StrategyDevelopmentandtheroleofCustomer inFacilitiesManagement

SouthBankUniversity

MBA (PartTime)

ColinRead.

December2007

SubmittedbyColinRead FortheMasterofBusinessAdministration LondonSouthBankUniversity 2007

AttentionisdrawntothefactthatcopyrightofthisdissertationrestswiththeLondonSouth BankUniversity.Thiscopyofthedissertationhasbeensuppliedonconditionthatanyone whoconsultsitisunderstoodtorecognisethatitscopyrightrestswiththeUniversityandno informationderivedfromitmaybepublishedwithoutthepriorwrittenconsentofthe University

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Contents. Section Acknowledgements. Notes Abstract. 1.0. 1.1. 1.2. 1.3. 1.4. 1.5. 1.5.1. 1.5.2. 1.5.3. 1.5.4. 1.6. 2.0. 2.1. 2.2. 2.3. 2.4. 2.5. 3.0 3.1. 3.2. 3.2.1. 3.2.2. 3.3. 3.4. 3.5. 3.6. 4.0 4.1 4.2 CHAPTERONE,INTRODUCTION. Rationale. Aim. Objectives. Hypothesis. OutlineMethodology. ReviewofLiterature. LiteratureAppraisal. FieldResearch. AnalysisofResults. DissertationContents CHAPTERTWO,FACILITIESMANAGEMENT&INDUSTRYISSUES Introduction. DefinitionoftheFacilitiesManagementIndustry Scope IndustryIssues Summary 17 17 20 22 28 11 12 12 13 13 13 13 13 14 14 PageN 9 9 10
o

CHAPTERTHREE,STRATEGICPLANNINGTECHNIQUESANDTOOL Introduction StrategyDevelopment Mankins&Steele Allio LongRangePlanning ScenarioPlanning TheCustomer Summary CHAPTERFOUR,RESERCHDESIGN Introduction ResearchAims&Objectives 56 57 30 34 34 38 42 45 49 54

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4.3 4.4 4.5 5.0 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 6.0 6.1 6.2 6.3 6.4 6.4.1 6.4.2 6.5 6.5.1 6.5.2 6.5.3 6.6 7.0 7.1 7.2

RationaleoftheResearchQuestionnaire. MethodofAnalysis ResearchSample CHAPTERFIVE,FIELDWORKANALYSIS Introduction AnalysisQuestions1.1to1.4Buyers AnalysisQuestions2.1to2.2Buyers AnalysisQuestions4.1to4.4.3Buyers AnalysisQuestions5.1to5.8Buyers AnalysisQuestions6.1to6.8Buyers AnalysisQuestions1.1to1.4Providers AnalysisQuestions2.1to2.2Providers AnalysisQuestions4.1to4.4.3Providers AnalysisQuestions5.1to5.8Providers AnalysisQuestions6.1to6.8Providers Question6.8 CombinedAnalysis CHAPTERSIX,RESEARCHSUMMARY Introduction DefinitionsSummary StrategySummary LongRangeandScenarioPlanningSummary LongTerm ScenarioPlanning CustomerSummary ValuevCost Capability Differentiation ConceptualModels CHAPTERSEVEN,CONCLUSIONS Conclusions TestofResearchHypothesis

57 59 63

64 64 67 72 77 86 95 97 99 105 115 124 124

131 132 133 136 136 137 141 143 144 145 147

159 162

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8.0 CHAPETEREIGHT,RECOMMENDATIONSFORFURTHERWORK 8.1 9.0. RecommendationsforFurtherWork. CHAPETERNINE,REFERENCES 163

APPENDICES. APPENDIXACHAPTERTWO A1 A2 A3 A4 A5 A6 A7 A8 A9 FMMarketIssues FMStrategy AuditoftheUKFMMarketSector2008(Extracts) Business&MarketingFactors Definitions MarketingPlanComponentsandScope MISMeasuresandIndicators FMPriorities FMSurveyAnalysis

PAGE#

2 7 17 36 49 50 52 54 55

APPENDIXBCHAPTERTHREE B1 B2 B3 B4 B5 StrategyDevelopment DevelopmentModels GenericStrategies Organisational&CustomerDecisionProcesses StrategicManagementTerminology 62 67 75 79 83

APPENDIXCCHAPTERFOUR C1 ResearchQuestionnaire 85

APPENDIXDCHAPTERFIVE D1 D2 D3 Buyer&ProviderAnalysis CombinedAnalysisHighLevelVariance Question6.8WrittenResponses 104 110 115

APPENDIXECHAPTERSIX E1 ScenarioPlanningKeyActions 120

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ListofTables,GraphsandCharts. Table2.1 Table2.2 Table2.3 Table3.2 Table3.3 Table4.5.1 Table5.3.1 Table5.3.2 Table5.4.1 Table5.4.2 Table5.4.3 Table5.4.4 Table5.4.5 Table5.4.6 Table5.5.1 Table5.5.2 Table5.5.3 Table5.5.4 Table5.5.5 Table5.5.6 Table5.5.7 Table5.5.8 Table5.6.1 Table5.6.2 Table5.6.3 Table5.6.4 Table5.6.5 Table5.6.6 Table5.6.7 Table5.8.1 Table5.8.2 Table5.9.1 Table5.9.2 Table5.9.3 Table5.9.4 Table5.9.5 FacilitiesManagementServiceLines GenericFacilitiesManagementProviderSolutions ClientPriorities StrategyDevelopmentFindings KeyFacilitiesmanagementCustomerServiceDimensions ResearchSample ProviderScopeQuestion2.1 ConsultancyServiceQuestion2.2 Definition Process Sequence TheStrategy Process Implementation ExternalEnvironmentScanning SpeedofChange Techniques WiderMarketChanges Competition StructuredandUnstructuredApproach Forecasting Quality&Cost ProviderStandards Approach SuccessCriteria WorkingTogether WorkingTogether Opinions General ProviderScopeQuestion2.1 ConsultancyServiceQuestion2.2 Definition Process Sequence TheStrategy Process

(BuyersTables)

(ProvidersTables)

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Table5.9.6 Table5.10.1 Table5.10.2 Table5.10.3 Table5.10.4 Table5.10.5 Table5.10.6 Table5.10.7 Table5.10.8 Table5.11.1 Table5.11.2 Table5.11.3 Table5.11.4 Table5.11.5 Table5.11.6 Table5.11.7 Table5.13.1 Table6.4.1 Table6.4.2

Implementation ExternalEnvironmentScanning SpeedofChange Techniques WiderMarketChanges Competition StructuredandUnstructuredApproach Forecasting Quality&Cost ProviderStandards Approach SuccessCriteria WorkingTogether WorkingTogether Opinions General CommentaryonHighVarianceAreas KeyAspectsofScenarioPlanning AimsofScenarioPlanning

Figure2.1 Figure2.2 Figure3.1 Figure3.2 Figure3.3 Figure3.4 Figure3.5 Figure3.6 Figure3.7 Figure6.6.1 Figure6.6.2 Figure6.6.3 Figure6.6.4 Chart5.1 Chart5.2 Chart5.3 Chart5.3.1

ClustersofSupportServices FacilitiesManagementMarketSizeandDistribution ElementsofStrategicManagement Mckinsey7SModel ContinuousDecisionOrientatedStrategicPlanning StrategyProcessTheUsualWay StrategyProcessTheBetterWay StrategyDevelopmentinEnvironmentalContext ServiceQualityImportance StrategyDevelopmentModel AchievingValueAddedServices ScenarioPlanningKeySteps IntegratedStrategicDevelopment BuyersEmployeeNumbers BuyersUKBasedFMExpenditure BuyersRespondentsJobTitles FMServicesPurchased

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Chart5.3.2 Chart5.7.1 Chart5.7.2 Chart5.7.3

ConsultancyServicesPurchased ProvidersEmployeeNumbers ProvidersUKFMTurnover ProvidersRespondentsJobTitles

ListofTables,GraphsandChartswithinAppendices AppendixA TableA11.1 TableA11.2 TableA11.3 TableA22.1 TableA22.2 TableA22.2 TableA81.1 TableA91.1 TableA91.2 FigureA11.1 FigureA22.1 FigureA22.2 ChartA22.1 ChartA22.2 ChartA91.1 ChartA91.2 ChartA91.3 ChartA91.4 ChartA91.5 AppendixB TableB11.1 TableB11.2 TableB21.1 TableB31.1 FigureB11.1 FigureB11.2 FigureB11.3 FigureB11.4 FigureB21.1 Decision&Planning TenYearPriceEarningsRatiosforHighPerformingOrganisations TenSchoolsofStrategy GenericStrategiesEffects&Actions ChangeDrivers PorterCompetitiveStrategy ManagementStyles MarketingInformationSystemsConcepts TheStrategicPlanningProcess %SectorWorkforceDistribution GrossDomesticProduct&ServiceSectorContribution BuyersSelectionCriteria ClientOutsourceExpectations FacilitiesManagementandOrganisationalStrategyLinks FacilitiesManagementandOrganisationalStrategyLinks FMClientPriorities&OrderofSelectionProcess FMSurveyCriteriaClassification FMClientPriorities&OrderofSelectionProcessEvaluation ConsumerEvaluationProcesses ResourceModelStrategicFacilitiesManagement StrategicFacilitiesManagement ClientExpectedBenefitsfromOutsourcing ClientSatisfactionDrivers DominantExpectedBenefits DominantSelectionCriteria DominantSatisfactionDrivers DominantPriorities DominantEvaluationMethods

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FigureB21.2 FigureB21.3 FigureB21.4 FigureB21.5 FigureB31.1 FigureB31.2 FigureB31.3 FigureB41.1 AppendixD TableD21.1 TableD21.2 TableD21.3 TableD21.4 TableD21.5 AppendixE TableE11.1

RelationshipModelofEnvironmentalTurbulence&StrategicPlanning MintzbergSchoolsofThought StrategyFormulationasManyProcesses StrategyFormulationasaSingleProcess ApproachestoStrategicPlanning TheStrategyClock GeneralElectricPortfolioModel CustomerDecisionProcess

StrategyQuestionVariance ExternalScanningQuestionVariance ExternalScanningQuestionVariance CustomerSuccessFactorQuestionVariance CustomerSuccessFactorQuestionVariance

ScenarioPlanningTasksandOutcomes

ListofAbbreviations. FM TFM SME FacilitiesManagement TotalFacilitiesManagement SmallMediumEnterprise

TotalWordCount. ChapterOne ChapterTwo ChapterThree ChapterFour ChapterFive ChapterSix ChapterSeven ChapterEight

31,533 1211 2731 7289 2118 7811 9053 1132 188

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Acknowledgements.

IwishtoexpressmythankstoDrUlyMaforhisadviceandguidanceinthepreparationof thisreport,andGeorgeBellforhishelpthroughouttheMBAcourse. LastlyIwishtothankmywifeandtwosonsforthesupporttheyhavegivenmeinthe completionofthisreport,mypreviousUniversitycoursesandinacknowledgementofthe sacrificestheyhavemadetoenablemetocompletes mystudies,thiswillbethelastofmy majoracademicundertakings.

