EMS Presentation Summary from SIG May 2008 Summit: Transforming Facilities Management
By: Expense Management Solutions Printed in: EMS Newsletter Special Edition, Part 2, May 28, 2008
On May 7, 2008, Michele Flynn, president of Expense Management Solutions, and Geoff Gatling, vice president of administrative services at CA, co-presented a session entitled, “Global Sourcing at CA: Transforming Facilities Management” at the Sourcing Interests Group (SIG) Sourcing Leadership 2008 Summit. If you missed the session, or were unable to attend the Sourcing Leadership 2008 Summit this year, the following article will provide you with a summary of the presentation, and will help you to understand how transformation of facilities management has entered a new phase, maturing beyond the sourcing process to encompass sophisticated relationship management strategies and technology that drives outsourced services relationships to new levels of value creation and collaboration. To download the slides from the presentation, click here.
Global Sourcing at CA: Transforming Facilities Management
Background
Expense Management Solutions, Inc. (EMS) was hired by CA to perform an assessment of their worldwide facilities operations, develop recommendations to increase the efficiency and reduce the costs of delivering services, and explore outsourcing as an option. CA’s global portfolio consisted of 191 properties across the Americas, EMEA and APAC, totaling over 6.2 MSF.
Data collection was challenging. CA’s decentralized service delivery model resulted in a wide variety of data collection and reporting practices. EMS had to drill down beyond the numbers to understand the work that was done, the level of service provided, the actual volume of work being performed and the cost of delivering services. At CA, the facilities organization had long been considered a dumping ground for expenses, so teasing out the true cost of providing facilities services from the expenses that were actually being booked to the facilities organization was critical. By converting CA’s data to industry standard reporting formats EMS was able to benchmark CAs processes and costs.
EMS recommended that CA move to an integrated facilities management (IFM) delivery model, to leverage spend, infrastructure and expertise. In addition to facilities management, the proposed model also included project management, architecture and engineering, space management, mail, audio/visual, reception, signage and switchboard services. Specific recommendations included:
- Standardization of staffing models across the portfolio
- Standardization of service level agreements (SLAs) for service delivery
- Centralization of call center operations
- Linking of compensation to performance through use of a fee-at-risk compensation model
- Implementation of a fully integrated technology suite
IFM Sourcing
Based on the goals of CA and the results of the completed operational assessment, EMS developed and implemented a sourcing strategy that consisted of a comprehensive request for proposal (RFP), selection of appropriate bidders, analysis of the proposals, selection of a service provider, negotiation of the final contract, and an ongoing governance program for the life of the contract.
The RFP was built on EMS’s proven methodology. Beginning with a well-defined scope of work, EMS incorporated detailed SLAs using performance based specifications, measurable KPIs and explicit targets for performance. Roles and responsibilities for both CA and the service provider were clearly defined and expectations of a detailed transfer strategy were included in the RFP. Compensation was tied to performance through the use of at-risk compensation.
Initially, CA anticipated a regional sourcing approach so that best-in-class service providers could be identified for each global region. Ultimately, smaller regional service providers could not provide the coverage necessary to respond to CAs needs, and three suppliers, Cushman and Wakefield, Johnson Controls, Inc., and Jones Lang LaSalle submitted bids for the contract. After the proposals were evaluated, Jones Lang LaSalle was selected. Based on the proposal submitted, CA anticipated savings of 21% off the baseline.
Relationship Management On Demand™
In order to effectively manage the complex global relationship with the Jones Lang LaSalle, CA selected an advanced technology platform, the Hiperos Relationship PortalTM. Hiperos provides centralized access to all the critical activities of strategic relationship management (SRM), including compliance management, performance management, demand management, and market intelligence.
CA will load all of the details of the relationship into the system, including SLAs, KPIs, timeframes, contacts, responsibilities, reports, and more. Hiperos will then be fully configured to function as a collaborative tool to manage the relationship. Both CA and Jones Lang LaSalle will access the system to enter relevant information, exchange critical communication, analyze data, and monitor performance. Importantly, CA can expand their use of Hiperos to manage its entire portfolio of suppliers, unlike most performance management solutions that are designed to be used with only one specific service provider.
Another critical feature of Hiperos is its capability to support the collaborative scoring process required to effectively implement the at-risk compensation strategy. As the data and scores from the IFM relationship are entered, averages are automatically calculated and weighted based on the unique rules of the relationship, and final disbursement of at risk fees are calculated and submitted for payment.
The Hiperos Relationship PortalTM requires no software, just an internet browser. Individuals are granted access to the system based on their roles and responsibilities. Each individual who logs into the system sees a personalized landing page that provides access to only those aspects of the relationship, data, and reports that are relevant. The system maintains automated distribution, routing, delegation, review and tracking of all information entered. Dashboards assist the user to track trends, analyze data, and instantly respond to alerts or signs of trouble.
Current Status
At this point, the transition is complete and the new governance model is in place. Although operational reporting is not yet fully implemented, financial reporting is, and CA has completed two global quarterly program reviews and scorecards. Looking ahead, CA expects the results to reflect the anticipated cost reductions and increased efficiency.
One notable result of the transition is the real change in the level of opportunity for the staff who now work for Jones Lang LaSalle on the CA account. It is a common phenomenon. Under an in-house model, real estate and facilities staff are corporate staff who are viewed as a cost center within the organization, with minimal opportunities for advancement. However, real estate and facilities outsourcing initiatives most often result in the majority of existing staff maintaining their jobs, in effect flipping their badges from that of their previous employer to that of the selected service provider. Once this occurs, the same individual in the same job now works for a large corporation as a contributor to a profit center rather than an expense in a cost center. Training opportunities and career opportunities are expanded, often resulting in a noticeable change in morale.
Key Take-Aways
Reflecting on the process, Geoff shared a couple of key decisions that were critically important to the project’s success, and suggested this information would be useful to any company contemplating an outsourced IFM delivery model.
Establish a valid baseline. If you don’t, not only will you not be able to measure the extent of your success, it will also hamper your ability to develop an appropriate sourcing strategy or an RFP with accurate workload volumes.
Don’t overestimate your ability to go it alone. Engaging an experienced advisor to assist you through the process will ensure that you have appropriate resources assigned to the project at all times. Often, a third party can be an effective tool for navigating the internal politics of a significant strategic change. Although the do-it-yourself option may save money upfront, a good advisor is worth their weight in gold and often pays out far more than their upfront expense.
Don’t short cut the process, but drive it. The average global sourcing engagement takes 6 – 9 months. Take the time to do it right and you won’t be disappointed. On the other hand, there is no reason to let the process drag out – as they say, time is money.
Tee it up internally, well in advance. The shift from internally delivered IFM services to an outsourced delivery model is a significant strategic redirection. Build your business case and line up the necessary support for your initiative to smooth the path to success.
Don’t underestimate EMEA. EMEA offers many challenges for corporate real estate and facilities outsourcing, from gaps in coverage to issues surrounding principal and agency in contracting, complicated laws and regulations, and work councils. All of these issues are navigable, but require an experienced hand.
Don’t underestimate the resources required for successful governance. Ongoing governance is a critical component of any outsourcing strategy. An investment in the proper tools and resources will enable you to derive the full value of your supplier relationship over its lifetime.
If you would like to speak with an Expense Management Solutions representative about SRM, new enabling SRM technologies, or how we have helped our clients save millions of dollars in corporate services expenses, call us today at (508) 460-7014, or send an e-mail to solutions@expensemanagement.com.
