet airport business office that had about four square feet of desk space, an Internet connection (a rarity at the time), a printer and proper lighting.  This tiny, but highly functional and well-designed office had everything I needed to be productive.  Since then, I haven’t craved anything larger or more ornate.

(2)    Get the mix right

I have worked with clients with wonderful collaboration space… but then had to go outside or into a stairwell to make a private phone call.  Other companies have beautiful private offices but meeting rooms need to be booked days (if not weeks) in advance.

Companies that strive for a single vision of an ideal space or office layout will strive in vain.  Throughout the work day, we engage in a variety of activities.  Some of these, such as analyzing information and writing reports may be essentially solitary in nature, thus benefiting from quiet space where intrusion is minimized.  Other activities require collaboration of teams of various sizes better served by more open, collaborative space.

The workplace shouldn’t be designed to meet a specific aesthetic or ideal espoused by another organization.  Instead it should provide a mix of space and functionality which, in aggregate, productively support the various types of work performed in the organization.

(3)    Let workers select the technology they need to be productive

“Wait a minute” you’re thinking, “this post is supposed to be about space planning & now you’re writing about technology”.  If space defines the environment for our work, tools are the medium through which we produce and interact.  The two are intertwined.  For some knowledge workers in transit their office can shrink to the size of a smart phone, and this smart phone can represent a highly functional “office”.  Tools and technology have become our workspace; yet we find that companies with the most elegant space solutions often hamper their workers through excessive standardization and inflexible policies surrounding collaboration and work tools.

Standardization is a byproduct of mass production.  In the early days of the industrial revolution the only way to achieve high production volumes was to ruthlessly standardize every single manufactured part.  Henry Ford epitomized this mind-set in 1909 when speaking of the Model T he stated, “Any customer can have a car painted any color that he wants so long as it is black.”

Unfortunately, standardization is counter to human nature.  When Michelangelo painted the Sistine Chapel the Vatican did not try to constrain costs by dictating the type of paintbrushes he could use.  In our buildings most mechanics and tradesmen own their tools and choose what best fits their needs for a particular job; yet this simple logic gets lost once the worker steps out of the maintenance department and into the office.

Ironically, manufacturing has moved beyond the tyranny of excessive standardization but many IT departments focus on standardization to ostensibly minimize direct costs, ensure security and streamline support requirements.  Sadly the basis for this excessive standardization is overstated.

Within our own organization we find productivity is maximized when consultants are given the flexibility to select the combination of laptops, monitors, tablets, phones, other devices, programs and applications that best suit their needs.  Despite the diversity we do not experience file compatibility problems or significant support issues.  A number of our clients with similarly flexible approaches report similar experiences.

Personalization allows users to select the tools which function best in their environments; and better adapt to what might otherwise be suboptimal environments.  Case in point; once again I’m working and writing in the coach seat of an aircraft… but this time I’m using the little red laptop that I carefully measured and selected based on that fact that it fits ever so nicely on the airplane tray table.  On top of that, I’ve got a great view from up here.

Welcome

Welcome to FM Musings and Insights.  Those of you that already know us are aware that the open sharing of ideas and information has always been a hallmark of the Agile OAK approach.  Traditionally most of this sharing, when not in person, has been through our FM business news site and the publication of white-papers and viewpoint articles.  Our commitment to FM business news and white-papers is unwavering.  We are still scanning and posting the latest business news and our most recent article “Characteristics of High Performing Facilities Organizations”, was published earlier this month.

You have told us that you want more.  In response to the demand for more timely insights and more digestible information we launched our twitter feed @AgileOAK in January and now our blog, FM Musings and Insights.  This will be our new home for ongoing discussion on trends, emerging best practices, commentary or perhaps even some gentle chiding as we try to do our part to make the industry better for all of us.

To our dear friends and supporters we hope that you will find FM Musings and Insights an inviting place to gain new perspectives and share your own ideas about where our industry is going.  To those of you discovering us for the first time, we look forward to hearing your voices and getting to know you better.

Warm regards

Michael Redding