Notes.

Duetothenatureofthisreportandthecommercialsensitivitysurroundingthe researchquestionnaire,theorganisationalandindividualrespondentsnameshave beenexcludedfromthefinalreportthisistomaintaintheconfidentialityrequiredin ordertoobtainfeedbackforbothbuyersandprovidersofFacilitiesManagement Services.

Thefinalwordcountforthisreportexceedsthetargetlevel.Followingdiscussions withtheresearchadviser,DrUlyMa,itwasagreedthattheinformationcontained withinthefinalversionofthisreportwasessentialforthepurposeoftheresearchand shouldthereforebeincludedinthemaindocument.

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Abstract.

Understablemarketandeconomicconditions,organisationscantendtoplanwithsome certaintyonfuturemarketandindustryconditions,usingpasteventsandtrendstoguide decisionmaking.ItcouldbesaidthattheUKtheeconomyoverthelast10yearshascreated somestabilityfororganisations,withsteadygrowth,astrongcurrencyandrelativelylow inflationwhencomparedwithitsEuropeancounterparts.Howeverglobalmarketchanges, growthinoutsourcingandglobalisationmeansthattraditionalareasofstabilityorcontinuity arebeingsubjectedtonewfoundforeigncompetitiveforces.Thesearesomeoftheissues thattheUKFMindustryfaceandwhatdrivestheneedforhavingrobustplanningand strategicdevelopmenttechniquesinplacefortheeffectivemanagementoftheFM organisation.Thisdissertationevaluatesthestrategicplanningprocess,theuseofexternal environmentalscanningandforecastingtechniquesusedtodeveloptheorganisational strategywithintheUKFacilitiesManagement(FM)Industry. Whatwasidentifiedwasthattheareaofstrategyandstrategicplanningislargeandwidely debatedamongstacademics.Thereisalackofagreementonwhatconstitutesbestpractice andlackspracticalguidanceforimplementationandapplication.Itisoverlycomplicatedand thisresultsinreluctancebyseniormanagerstoembracethesoundtechniquesand approachesthatdoexist.Assuchstrategyandstrategicdevelopmentwiththeassociated techniqueswouldbemorereadilyusedifitcouldbesimplified.Thiswouldbringmore practicalapproachesthatcouldbereadilyunderstoodbyoperationalmanagers.Itisthewriter viewthatplacingthesetechniquesinthecontextofdecisionsupporttoolswouldaidtheiruse andunderstanding. Fromthesurveyworkcompleteditisclearthatthereexistsalackofuseofsuchstrategy developmenttechniquesbybothbuyersandprovidersofFMservices.Bothgroupsaspireto receiveandcreatevalue,yettheyappeartobeconsumedbyashorttermcostfocuswhichis valuedepleting.FMprovidersneedtomakebetteruseofstrategicdecisionsupport techniquesandworkatahigherlevelwiththeircustomersinordertocreatevalueanda differentiatedservicesprovision.Providersneedtoembracemanagementthinkingand practicewhichplacesgreatervalueonthefutureratherthanthepresentshorttermcostfocus thatthesurveyresultsindicate. Theuseoftheproposedframeworksandmodelsshouldencouragemorestrategicthinking andthedevelopmentofrobustFMorganisationalstrategies.

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CHAPTERONE.INTRODUCTION.

1.1.

Rationale.

Inadynamicbusinesscontextchangeisacertaintyandorganisationsneedtobeableto makegoodquality,accuratedecisionsontheoperationalmattersandlongtermstrategic plans.Withoutthiscapabilityitcanbeeasytobecomefocusedonoperationalitemswithout placingsufficientemphasisonmarketconditions,presentandfuture.Thisapproachanda lackofunderstandingoftheorganisationsstrategiccapability,withinthecompetitivemarket place,couldleadtobusinessfailure. Conventionalstrategicplanningtrendstofocusondevelopingtacticstoadvancetheexisting business.Decisionsarebasedoncurrentcircumstancesandprojectionsoftrendsthatare fairlyreliablebecausetheyreflectpredictable,threetofiveyeartimeframes.Longrange strategicplanningontheotherhandcallsforaleapoffaithtoplanaroundanuncertain, distantfuture.(MollerTiger1999) Ifstrategicplanningisaprocessofanticipationandpredictionofsomefuturestateofthe organisationsmarketsandindustry,thenaneffectivestrategicplanneedstobebuiltupona soundfoundationofknowledge.Thisknowledgeneedstocoverbothinternalandexternal conditions.Withstronggrowthinanumberofmarketsthereisariseinconglomerateactivity asorganisationsundertakeanabsorptionstrategyacrosstheglobe,withtheaimofbeingto biganddiversetofail.Undersuchconditionstherewillbeadiscontinuityduetocompetition comingfromoutsidetheindustry,technologicaladvancesorstakeholderpressures.Under suchconditions,whicharehighlightedinsection3ofthisproposal,theorganisationwillneed tobecapableofeffectivedecisionmaking,adjustmentinstrategicplansandorganisationally implementchangeinanagileway,inresponsetothenewfoundenvironmentalcondition. Thechangedriversactingontheorganisationarenumerousanddevelopmentofalongterm strategicplanthatallowsforprovidingacommerciallyviableandsustainablebusinessis difficult.Theuseofframeworksandtoolstoassistinthestrategydevelopmentprocess shouldbemade,howeverthisinitselfisnotwithoutchallenge. Fortheriskintelligententerpriseitisrecommendedthatcompaniesgopasttheriskregister andengageinscenarioplanningandhelpprepareforspecificevents.Scenarioplanning enablesexecutivestoanswerthequestionsofwhatcoulddisruptourplansandhow vulnerablearewe(Fitzpatrick2007)

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Adaptingtochangeinthecontextualenvironmentisoneofthekeychallengesformanagers astheytrytoensurethesurvivalandlongevityoftheirorganization.Yet,boththeliterature andthetextbooksonthesubjectareaofthecontextualenvironmentlackunequivocal conceptualandpracticalguidanceformanagersinterestedinthisareaofmanagement practice.(Burt2006).

1.2.

Aim.

Developaframeworkfortheimplementationofbestpracticeembracingtheuseoflongrange planningtechniques,organisationalenvironmentalscanninginterlinkedtothekeydriversof theorganisationscustomers.Thisframeworkbeingatoolforthedevelopmentand implementationofcorporatestrategy.

1.3.

Objectives.

1. Definelongrangeplanningandorganisationalenvironmentalscanningtechniquesinthe contextofcorporatestrategydevelopment. 2. IdentifythekeybusinessdriversintheFacilitiesManagementservicessectorandits customers 3. Identifypolicyandmanagementtrendswithinfacilitiesmanagementsectorwithregardsto strategydevelopment 4. Analysecurrentthoughtswithintheindustryonlongrangeplanningandenvironmental scanningandtheeffectsonstrategydevelopment 5. Developaframeworkfortheimplementationofbestpracticeembracingtheuseoflong rangeplanningtechniques,encompassingenvironmentalscanningandscenarioplanning

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1.4.

Hypothesis.

FacilitiesManagementorganisationsarebecomingincreasinglycustomerfocusedinthe deliveryofservices,howeverwhilstpractitionersknowaboutstrategydevelopmenttoolsthey arenotfullyunderstoodandhencenotwidelyimplemented.Thisthencreatesagapbetween thestrategydevelopmentprocessesbeingusedandthecustomersstrategicdrivers.

1.5.

OutlineMethodology.

Sothattheuseandunderstandingofstrategicplanningtoolsisidentifiedwithinthefacilities managementindustry,researchwillberequired.Thisresearchwillbeinfourmaintypesas detailedbelow. 1.5.1. Reviewofliterature. Areviewofcurrentandbackgroundliteraturewilltakeplacethiswillconcentrateonthe followingareas.

ReviewliteratureproducedbyProfessional&AcademicbodieswhichrepresenttheUK
businesses

Reviewcurrentresearchdocumentsproducedbyindustryandacademicsources Reviewgeneralbusinessjournals ReviewinformationavailableontheInternet

1.5.2. LiteratureAppraisal. Criticallyappraisethedatacollectedintheliteraturereviewandestablishthepresentopinion andstatusofthelongrangeplanninginthedevelopmentofcorporatestrategy.Thiswillallow greaterunderstandingofthecurrentdirectionandextenttowhichplanningtoolsand frameworksareusedinthedevelopmentandimplementationofstrategyandcorporate direction.Thiswillalsoallowthedevelopmentofamorefocusedquestionnaire,forthe fieldwork,whichconcentratesonthepracticalissuesassociatedwiththeuseoflongrange planningandenvironmentalscanningtechniques. 1.5.3. FieldResearch. Inordertoestablishtheextentoruseoflongrangeplanningitwillbenecessarytocontact thepractitionerswithinthefacilitiesmanagementsectoritself.Thiscontactwillinitiallybe madeintheformofaquestionnairetoacompletecrosssectionoftheindustry,rangingfrom professionaltocontractingcompanies.Thequestionnaireresponseswillbeanalysedand fromthisanalysisashortlistofpeoplewillbeaskedtoattendinterviewsothatafullanswer

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andexpansiononthetopicareacanbeobtained.Theselectionoftheintervieweeswillbe madeonthequalityofresponsestotheinitialquestionsandwilllooktotakeupkeypoints, whichmayhavebeenraised. 1.5.4. AnalysisofResults. Ananalysisofthefieldworkwillbecompletedandcomparedwiththatoftheliteraturereview, thisshouldidentifyareaswherepresentpracticemaynotincludeanyformoflongtermview, toolsoranalysisoffuturemarketconditionwhendevelopingcorporatestrategy.Fromthis workitwillbepossibletoformopinionsanddevelopaframeworkforimplementationofbest practice,whichencompassestheuseofstrategydevelopmenttools.

1.6.

DissertationContents.

Thecontentsofthisdissertationaresummarisedbelow, a. b. c. d. e. f. g. Contents. TableofAppendices. TableofgraphsandCharts. Acknowledgments. Abstract. AbbreviationsList. ChapterOne,Introduction. a. Rationale b. Aim. c. Objectives. d. Hypothesis. e. OutlineMethodology. f. ReviewofLiterature g. LiteratureAppraisal h. FieldResearch i. AnalysisofResults

j. DissertationContents.
h. ChapterTwo,facilitiesmanagementandindustryissues a. Introduction. b. DefinitionoftheFacilitiesManagementIndustry c. Scope d. MarketIssues e. IndustryIssues f. Strategy g. Summary h. References

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i. Chapterthree,marketingandbusinessfactors a. Introduction b. MarketForces i. Globalisation ii. Competition iii. Regulation iv. Investors v. Technology vi. Customers c. StrategicConsideration i. StrategyQuestions d. Marketing i. InternalPressuresandIssues ii. MISValueRecognitionDrive iii. BasicAwarenessandScope iv. AlignmenttoStrategy e. Summary f. References j. Chapterfour,strategicplanningtechniquesandtool a. Introduction b. StrategicPlanningOverview c. StrategyDevelopment d. LongRangePlanning e. ScenarioPlanning f. TheCustomer g. Summary h. References k. Chapterfive,ResearchDesign a. Introduction b. ResearchAims&Objectives c. RationaleoftheResearchQuestionnaire. d. MethodofAnalysis e. ResearchSample.

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l. Chaptersixanalysesofresults. a. Introduction b. FacilitiesManagementProviders c. Question3.1to3.4,5.1&5.2. d. AnalysisQuestions5.3,5.4,7.1&8.3. e. AnalysisQuestion7.2. f. FacilitiesManagementBuyers g. AnalysisQuestion h. SummaryofFindingsfromFieldwork. m. Chapterseven,Conclusion. a. Introduction b. DefinitionsSummary c. StrategySummary d. LongRange&ScenarioPlanningSummary e. CustomerSummary f. ConceptualModels n. ChaptereightConclusion a. Conclusion b. TestofResearchHypothesis o. ChapternineFurtherWorkRecommendationsforFurtherWork.

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CHAPTERTWO.FACILTIESMANAGEMENT&INDUSTRYISSUES

2.1.

Introduction.

Thischapterreviewsthecurrentliteratureinordertoestablishaclearunderstandingofthe whereFacilitiesManagement(FM)residesintheoveralleconomy,areviewoftheissuesthat arebeingfacedbyFMprovidersandconsumers. DuetowordcountconstraintsthischapteristobereadinconjunctionwithappendixAofthis report,whichprovidesfurtherresearchandfindingsonthefollowingareas: A1 A2 A3 A4 A5 A6 A7 A8 A9 FMMarketIssues FMStrategy AuditoftheUKFMMarketSector2008(Extracts) Business&MarketingFactors Definitions MarketingPlanComponentsandScope MISMeasuresandIndicators FMPriorities FMSurveyAnalysis

2.2.

DefinitionoftheFacilitiesManagementIndustry

TheFacilitiesManagement(FM) industrywithintheUnitedKingdomisingeneralconcerned withtheprovisionofmaintenanceandpropertyrelatedserviceswithinthebuiltenvironment. Thescopeofservicesthatfallunderthisclassificationcanbequitewide.Asummaryof servicesandthegenericheadingsthattheyfallunderarecontainedwithintheTable2.1 below.

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Table2.1FacilitiesManagementServiceLines HardServices PlannedMaintenanceServices EngineeringServices ReactiveMaintenanceServices EmergencyCalloutServices HeatingVentilationandAirconditioning (HVAC) Environmentalmonitoring RegulatoryCompliance(HVAC) ElectricalServicesandSystems BuildingFabricRepairsandMaintenance MechanicalandElectricalInstallationWorks BuildingFabricInstallationworks Lifts Lifeprotectionsystems SoftServices Mailroomservices Porters SecurityGuarding ReceptionServices Graphics&ReproductionServices Catering Vending Cleaning Stationary Wastedisposalandmanagement Health&SafetyServices Firewardens FirstAid Landscaping InternalPlanting Concierge SpaceManagement&Planning InternalSpacechargingmanagement Courierservices ChauffeurServices Transport&FleetManagement

Thedefinitionoffacilitiesmanagementisasubject,whichappearstobeindebate.A selectionofdefinitionsfromrecognisedbodiesandresearchareprovidedbelow. ThedefinitionprovidedbytheBritishStandardsInstituteandtheBritishInstituteofFacilities Managersisdetailedbelow: Facilitiesmanagementistheintegrationofprocesseswithinanorganisationtomaintainand developtheagreedserviceswhichsupportandimprovetheeffectivenessofitsprimary activities

TheInternationalFacilitiesManagementAssociationdefinesfacilitiesmanagementasbelow: Aprofessionthatencompassesmultipledisciplinestoensurefunctionalityofthebuilt environmentbyintegrating,people,place,processandtechnology. Nuttprovidesthefollowingdefinitions(Nutt2004). Themanagementofinfrastructureresourcesandservicestosupportandsustainthe operationalstrategyofanorganisationovertime

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Grimshawprovidesanumberofdefinitionsbutthewriterviewisthattheonebelowismost applicabletotheindustryweseetoday(Grimshaw2003). FacilitiesManagementisatechnicalfunctionconcernedwithmaintainingthepracticalutility ofthephysicalinfrastructuretoensureitssupportsthecoreactivityofanorganisation

Thereisemphasisonprocess,peopleinterface,infrastructureandutilityofpropertyinmost oftheabove.HoweverlittleemphasisisgiventocustomerserviceandonlyNuttbringsalink toorganisationalstrategywithinhisdefinition.ThisisanissuethatBarrettdrawsuponhis viewisthattheverynotionoffacilitiesmanagementisthatofaproactiveservicethatcreates anenvironmentconducivetotheachievementofcorebusiness.Hisviewisthatthisisinstark contrasttothetechnicalandreactivenatureofthepresentserviceapproachwithinthe industry(Barrett2000).Averymuchsimplifieddefinitionwhichperhapsplacedgreater emphasisonallaspectofwhatisevolvingwithintheFMindustryaroundtheimportanceof serviceandcustomersisthatofAlexanderwherehepointstothreeemergingmanagement roleswithintheindustry.

ManagingCustomers ManagingService ManagingAssets

Theindustryisessentiallyconcernedwitheitherthedeliveryormanagementofservices withinthebuiltenvironment,itcanbesaidthatitmanagestheinterfacebetweenbuilding users,processes,proceduresandthefunctionalityofthebuildingasset.Withpropertyand officeorbuildingmaintenanceservicesbeingoneofthehighestsinglecostsformost businessoperations,outsideofemploymentcosts,itisimperativethatlikeallorganisational investmentsthemostcosteffectiveuseismadeofthisfinancialcommitment(Alexander 2003).

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2.3.

Scope

ThebreadthofservicesandscopecontainedundertheheadingofFMisbothwideandin someinstancespoorlydefinedandunderstood,asdiscussedearlier.Addedtothisisthat boththescopeofserviceandofferingsaresubjectedtomarketforces,whicharelookingto increasethescopeofserviceevenfurther.InwidercontextChotipanichmodelbelow, representshowthefunctionallinesfittogetherinthecontextoftheoverallpurpose/focusin relationtopropertyandfacilitiesservices.Themodelisadaptedtoreflectthemoregeneric referencefortheservicesastheyarebroughttogetherandofferedtoclientsinasimilarway toFigure2.1.ThemodelgivesagoodindicationofhowtheFMserviceprovidershavegrown fromtheirsingleserviceprovisionintomultiserviceprovider,throughhorizontalintegration. Whilstnotalloftheservicelinesarepresentlyintegratedwithintheindustryasitstandsyou canseehoweverthefragmentednatureoftheindustryandhowthiswillmakesupplier evaluationandselectiondifficultformostclientorganizations.

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Figure2.1

ClusterofSupportServices(AdaptedfromChotipanich2004)

Realestateandpropertyportfoliostrategy LeasenegotiationsandManagement LandlordsActivitiesandrentreviews RetailO utletsandspacerenting FacilitiesProject M anagement

Locationsearchingandselection Acquisitionanddisposal Relocation NewBuildings Extendingandalteration Demolition Maintenanceand Repair Facilityrefurbishment Buildingshellandm aintenance Maintenanceandrepairplant M&Eoperationandmaintenance Energydistributionandmanagem ent Disasterpreventionandrecovery PestControl Landscapingandlandscapemaintenance CleaningandHousekeeping HealthandSafety Security OfficeServices Officemovesservices Postandm aildistribution CourierServices Telephones RecordsManagem ent Printandfax Storageanddistribution Reprographics ReceptionandTelephoneO perators Publicrelationsandgovernmentalaffairs Travelarrangem ents Carfleetcontrol Transportation BusinessHospitality LongTermresourceplanning Midtermresourceplanning Annualresourceplanning W orkProgramm ing Developmentprogramming FacilityPlanningandMasterplanning SpacePlanning SpacePlanning& Management Spaceconfigurationandreconfiguration Spaceallocations,utilisation,relocation spaceauditandmonitoring Churnmanagement

BuildingServices& O perations

Officeallocation Demonstrationandmanagement Budgetandcostcontrol Purchasingandcontractcontrolandnegotiation Officefurnitureandstationaryprovision ChildNurseryProvision EmployeeSupport Services Restroom W orkplaceNursery Recreations Catering ResidentialAccommodation CommunityAffairs EmployeeSpecialservices

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SoftServices

O perations Administration/ M anagement

Strategy

Planning& Programming

SoftServices

HardServices

ConsultancyServices

RealEstate& Property Management

2.4.

IndustryIssues

AppendixA1showstheeconomicsignificanceoftheservicesectorinwhichtheFMindustry operatesisgrowing.ItisthereforemakinganimportantcontributiontotheUKeconomy,on thispointAlexandernotesthatGovernmentpolicyandactiononderegulation,market economy,competitivepolicesandprivatisationhaveprovidedinfluenceonconditionswhich allowforgrowthintheFMsector(Alexander2003).Theimportanceoftheindustryandits benefitextendstodevelopmentagenciesneedforgreateraccountabilityfortheuseofpublic money.ThisisseenintheriseinPublicPrivatePartnerships,PrivateFinanceInitiatives,and JointVenturesbetweenGovernmentaldepartmentsandprivateindustry,whichincludesthe FMsector. Aswithmostprivateorganisationsgovernmentaldepartmentsarefacedwiththeneedto reduceoverheadcostsandseekoutmorecosteffectivesolutions,Governmentpolicystill seesthisthroughprivateindustryandoutsourcing. Thesizeofthemarketbasedon2005dataisprovidedinFigure2.2below,thedefinitionsof theservicesectorsarecontainedwithinthereferencesectionofthischapter.Overallthe industryisworthanestimated187bnandestimatedtoriseto246bnby2010(Mintel2005). Figure2.2FacilitiesManagementMarketSizeandDistribution(Mintel2005)

2005bn

Supportservices Telecommunications BuildingO&M

16.8 18.7

9.4 7.5 1.9 84.2

Infrastructure management Transport Propertymanagement Environment management Informationtechnology

20.6 28.1

Theindustryissegmentedinanumberofwaysinrelationtohowservicesaredeliveredand wherefrom.ThisissimplifiedinTable2.2overleaf,whichindicatesthegenericFMsolutions offeredbyvarioustypesofprovidersthataretraditionallyassociatedwithFM.Fromthisitis possibletoseehowthebusinessisfragmentedbythewayinwhichproviderspositions

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themselvesinanefforttoattracttheirtargetclients.Youcanseefromthistablehowthe transitionoftheindustryhastakenplacethroughclientsoutsourcinginastagedmanner throughsingleservicelinesleadingtoafullTotalFacilitiesManagement(TFM)solution.In responsethismeansthattheindustryparticipantshavehadtointegratehorizontallyaway fromtheiroriginalcoreofferingofeithersoftorhardservicesbeginning,inordertomeetthe demandforafullserviceoffering. Theindustryhasdevelopedinrecentyearsandisstilllargelyevolving,itsoriginsdostem,in thewritersview,fromgeneralmaintenancecontractors.HoweverMintel(Mintel2005)viewis thattheriseoftheFMsectororiginatesfromthesoftservicesproviderswhohavegrowntheir traditionalsingleserviceprovisionwithinthewidersoftservicesdefinitiontakingoncleaning cateringandsupportservices.Thisviewonthedevelopmentandhorizontalandvertical integrationofsoftservicesprovidersdoesconflictwithBarrett,whereheviewsthatthe industryremainstechnicallyorientatedandreactive(Barrett2000). Asoutsourcinghasincreased,clientslooktoexternalisethefunctionandinhouse managementteamsinvolvedwithpropertyandpropertyrelatedservices.This,likemany industriesbefore,isconcernedwithseparatingcoreandnoncoreactivitiesandlookingfor bettervalue.Theevolutioniswhatweseetodayisthetotalfacilitiesmanagementservicesis increasingbecomingmorepopularwithcorporateclientsandinparticularGovernment sectors(Mintel2005).TherearealsotaxbenefitsformanyCorporateforremovingproperty assetsfromthebalancesheet,henceariseinsaleandleasebackarrangements,whichthen haveaneedforclient/FMroutinesupportservicesratherthanafullclientleadproperty team.FromTable2.2andfromresearchcompletedbyMintelthereremainsquitedifferent approachestothebuyingandprovidingofserviceswithinthemarketplace(Mintel2005).

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Table2.2GenericFacilitiesManagementSolutions
ProvidersOffering
ReprographicProviders/Manufacturers TotalFacilitiesManagementProviders Direct Direct Direct Direct Direct Direct Direct Direct Direct Direct SubContract SubContract Direct Direct Direct Direct SubContract Direct Direct Direct SubContract SubContract Direct Direct SubContract SubContract Direct SubContract Direct Direct Direct Direct Direct Direct Direct Direct Direct Direct Direct EngineeringConsultancyProviders CombinedM&EFabricContractors BuildingSmallWorksContractors WasteManagementContractors M&EMaintenanceContractors FMConsultancyProviders ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService Direct Direct ManagedService Direct ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService Direct Direct ManagedService ManagedService Direct ManagedService ManagedService Direct ManagedService Direct Direct Direct ManagedService Direct ManagedService Direct ManagedService HardServicesProviders Direct Direct Direct Direct Direct Direct Direct Direct Direct Direct SubContract SubContract Direct SubContract SubContract Direct SubContract SubContract SubContract SubContract SubContract SubContract No No SubContract SubContract SubContract SubContract SubContract Direct Direct SubContract SubContract SubContract SubContract SubContract Direct Direct Direct

SpecialistSupplierItem

LandscapeContractors

GenericClassification

ServiceLines
PlannedMaintenanceServices EngineeringServices ReactiveMaintenanceServices EmergencyCalloutServices HeatingVentilationandAirconditioning(HVAC) RegulatoryCompliance(HVAC) ElectricalServicesandSystems BuildingFabricRepairsandMaintenance MechanicalandElectricalInstallationW orks BuildingFabricInstallationworks Lifts Lifeprotectionsystems Mailroomservices Porterage SecurityGuarding ReceptionServices Graphics&ReproductionServices Catering Vending Cleaning Stationary Wastedisposalandmanagement Firewardens FirstAid Landscaping InternalPlanting Concierge Courierservices ChauffeurServices EnvironmentalConsultancy M&EDesign Health&SafetyServices SpaceManagement&Planning InternalSpacechargingmanagement Transport&FleetManagement Procurement EnergyManagement ProjectManagement QuantitySurveying Notes No=servicenormallyprovided Direct Direct Direct Direct Direct Direct Direct NS Direct No No No No No No No No No No No No No No No No No No No No SubContract Direct SubContract SubContract SubContract SubContract No Direct Direct SubContract No No No No No No No No No No Direct Direct No No No No No No No No No No No No No No No No No No Direct No No No No No No No No

Direct No No No No No No Direct NS Direct No No No No No No No No No No No No No No No No No No No SubContract SubContract SubContract SubContract SubContract SubContract SubContract SubContract Direct Direct

HardServices

Direct Direct Direct Direct Direct Direct Direct Direct Direct No No No No No No No No No No No No No No No No No No No Direct Direct No No No No No Direct Direct Direct

No No No No No No No No No No No No No No No No No Direct Direct No No No No No No No No No No No No No No No No No No No No

No No No No No No No No No No No No No No No No No No Direct No No No No No No No No No No No No No No No No No No No No

No No No No No No No No No No No No No No No No No No No Direct No No No No No No No No No No No No No No No No No No No

No No No No No No No No No No No No Direct Direct Direct Direct No No No No No No No No No No No No No No No No No No No No No No No

No No No No No No No No No No No No No No No No No No No No No No No No Direct Direct No No No No No No No No No No No No No

No No No No No No No No No No No No Direct No No No No No No No No No No No No No No No No No No No No No No No No No No

No No No No No No No No No No No No No No No No Direct No No No Direct No No No No No No No No No No No No No No No No No No

No No No No No No No No No No No No No No No No No No No No No Direct No No No No No No No No No No No No No No No No No

SubContract SubContract SubContract SubContract SubContract SubContract SubContract SubContract SubContract SubContract SubContract SubContract Direct SubContract SubContract Direct SubContract Direct Direct Direct SubContract SubContract No No SubContract SubContract Direct SubContract Direct SubContract SubContract SubContract Direct Direct SubContract SubContract SubContract SubContract SubContract

SoftServicesProviders

CleaningContractors

CateringContractors

VendingContractors

SecurityContractors

Couriers

ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService ManagedService Direct Direct Direct ManagedService ManagedService ManagedService Direct Direct Direct Direct

ConsultancyServices

SoftServices

Clients:SmallBusiness,DirectRelationship,SubContractortoLargerFMorganisations

Clients:LargeCorporate,CentralandLocalGovernment,MultiNational Service

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Asthemarketandserviceshavematuredorganisationshavelookedtoremoveoverheadand marginonservicesthathavepreviouslybeensubcontractedorprovidedbycontractssetup directwiththeclientsandnotthroughtheFMmanagementcompany.ThisisnotedbyMintel (Mintel2005)wheretheyfoundthatincreasinglythelargestproportionofFMexpenditureis withintheprovisionofcatering,cleaningandsecurityonwhichoperatorsareincreasingly beingrequiredtobundletheseservices.Atthetimeofthereportthiswouldhavebeentrue andeventsarefurtherconfirmingadrivetowardsgreaterexpansionofservicescopeas organisationswiththeirrootscomingfromcleaningorcateringbackgroundsareextending theirservicesofferingsintomechanicalandelectricalmaintenance,notablyOCSand Compass.Again,Mintelforecastthismovewithinthemarketplace,wheretheynotethat majorplayerswilldominatethefutureastheyincreasetheirtotalfacilitiesmanagement capabilities,significantscaleandpurchasingpowerwillbegintocount.Theyseethegrowth throughtacticalacquisitiontofillserviceorgeographicalgapsintheiroffering(Mintel2005). Againacquisitioninthelast24monthshaveincludedexamplessuchas 1. CarillonacquiringPlannedMaintenanceEngineering(BuildingServicesMaintenance Provider) 2. CarillonacquiringMowlemPallMall(CleaningandTechnicalServicesProvider) 3. InterserveacquiringMacClellan(CleaningProvider) 4. AlfredMcAlpineacquiringEnvirosandAIMS(EnvironmentalandHealthandSafety Consultants) 5. JohnsonControlsacquiringYorkInternational(GlobalRefrigerationManufacturerand Maintenanceprovider) Toacertainextentthestrategyappearstorelatetoscale,scopeofofferingandbeingableto attracthighvaluelongtermbusinessthroughhavingthecapabilitytodeliverallservices.It couldalsobesaidthattherearelimitedchoicesonmakingthecommercialofferingmore attractivetoclientsandonlytheremovalofduplicationofmanagementandmarginonmargin isavailablenow.Theoriginalbiasofthecompanyexamplesshownaboveisthattheyare extendingthecapabilityofferingtoclients,throughbluecollarresourcethatundertakethe workdirectly(Carillon,Interserve,JohnsonControls)andbydoingsobenefitfromashiftin makeorbuydecisions.Withservicelines,whichhaveeitherapremiumrateorbring opportunitytoshiftpreviouslyoutsourcedworkintoaninternalsale.Theotheracquisition exampleisofwhitecollarcapacityandamoveupthevaluechainthroughconsulting capabilityinspecialistareas(AlfredMcAlpineBusinessService). ThisperceptionofmarginonmarginwaspreviouslyprevalentinmanagementstyleFM contracts,whichlooktobreakdownservicelinestothepointofhavingmultipleproviders servingsingleclientsorbuildings.Itisthereforemovingfromamarketwheremarginshave

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beenhigherthanthatofconstructionorservicessectors,dueinparttothematurityof providersandunfamiliarterritoryforcustomers.Bothhavegrownincomplexityofofferingand procurementmethodology,tothepointwheremarginsareverymuchtheunderpressurefor FMprovidersthroughclientsophistication,experienceandcompetitoractions. Thecompetitivenatureoftheindustryisevidentinthewritersexperienceandisalsonotedby LochandDuffywherebothpointtothesameissuesinthattheprovisionofFMservicesis increasingbecomingacommoditypurchaseformanyclients.Duffygoesontoprovide directionfortheindustryinsettingouttheneedforvalueaddedservicesasbeingpartofthe normalserviceprovision(Loch2000andDuffy2000).Thiscommodityviewissupportedby theresearchcompletedbyIFMwheretheysoughttoidentifytheprioritiesthatclientshavefor theirFMproviders.Table2.3belowshowshowtheseprioritiesranked.Thehighestpriority beingthatofcostsavings,whichisnotedintheresearchasconstantlybeingrankedatthis position.Theynotethatsomemovementinhealth&safety,whichgainedahigherthan previousyearsrankandalsothatofwholelifecyclecostmovedupsignificantly.Whatthis maysuggestisthatchangesinregulation(CorporateManslaughterandafocusonCorporate SocialResponsibility)inthetwelvemonthperiodbetweensurveyshavecontributedtowards this.Itisalsonotedthatthereislittlechangeinrankforthoseitemstowardsthelowerranks onthelist.

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Table2.3

ClientPriorities

ClientPrioritiesfor2007/2008 RankOrder 1
st

ClientPriority ReducingCostofFM ImprovingonKPIsandSLA's Health&SafetyEnhancement CreatingSavingsthroughEfficiencies BuildingInternalFMTeam&Skills IdentifyingandManagingWholeLifeCosts CreatinganEnvironmenttoAttractStaff BuildingInternalAwarenessofFM RiskManagement UnderstandingMoreAboutOrgsNeeds IncreasedFlexibleWorkinginOrganisation StressReduction LeveragingGroupPurchasingPower BusinessContinuityPlanning MovingTowardsTotalFM IncreasingUseofFMTechnology IncreasedOutsourcing

nd 2 rd 3 th 4 th 5

th

th 6

7 8

th th

th 9 th 10 th 11 th 12 th 13

14 15 16

th th th

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2.5.

Summary.

TheUKfacilitiesmanagementindustryisstillinaphaseofdevelopment,productofferings arebecomingincreasingcomplexandthecompetitivebasisisshiftingformany organisations.Clientsarebecomingmoreawareofthemarketandthelevelsofperformance andrisktransferthatcanbeachievedthroughsplittingoutnoncoreactivitiesandthenmarket testingthem. Thirdgenerationoutsourcecontractsareevidentinthemarketplaceandthesecontracts/ outsourcingexercisesareseekingincreasedlevelsofperformanceandguaranteesfrom providerstypicallyagainstareducingcostbasis.Thisisasituationonceseeninthe manufacturingindustryandtheUKsoughttoretainitsmanufacturingpowerbaseof knowledgeandcapabilityagainstgrowingeconomiesinJapanandChinaalike.ForFMthe differencecentresaroundtheconsumptionofservicebeingrestrictedtothelocalbuildingsfor themostpartandassuchtherewillremaindifficultyinmovingtheselocallyconsumeditemto distantshores.Howevercallcentres,administration,travelbookingandothernoncore activitiesdonthavethislevelofprotectionandcantransfer. Withsmarterclientsandmoreinformedpractices,FMorganisationsarehavingtoseek competitiveadvantageinanumberofways,asPortersuggestthedifferentiationonservice canbethroughcostleadershiporprovisionofvalueaddingservices(Porter1980).The industryischangingtotakeoutmarginthroughincreasingitsmakeratherthanbuycapability andthisisprovidingthelargerFMorganisationswithadvantagebroughtaboutthroughits procurementcapability.Howevertheneedforvalueandvalueaddedserviceprovisionis foundfromtheresearchtobesomewhatelusive,takingtheareasofdifferentiationproposed byPortermuchofthefocusfortheFMsectorisplacedoncustomercentricserviceprovision. Theresearchhasidentifiedthatthesearchforvalueaddforclientsandtheiroutsourceof noncoreactivities,needstocommencefromastrategicperspective.Howevermostofthe definitionsofFMdonothighlighttheneedforstrategy,environmentalscanningorany forwardlookatthefutureoftheFMindustry,letaloneclientorganisationsbusinesssectors.It wasalsofoundthatthegeneralviewofFMwithintheUKisthatitisdominatedbyalargely reactiveandtechnicalslant,ifthisistruehowpractitionerscanbegintooperateinamanner thataddsvalueatanoperationalandstrategiclevel.TheresearchcompletedbyIFM(IFM 2007)givesindicationthatthedifficultiesabove,arebeingfurthercompoundedbythe emphasisbeingplacedinclientscriteriaattheoutsetoftheoutsourceandthenthroughtoits implementationandoperationalevaluation.Thecriteriaandemphasisappearstobe inconsistentandthereforemakesitdifficulttoevaluateaserviceprovision,whichishighin, qualitativeandexperienceleadmeasures.

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FurthermoreFMisbeingevaluatedonitsabilitytoInnovateyetthisdoesnotappearinanyof theothercriteriaassociatedwithselection,prioritiesorsatisfaction.TheIFMsurveygoesso farastopointatthatinnovationisanicetohaveandnotessentialovercostandquality priorities.Howeverifclientsaretoreceivealltheirexpectedoutsourcebenefits,inparticular improvetheirowncompetitiveabilityasabusinessthenFMprovidersmustsurelybe encouragedtothinkandactininnovativewaystosatisfythisexpectation.Addedtothismust betheopportunitytoengageatastrategiclevelwithclientsinordertofulfilthepotentialfrom therelationship,onthispointtheworkcompletedbyOkoroh,Grombera,John,Wagstaff wouldindicatethatsuccessisbestachievedbyoperatingatastrategiclevelfirstandthen movingtowardstheoperationalphaseofthedevelopedservicesolution.Suchdialogueisnot alwaysaffordedtoFMproviders Fortheorganisationalfacilitiesfunctiontobeeffective,itisimperativethatthereisstrategic integrationwithinthehostorganisation.Justaseveryorganisationwillhaveanendobjective orgoalitisequallyimportantthattheorganisationfacilitiesmanagementfunctionshouldhave endorgoalsisalignedtothoseoftheorganisation(Featherstone&Baldry2000).

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CHAPTERTHREE,STRATEGICPLANNINGTECHNIQUESANDTOOLS

3.1.

Introduction.

Thischapterreviewsthepresentliteratureassociatedwiththeorganisationalstrategy developmentprocessesandpractice.Inparticularitfocusesonthedefinitionandapplication ofthefollowingtechniquesinthedevelopmentoforganisationalstrategy.

LongRangePlanning ScenarioPlanning

Alsoconsideredarethebenefitsoftheabovetechniquesinthecontextoforganisational performanceandtheabilitytooperateinacommerciallycompetitiveindustry,suchasthe servicesector. Fromtheearlierchaptersitisshownthatthefacilitiesmanagement(FM)industryisnow subjecttopressurefromclients,whoaredemandingincreasedservicestandards,setagainst anexpectationofdecreasingcosts.TheIndustryitselfisbuiltaroundlocaldeliveryofservice andturningintangibleorganisationalbenefitsintotangiblevalueforclients.Thearticulationof thesebenefitsanddifferencesforaprospectiveclientisdifficultenough,butasclient evaluationcriteriaandprocurementprocessesincreaseinsophistication,itbecomesmore difficultforFMproviderstodifferentiatetheirserviceoffering.Furthermoretechnological advancesandaccesstoinformationforclients,meansthatcompetitiveadvantagesarenow atbestshortterm,meaningthatsustainableadvantageisdifficulttomaintainforthelong term.AsMitreanusuggests,organisationalcorecompetenceisnolongersufficientto maintainadvantageintodaysmarketplace.(Mitreanu2004).TheseissuesforFMareinthe writersviewpushingtheservicedownthevaluechainintoacommoditypurchaseformany largecorporateclientsassuchFMorganisationsneedtobeabletodevelopstrategies, whichcounterthistrend. DuetowordcountconstraintsthischapteristobereadinconjunctionwithappendixBofthis report,whichprovidesfurtherresearchandfindingsonthefollowingareas: B1 B2 B3 B4 B5 StrategyDevelopment DevelopmentModels GenericStrategies Organisational&CustomerDecisionProcesses StrategicManagementTerminology

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TheprocessofstrategydevelopmentiscapturedintheFigure3.1belowitidentifiesthe complexityofitsdevelopmentfromwithintheorganisationandtheneedforadetailed understandingoftheissues,whichimpacttheorganisationsdevelopmentofitsstrategicplan, mission,objectivesandvaluesthroughitsstrategicmanagementprocesses.Thischapterwill considerthoseareasofthismodelthathaveaparttoplayinthedevelopmentofthe organisationalstrategy,withemphasisontheuseoflongrangeplanning.Inorderthatthe abovemodelcanbeunderstoodTable3.1summarisestheissuesthatsitwithinthemodel andwhattheymeanfortheorganisationandthoseinvolvedwiththestrategy.

Figure3.1

ElementsofStrategicManagement(AdaptedfromJohnson,Scoles&

Whittington2005)
Capability Expectation& Purpose Strategic Position

Environment

Strategic Choices

Strategyin Action

BusinessUnit Level Strategy

Development Direction& Methods

Managing Change Enabling

Organising

CorporateLevel, International LevelStrategy

Theaimofthestrategicmanagement&planningprocessistodefinetheorganisational direction,itspurpose,andobjectivesovera3to5yearperiodinorderthat,onthe assumptionthatitisaforprofitorganisation,itmayachievesustainablecompetitive advantage,meettherequirementsofitsstakeholdersandremainprofitable.Therearea numberoftoolsandtechniquesavailabletotheorganisationinthepursuitofthis,someof whichwillbeconsideredinthisreport. Asastartingpointthereexistssomedebateondefinitionofstrategicmanagement,planning, longrangeplanningandforecasting.Thisisasituationthatdoesnothelppractitionersin understandingtheissuesorinfactdevelopingandimplementingthestrategicchoices.Listed belowarefivesuchdefinitionsofstrategyandstrategicplanning.

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Strategyisthedirectionandscopeofanorganisationoverthelongterm,whichachieves advantageinachangingenvironmentthroughitsconfigurationofresourceandcompetence withtheaimoffulfillingstakeholderexpectations(Johnson,Scoles,Whittington2005). Strategicplanningisanexplicitprocessfordeterminingthefirmslongrangeobjectives, proceduresforgenerating,andevaluatingalternativesandasystemformonitoringresultsof theplanwhenimplemented(Armstrong1982) Theaimofstrategicplanningistoshapeandreshapethecompanysbusinessesand productssothattheyyieldtargetprofitsandgrowth(Kotler1997) Strategicmanagementistheartandscienceofformulating,implementingandevaluating crossfunctionaldecisionsthatwillenableanorganizationtoachieveitsobjectives(David 1989) Strategicmanagementisanongoingprocessthatassessesthebusinessandtheindustries inwhichthecompanyisinvolvedassessesitscompetitorsandsetsgoalsandstrategiesto meetallexistingandpotentialcompetitorsandthenreassesseseachstrategyannuallyor quarterly[i.e.regularly]todeterminehowithasbeenimplementedandwhetherithas succeededorneedsreplacementbyanewstrategytomeetchangedcircumstances,new technology,newcompetitors,aneweconomicenvironment,oranewsocial,financial,or politicalenvironment.(Lamb1984)

Thekeywordsfromthedefinitionabove,forthepurposesofthisresearch,areachievement ofadvantageinachangingenvironmentoverthelongterm.Itisworthnotingthatcustomer havenotbeenexplicitlyidentifiedinthesedefinitions.Inthewritersview,clarityonthiswould goalongwayinassistingunderstandingateverylevel.Strategicplanningcreatesavisible linkbetweentheorganisationsobjectives,goalsandresources,itisnotonlyconcernedwith theformulationofstrategiesthatworkwithintheframeworkofpolicy,butalsofocuseson analysiswhichisdesignedtoleadtoactionforthepurposeofachievinggoals.Organisations theirstrategies,structuresandproceduresarebecomingmoreandmorecomplex,asaresult organisationsshouldknow:(Desai2000). Wheretheyare Wheretheyaregoing Howtheymanage

ThiswillbeexploredinthecontextoftheFMindustryandpresentpractice.Thischapter concernsitselfwiththestrategyformulationprocessesandnotthoseassociatedwith implementation.Thisisinorderthattheresearchareaisfocusedonthoseaspectswhichare mostaffectedbytheclient/customerandtheorganisationsunderstandingofthemandthe externalenvironmentinwhichthebusinessoperates.

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Table3.1ContextoftheStrategicManagementModel(AdaptedfromJohnson,Scoles &Whittington2005)
StrategicPosition Environment Whatarethepresentmarketforces Capability Areourresourcefullyutilised Expectation&Purpose W hatisourstatedpurpose W hataretheexpectationsofour stakeholder Arewemeetingrequirementsofthe stakeholder W hatisthepowerinterestmatrixforour customers W hatdoesourculturalweblooklike

Whatwillbethefuturemarketforces

Arewemeetingthresholdrequirements Whatwillbetheimpactofpresentand futuretrendsoncapabilityrequirements Whatareourmakeorbuyoptionsand capabilityatpresent Doweunderstandourvaluechainand networks StrategicChoices

Howwillregulationaffectus

Arewemeetingthemarketneeds&wants

Whatopportunitiesexistforus

BusinessUnitLevel

Corporate&InternationalLevel

Development&DirectionMethods

Whataretheopportunities&threats

Doestheparentcreatevalueinallareas Whatintegrationopportunitiesshouldbe considered Whatmarketsofferimprovedopportunities

Marketdevelopmentneworexisting

Howdowedifferentiateouroffer Iscompetitiveadvantagepossibleand sustainable

Products,protect,develop,diversify Strategicdevelopment,organic,Mergers, Acquisition,Alliances W hatarethesuitability,feasibilityand acceptabilityofthedevelopment opportunities

Whatarethebenefitsforcollaborationwith Isourportfoliobalanced competitors DoesourstrategysupporttheCorporate objectives

Whataretheentrymodelsareappropriate W hataretherisks forus StrategyintoAction

Organising

Enabling

ManagingChange

Structure:what'sneeded,functional, matrix,divisional,transitional,teams, projectstructures

Diagnosis:Depthandscopeofchange Relationships:Businessunitsrelationships required,incremental,bigbang, withthecorporatecentretofoster realignment,transformational. improvedworking Understandingofpowerbasisand symbolicprocesses.

HumanResourceManagement:Gap ChangeProgramme:setbythe Processestosupport:control,planning, analysis,traininganddevelopmentplans, requirementsoftime,preservation, business,culturalnorms,standardisation, behaviouralchange,management diversity,capability,capacity,readiness development,shortandlongtermtrends andpowerwithintheorganisation. Relationships:Planningstyles,strategic andfinancialcontrolsmethods,alliances, networksandoutsourcingdecisions DefineSuccess:setoutwhatsuccess lookslike,criteriaandobjectives Measurement:Successmeasurement, progress,individualandteam performance,scorecards,businessKPI's AssetManagement:Processand hardwarerequirements,accessto information,developandsupportstrategic capability FinancialManagement:Valueandcost drivers,organisationalstrategic developmentcosts Innovation:supplyanddemandside developments,technicaldevelopment, research ForcefieldAnalysis:Understandingof forcesforandagainstchange,adjust approachtosuit,considerMachiavellian approaches. Styletobeadopted:Communicationof change,collaborative,intervention, directionandedict. Rolesrequired:Changeagents,set leadership,dontunderestimatemiddle managementpower.

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3.2.

StrategyDevelopment

Thischapterwillreviewanumberofthemodelsandresearchinthisarea.Thedevelopment oftheorganisationalstrategyiscomplex,sinceitneedstotakeaccountofanumberof internalandexternalfactorsandfunctionsifitistobeeffective.Thecomplexitycanbe representedbyFigure3.2theMckinsey7Smodelbelow.Themodelisusedinthisreportto demonstratetheinterrelationshipoftheorganisationssystems,staff,stylesetcandnotleast itsorganisationalculture.Forthepurposeofthisresearchwhatthismodellacksisthecontext inwhichtheorganisationisoperatingwithintheexternalenvironmentandagainasearlierthe customer.Thiswillbeconsideredlaterwithinthechapter. Figure3.2 Mckinsey7SModel

S t r u c t u r e

S t r a t e g y

S y s t e m

S h a r e d

S k i l l s

S t y l e

S t a f f

Strategicplanningtechniquesusedthereforelooktoprovidedirectionandguidancefor improveddecisionmaking,leadingtostatedgoalswhichshouldberealisticandbasedonthe organisations: Capability Capacity Markets

FromaChiefExecutiveperspectivetheprocessofsettingthestrategicvisionforthe organisationandtheresultingplantosupportthisvisionmustbeoneofthemostimportant aspectsoftheirrole.Howevercomplexityisincreasedwhenmarketforcesarebroughtinto consideration.Thissectionofthereportwillconsideronlytheformulationofthestrategicplan andnotitsimplementationandongoingmeasurement,byreviewingsomeofthemodelsthat existinthisarea. 3.2.1 Mankins&Steele

ThemodelproposedbyMakins&Steelefocusesontheissueofdecisionmakingata strategiclevelwithinorganisations.Thisissomethingalreadyhighlightedwithinthisreport, Themodelbringsaprocesswhichdrivesdecisions,whichcanalsoaccommodatechanges

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alongthewaytoallowforanyunforeseenevents.Acontinuousdecisionorientatedplanning approachisonethatlookstodriveoutdecisionsofstrategicimportancethroughoutthe courseoftheyearratherthanbeconstrainedbyacalendarbasedplanningcycle.Integrated withinthisprocessisthecapitalandbudgetinground,sothattheendresultoftheprocessis theproductionofaconcreteplanforeachbusinessunit,whichisupdatedcontinually(Makin &Steele2006).Theprocessinvolvessettingthemostimportantstrategicissuesforthe organisationasawhole,Figure3.5showstheconceptualmodel,whichindicatestheprocess andtheresultanttimelinesinvolved.Withineachoftheheadingsthefollowingactionsshould beaddressed: Issues:Identificationoftheinitialitems,whichareofsignificantstrategicimportanceandona prioritybasis.Theseshouldcomefromacrossthewholebusinessandneedtoberationalised intothosethatspanthemultiplebusinessunits. TaskForce:Establishteamtotakeforwardtheissuestoquantify,determinestrategicand financialinformationneededtouncoverandevaluatealternativesforeachissue.Indicative timeperiodmaybeoneweekormoreforthistobecompleted. DialogueSessionOne:Executivesspendthreetofourhourstoreachagreementonthe factssurroundingtheissuesandaonasetofviablealternatives. DialogueSessionTwo:Executivesevaluatealternativesandselectthebestcourseofaction IssueDecision:Throughdialoguesessiononeandtwodecisionsaremadeontheinitial issues.ThisallowsfurtherconsiderationofthenextpriorityissuefortheExecutivecommittee. IssueAddition:Cantakeplaceatanytimebywillbeafterdecisionsaremadeoninitial priorityissues.Criticalissuesthathaveincreasedprioritythroughchangesinthemarketof financialcircumstancescanbeinsertedatanypoint. Budget&CapitalPlans:Updatedoncedecisionmadeonissuesiftheyhaveaneffecton thoseplannedattheoutset. Theprocessproposedisgenerallyoneofanevolvingapproachtostrategicplanningthat doeshavesomestructurearoundthatofacalendardrivenprocess.Howeveritbringswithit thedimensionofintegrationwiththewholeofthebusinessthroughtheuseoftaskforcesto tackleandquantifytheissuesandallowingforchangeintheexternalenvironment.Suchan approachshouldintheoryprovideagilityintheprocess,theExecutiveswithinthe organisationshouldthenbeabletorespondinatimelywayonanymarketorinternal changes.

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Theresultantprocessstemsfromworkcompletedwith156largecorporationsandlooksto addresstheissuesoftiminginthetraditionalplanningapproach,whichpresentobstaclesto gooddecisionmakingfortheorganisation.TableB11.1withinAppendixB1ofthisreport identifiesthefindingoftheirresearchandtheimprovedcapacityondecisionmakingby followingthisparticularprocess.Fromtheirresearchtheypointoutthatmanyofthebest performingcompanieshaveabandonedthetraditionalapproachtostrategicplanningandare focusingexplicitlyonreachingdecisionthroughthecontinuousidentificationandsystematic resolutionofstrategicissue.(Mankins&Steele2006).

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Figure3.3ContinuousDecisionOrientatedStrategicPlanning(AdaptedfromMankins2006)

Quarter3

Quarter4

Quarter1

Quarter2

Quarter3

Quarter4

Budgets,CapitalPlansandOperatingplansareupdatedcontinuously AnnualStrategy Update ExecBoardmake decisiononissues1 &2 Preparation InformationPrepared onissues1&2by TaskForce Issue1 Issue2 Issue3 Issue4 Issue5 Issue6 Budgetsandplans updated

Preparation

Preparation

Issues: MovetoChina Launchnewproducts

Decisionsmade Issues3&4 added

Preparation

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3.2.2Allio InformulatingthestrategydevelopmentmodelAlliopointstoanumberofissuesthatare facedbyorganisationsthroughacombinationofmarketconditionsandexistingdevelopment practicewithinorganisations.Theseissuesaresummarisedbelowintable3.2: Table3.2StrategyDevelopmentFindings(Allio2006)

Globalisation: Increasedcompetition, Slowergrowthrates, Consolidationoforganisations Customisationofoffering Increasedservicestandards, Requiredtogoingbeyondstandardserviceoffering

CustomerExpectation:

StrategyEffectiveness:

Lowlevelsofsuccessperceivedthroughprocess Organisationtolargetobenimble, Tosmalltoinvestinprocess,

MarketComplexity: Growthincommoditisationofservice Complexityaddingcost Lackofcustomerinsight Innovationhigherpriority Profitsincreasedthroughcostreduction StrategyThrough: Edict Bringslackofmarket,competitiveandfunctional perspectives. Increasedfailurethroughlackofbuyin Middlemanagementrevolt&attrition Budget Thebudgetistheplan Forcefittingstrategiestobudget Tacticsnotstrategy DataMine: Internalanalysisofbudgetperformancemetric Lackscrossdepartmentalcoordination Basedonfunctionallineratherthanstrategy Goals&Mission Drivenbyseniormanagers Limitedcommunication Basedonpreviousyearsperformance Morelikelytobeabroadlistofaspirations Lackofownershipandmeasurableresultsinfailure

Theissuescontainedwithintable3.2aboveresultinwhatAlliocalltheUsualWayforthe strategydevelopmentprocess,thisisindicatedinFigure3.4below.Thiscomesfromwork completedacrossanumberofindustriesandisasummaryoffindingstakenfromworking withinorganisations.FromthisAllioprovideswhatisinhisviewaBetterWayshownin Figure3.5.Takingthemainpoints,whicharerelevanttothisreport,arethoseassociatedwith theexternalenvironment.

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Figure3.4StrategyProcessTheUsualWay(Allio2006)

SeniorManagementcreates abudgetbasedonprior yearsbudgetandgutfeel

Managerscreatetaticsor "Strategy"basedonfunds availabletothem

Managerstrivetohittheir budgetor"numbers"

Managersreview performanceversusbudget. Processrepeatsannually

Budget

Strategy

Implementation

BudgetReview

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Successfulstrategyprogrammesfeaturebalanceandrationalinputfromwhatistypicallyafar broadersetofstakeholdersthanmostexpect.Thefirststepistoassembleastrategicdata bankthatofferstheteamarationalperspectiveofwherethecompanyistodayasaprecursor todecisionmakingaboutwhereweshouldbetomorrow.Recognisingthatperfectdatais unobtainableandtimeisprecious,managersneedtoassembleanddistilamixofinternal andexternalanalysisaddressingtheitemsbelow(Allio2006). Industry: Competitors: Customer: Benchmarking: Structureandtrends Profiles,dynamicandtrendsexternalbenchmarkingdata Profilesdynamictrends Internalandexternal,highlightingtrendsinfinancialandoperational performance Criticalissues: Inputaboutwhatisimportantorthreateningfromacrosssectionof stakeholders Managerialsystems: Issuesinputaboutwhatisimportantfromacrosssectionoffunctions andlevelswithintheorganisation Alliosmodelandprocessemanatesfromapositionofstakeholderandindustry understanding,whilstnotexplicitwithinhisresearchpaperitisimpliedthatwithinthis stakeholdergroupwillbethecustomerorenduseroftheorganisationaloffering.Thewaythe modelisconstructeditshouldbringtheabilitytohavefeedbackandwherenecessary revisiontothestrategy.WhilstAlliospointsoutthatforasmalltomediumsizedorganisation thiswholeprocessshouldtakenolongerthantwomonths,thereisnoindicationasto whetherthisisseenasaiterativeprocesswhichremainsdynamictothemarketsand stakeholdersneeds/wants.Againimplicitintheoverallrationaleofstrategicplanningisthis requirementbutthemodelshouldbeexplicitinthis.AppendixB2section1.3providesa scheduleofAttributesforsuccessfulstrategicplanningasproposedbyAllio.

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Figure3.5StrategyProcessTheBetterWay

Strategic Analysis

Processtobeoneof Analysis Education TeamBuilding FortheStrategicTeam

Strategic Measurement

Vision

Strategy

Budget

Implementation

Managementassesses industry,market,company performancethenclarifies thefirmsvision

Strategic Alignment

Managementteams formulatespecificstrategies neededtopropelthefirm towardsitsvision

Strategydictatesresource allocationpriorities,the budgetreflectsthestrategy.

Managersimplement& measurethestrategic performance,thenrealign strategies,theprocess repeatsasneeded.

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3.3.

LongRangePlanning

LongRangeplanningaroseinthe1950and1960swheneconomicdevelopmentgaveriseto thefirstfiveandfouryearplans.Thisplanningwasconsideredanextensionoftheregular annualfinancialplanningprocess.Itdidnotaccountforsocialandpoliticalfactorsand assumedstabilityinmarkets. Strategywasappliedtothisprocessinthelate1960sanditbroughtwithittheanalysisofthe environmentinordertoarriveatstrategicdiagnosisofthecompany.Theaimofthisplanning wastoprovideanswerstothreebasicquestions: Whatistheactualsituationoftheorganisation Whatdoesitwanttoachieve Whatmustitdotoachieveit

Theanswertothelatterquestionmeansdesigningstrategies,whichareconsideredessential elementsofstrategicplans. Ashiftinthe1980stoStrategicManagementbroughtarefocusontheinternalaspectofthe organisationinordertoprovidealllevelsofstaffwiththenecessaryhelptomanagethe strategicchange.Theinternalanalysisoftheorganisationanditspossibilitiesforchangeand thecreationofnecessaryconditionssothattheorganisationcanexecutesuchchange (Pacios2004).Managingforthelongtermdependsuponthreecapabilities. First: Theskilltothinkstrategically:tounderstandthesourceofyourcompetitiveadvantageand alwaysbuildonittounderstandhowforcesatworkintheworld,demographic,globalisation andunfoldingtechnologywillaffectyourstrategy. Second: Theabilitytoavoidthekindsofaccidentsandtroublethatcanknockawrythebestlaidplans. Havingenoughforwardandperipheralvisiontoanticipatethefutureandbuildingan organisationagileenoughtorespond. Third: Youcannotmanageforthelongtermunlessyoualignincentiveswithinvestmentsandvice versa.Stakeholdersmustbelievetheyaretreatedwellnowandwillbebetterofftomorrow (Stewart2007). Thedistinctionbetweenstrategicplansandlongrangeplansisthattheformerisanextended versionofthelater.Withthelongrangeplanbeingapredictionofthefuturebaseduponthe horsnep Page 42 7/29/2009

extrapolationofpasteventsandtrends.Strategicplanningdoesnotseethatthefuturewill necessarilybeadevelopmentofthepastorthatitcanbeextrapolatedfromthepast(Ansoff &McDonnell1990).MerceridentifiesthatRobustStrategiesarethosethatareaboveall aboutthelongertermensuringthatallthepotentialthreatsarecovered.Theydemand multipleandoftendivergentobjectivesaremetinordertoexploitthepotential,emergingfrom changesintheexternalenvironment(Mercer1998).EssentiallyMercerisdepictingalong rangeplan,whichshouldbeusedtoguidetheorganisation,anditwouldappearthatthe terminologyisalteredineffecttoensurethatthereisareorganisationthatforstrategicplans toberobustintheirdesigntheyhavetohaveconsiderationofthelongerterm. Thereisadifferenceinviewonstrategyplanningandlongrangeplanning,someseethat strategicplanningisessentiallythesameaslongrangeplanningandothersseethatstrategic planningismoreoperationallyshorttermbiased.Findingsfromresearchidentifiedthat difficultieswithlongtermandlongrangeplanningisasaresultofmanagerialsystems. Appropriatelyvaluingthefutureandmakingpropertradeoffsbetweenshorttermpressures andlongtermopportunitiesiscriticaltotheworkoftopmanagement.Themanagerial systemsmustbeattendedtofortheorganisationtomakenecessarylongterminvestment andsuccess.Assuringthatthesemanagerialsystemsareinplacemayrequireaperiod whichextraordinaryactionsmaybeneededtotransformthefirmandalignsystemswiththe imperativesoftheenvironment.Organisationsaremorelikelytoundervaluethelongterm whentheyareconfrontedwithtradeoffsbetweenthelongtermandshortterm.The managementteamcannotpreventthissituationbuttheycanactasabufferbetweenthe middlemanagersshorttermdemandsandthelongtermneedsofthebusiness(Laverty 2004). Thereexistsconcernthatevenwithintheprocessofstrategicplanning,whichinthewriters viewisbyitverynatureaplanningthatconsidersathreetofouryearperiod,shorttermism withinorganisationsisevident.Coupledwithsimilarconcernsonagencytheorymeansthat organisationsmayhavedifficultyappreciatingandimplementingaframeworkwhichdevelops strategyforthelongerterm,offouryearsplus. Shorttermobjectivesandapproachesarefelttobeaproblemaffectingmanymanagers.This isaparticularproblemwherelongertermrobuststrategies,protectingtheorganisationfrom majorproblemsinthelongtermfuture,mayatleast,intermsofitscoreobjectives,differ significantlyfromtheshortertermcorporatestrategy(Mercer1998).Asthetime(Planning& strategy)periodextendssotowilltheuncertaintyandriskassociatedwithanyplanning period,howevernothavingalongertermviewontheorganisationdirectionandpotential environmentmaymeanthatdecisionsmadetodaycouldhinderorlimitcompetitiveoptionsin thelongerterm.Thereisalevelofacknowledgementfromsomeonthis,MikeEskewthe CEOofUnitedParcelServicespointsoutthat,companiesthatbecomeslavestotheshort

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termareonesmostlikelytofailinthisageofglobalisation,justintimeoutsourcing,rapid technologicalchangeandempoweredconsumersmeansthatyoucannotcreatesolutionsfor yourconsumersweekbyweek(Eskew2007).Conventionalstrategicplanningtendstofocus ondevelopingtacticstoadvancetheexistingbusiness,withdecisionsbeingbasedoncurrent circumstanceandprojectionoftrendsthatarefairlyreliablebecausetheyreflectpredictable threetofouryeartimeframes.Longrangestrategicplanningcallsforaleapoffaithtoplan aroundanuncertaindistantfuture.Itinvolvesandbasementoftheorganisationscurrentline ofbusinessandrequiresawillingnesstocompletelychangethatlineofbusinessifthelong rangeprojectionssuggestthisisnecessary.Theriskassociatedwithlongrangeplanningcan bemitigatedthroughthefollowing:(MollerTiger1999).

Understandthelimitsofthepredictionsandplanaroundthose. Avoidsettinggoalsthataretolimiting.Dontbeafraidtosetbold,longrangegoalsfor theorganisationthatcouldbeachievedifelementsoftheplanfallintoplace

Establishabroadvisionthatanticipatesandallowsaresponsetochangingnatureof theindustry

Developstrategiesbasedonmultiplefuturescenarios,includingoptionsforchanging direction.Dontlocktheorganisationintoasingledirection

Definestandardsoforganisationalsuccesssothatthelongrangeplancanbe measured.

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3.4.

ScenarioPlanning

Fromtheearliersectionwehaveseenthatstrategicplanning,corporatestrategyandlong rangeplanninghave,iftheyhaventalready,startedtobediscussedinawaythatthe conceptshaveconverged.Thesameappearstobetrue,buttoalesserextent,withregards longrangeplanningandtheapplicationofscenarioplanning.Aswithstrategysome definitionsareprovidedinordertogetacontextaroundhowthistypeofstrategy developmenttoolcanbeusedbyorganisations. Scenariosremainanarrativedevice,asketchdetailingalikelysequenceofevents.They entailanewwayofthinkingaboutthefuture,anapproachtostrategicplanninganddecision making(Ralston&Wilson2006) Scenarioplanningisatechniquedesignedtohelpcompaniesandthosethatworkwithinthem takealongtermviewoftheirbusinessandpossiblefuturesinaworldofincreasinglyrapid andunpredictablechange(Kiely,Beamish&Armisted2004). Scenariosareneitherpredictionsnorforecastsofthefuture.Theyaremerelyprojectionsof imaginedfuturesandassuchhelpandguidestrategicplanning(DTI1999) Itisoneofanumberofplanningtechniquesusedbyorganisationstoimaginethefutureand learnfromtheirinsights(Bawden1998,Ringland1998) Scenarioplanningisdesignedtobeorganisationallybasedsocialreasoningprocessbased ondialogueandconversationstoshareparticipantsperceptionsoftheenvironmentand engaginginaprocessofsensemakingthroughtheorybuildingandstorytelling(Vander Heijden2002). Scenarioplanningisbestdescribedasawayofminimisingsurprisesbyrehearsingthe future.Theaimisnottoarriveataforecastbuttoconsiderarangeofplausibleoutcomesand decidewhetherthecompanyisabletodealwiththemshouldtheyoccur(Financial Management2007). Thescenariomethodologyisdesignedtosurfacemultipleperspectivesaboutconcernsand uncertaintiesintheenvironmentandtherangeofpossibleoutcomesoftheseconcernsand uncertaintiesinordertodevelopinsightsabouttheunfoldingfuturenatureoftheenvironment. Additionallytheintentionistoidentifywhatis,orwhatwillbecome,inevitableinotherwords thepredeterminedelementsofthefuture(Burt2006).

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Whatvaluedoesthistypeofplanningtoolhaveoverothermethods.Successfulstrategies aredrivenbythepossibilitiesofthefutureratherthantherestrictionsofthepast.Thiscannot beachievedthroughsequential/deductiveapproachestostrategyformulationand implementation.Asequentialapproachusuallyresultsinalreadyknowsolutionswhichdonot differentiatetheorganisationfromitscompetitors(Feurer&Chaharbagi1997).Whilstthe viewofFeurer&Chaharbagiaremoreingeneralaboutthestrategicplanningprocessesof organisation,itdoeshaverelevancetotheuseandneedsforscenarioplanning,asoneofthe manytoolsthatorganisationshouldadopttodevelopwhatMercercallsarobuststrategyfor theorganisationwhichcanstanduptothefuturechangesandimpacts.Bothareproviding emphasisonthelongertermsuitabilityandsustainabilityofthepresentstrategythatan organisationmaychoosetoadopt,bydoingsothisshouldhelpmovemanagementminds awayfromtheshorttermfocusissuesalreadydiscussed. ThischangeofthinkingandmindsetissomethingthatisdrawnuponbyGratetz,whopoints outthattherationalmodelofstrategicplanning,viewsdecisionmakingasalogicalstepby stepprocess.Theproblemisthatalthoughmanymodelsofferclearunderstandable,and systematicapproach,manydocontainassumptionsthatinrealityareunsustainable.It impliesthatthestrategicmanagementprocessisalwaysdeliberateandthatstrategiesare realisedasintended.Therealityisthatwhilstanorganisationalstrategymaybegininthis way,theydoinfactdevelopinarealisedstrategyoremergentway.Thiscomesfromaflowof actionsanddecisionsalongtheway.Thiscreative,dynamicandintuitiveprocesswithinthe frameworkofalargelyunpredictableenvironmentfitsmorecloselytotheconceptofstrategic thinking.Thecreationofstrategicthinkingwithinorganisationsisfacilitatedbytheuseof scenarioplanningandthroughtheuseofthisonetoolmanyorganisationshavecommittedto redesigningtheirstrategicplanningprocesses(Graetzetal2002). TheideaofstrategicthinkingproposedbyGraetzandtheevidencethatorganisationshave, asaresult,revisedtheirpreviousplanningprocessesmaybelinkedtotheideasofprevious writersandtheviewofthefuturebeingaresultofactionstakentodayorinthepast.Figure 3.6belowisthatproposedbyJohnson,Scoles&Whittingtontohighlightthatthestrategy developmentprocessemployedbyanorganisationneedstobeappropriateforthecomplexity andstabilityoftheenvironmentinwhichtheorganisationfindsitself.Wehaveseenearlierin thischapterthatorganisationneedtounderstandwhatvaluetheyplaceonthefutureand indeedhowtheiroperationalmangersvaluethefutureinordertogaugetherationaleon decisionmakingwhichcutsthroughboththeshorttermandlongterm.Itisthereforecorrect toconsiderthenthattheorganisationalfutureisonethatisspecifictotheorganisation.Being broughtaboutthroughcapability,capacity,skills,infrastructureandmanagementthinkingetc. Thisfuturethenisshapedbyactionstakentodayandoutlookonfutureopportunitieswhich mayimpactthedecisionsbeingmadetodaybytheorganisationanditsmanagers.

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Figure3.6StrategyDevelopmentinEnvironmentalContext(Johnson,Scoles& Whittington2005)

Tounderstandthefuturetheorganisationmuststartwiththepastwhatweregretaboutthe pastisusuallythefutureaheadofus.Sinceitresultsinvaryingdegreesoffreedomthat previousactionshaveleftustoactinthepresent,soastorealisesomefutureplan.Ina senseagivenevolutionofthepastpresentsoneparticularrangeofpossiblefuturesandnot another.Thefuturethereforeisnotwrittenitremainstobebuilt(Godet1982). Ifthepastthenisalimitonthefuturethenunderstandingtheimpactsoftodaysdecisionsis criticalforunderstandingfutureopportunitiesandanticipationofchange.Scenarios acknowledgeuncertaintyandaimatstructuringandunderstandingittheycreateafew alternativeandinternallyconsistentpathwaysintothefuture.Itisnotsomuchtohavea scenariothatgetsitright,astohaveasetofscenariosthatilluminatesthemajorforces drivingthesystem,theirinterrelationshipandcriticaluncertainties.Theusercanthenfocus onthekeyenvironmentalquestions.Youcanvaluethescenarioschosenbytwokey questions: 1. Whatdotheyleaveout.Infivetotenyears,amangermustnotbeabletosaythat thescenariodidnotwarnofimportanteventsthatsubsequentlyhappened 2. Dotheyleadtoaction.Ifscenariosdonotpushmanagerstodosomethingotherthan thatindicatedbypastexperience,theyhavenothingmorethaninteresting speculation(Wack1985) Successfulmodelsareonlyasgoodasthemodelsabilitytocontainandhandlesufficient, appropriatedatawithitscorrespondinginterrelationshipsbetweenthedifferentaspects.

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Scenarioplanningistechniquesdesignedtohelpcompaniesandthosewhoworkinthem takelongtermviewoftheirbusiness(Kiely,Beamish&Armistead2004).Thisfutureshould beassessedbylookingatthechangesandimpactsthatcouldexistfortheorganisationat leastfiveyearsforwardandshouldconsistoffourseparatescenarioswhichshouldbe developed.ThisisinkeepingwiththeviewsofPorter(1985)andMintzberg(1994)asthereis asuggestionthattomanyscenarioswillovercomplicateorconfusefurtherthedecision makingprocesses.Theemphasisistoretainsomeflexibilityandfromthisorganisational agilityorabilitytorespondtofutureopportunitiesorasitsuggests,bepartoftheshapingof thefuture(Fahey&Randell1998).

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3.5.

TheCustomer

FromtheliteratureitisfoundthatFMorganisationsneedtobecomemorecustomercentricin thedesignoftheirstrategieswithacustomerfocusandcreationofvalue.HowthendoFM providersworkwithclientsinordertoachievethisvaluecreatingenvironmentfromits strategicplanningprocesses.AgoodplacetostartisbyconsideringKotler,below Customersestimate,whichoffers,willdeliverthemostvalue.Theyarevaluemaximises, withintheboundsofsearchcost,limitedknowledge,mobilityandincome.Theyhavean expectationofvalue,whichisformedonpastbuyingexperiences,associatesfriends, marketers,competitorsandpromises,andthenactonit.Whetherornottheofferlivesupto thevalueexpectationaffectscustomersatisfactionandtheirrepurchaseprobability.If expectationsaresettohighthenthecustomerwillbedisappointed,tolowandtheywillnotbe attracted(Kotler1997).

Organisationsaredesigningcustomercentricstrategiesandprocessestorealisethelifetime valueofcustomers.Shiftingfocusfromtransactionalexchangetorelationalexchangeallows themtoestablishrelationshipsformutualgain.Howeverchangingcustomerpreferencesand expectations,alongwithgrowingsophisticationofcompetitivestrategies,aremakingitdifficult tomaintaincompetitiveadvantage.Servicesofalltypesareoftenperceivedashighrisk productsduetotheintangibilityfactor.Customerinteractionwithserviceproviders,systems andtechnologyduringdesign,diagnosisdevelopmentanddeliveryofaservicesolution placesahighdemandontherelationshipbuildingefforts(Jain2007). ThisisalsothecaseonFMcontractsandyetfromexperiencethecontractsaregenerally developedpretenderwithinsufficientlevelsofuserinteractioni.e.contractsformedwith servicelevelsstandardsbyclientorganisationwithlittleconsultationwiththeusersoftheFM service,internaldepartmentsoftheclientorganisation.Fromthistherewillbeanexpectation fromthreegroups,theprocurementteam,theproviderandtheenduseroftheservices, theseexpectationsarethenveryrarelyalignedattheoutset.Takingthepointsidentified,the needforaninvestmentinthecontract/relationship,oftime,toenablethevaluecreating opportunitiestoarisecommences,fromalessthanidealposition.Astwoorganisations interactonabusinesslevel,systems,process,peopleandculturethepressuresonthefront lineservicedeliveryteamsaremany.Throughexperiencethefrontlineservicedeliveryteam andtheclientscustodiansoftheserviceveryrarelyrecoverfromthisenforcedsuboptimal startpointandassuchvaluecreationandstrategicenhancementtakesecondorthirdplace tobasicservicedelivery,culturalintegrationandtheinevitablerecoveryoflowservicequality perceptions.

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WhilstJainadvisesthatcustomersandbusinessclientslookfordependablesourcesof servicedeliverytoreduceperceivedriskandarewillingtomaintainstablerelationshipswith them.Somecautionshouldbetakenhere,asKotlerpointsoutthatevensatisfiedcustomer willswitch,sothisclientinvestment,whichisnotalwaysevidentanddoesnottendtohappen untilanumberofmonthsintoacontractandnormallyduringperiodsofservicerecovery,may notbesufficienttopreventachangeinsupplier.Theeffortthenmaybebetterplacedpre commencementandduringthefinalphaseofFMproviderselection,thiswouldthenrequirea shiftinbothclient&providerthinkingandpractice.Itcouldbesaidthatthebasisof relationshipdevelopmentfromtheoutsetwithinaclientorganisationstillsitswithinthis transactionalmindsetandassuchcostmetricsremainemphasisedinadisproportionate way,whenyouconsidertheotherfactorswhichmayaddlifetimevaluetotherelationship andwhatenduserswithintheclientsbuildingsactuallywantorneed.Fromtheearlier chaptersthecostmetricbasedmeasurementappearlowinclientspriorityoncetheFM serviceisbeingprovided,doethissuggestadisconnectbetweenprocurementanddelivery objectivesforclients. Theorganisationalfocusshouldbeonvaluetothecustomerwithlessrelianceonthe financialsasameasureofstrategicsuccess.Longtermprofitswillfollowsuccessful implementationofagoodwellplannedstrategy(Towells2003).Thisisinkeepingwiththe viewsofothersbutTowellsinhisworkdoespointoutthatunderstandingthecustomer, marketsandenvironmentcanonlycomefrominvolvingtheimplementers(Operationalstaff) withintheplanningprocess,healsosetsoutthatcustomerinsightcreatesopportunityfor valuecreationandthatthisinsightisthroughcustomerknowledgefromthosewhoareclosest tothecustomer.Ifthisiscorrectthentherewouldseemtobeastrongargumentfortheearly involvementofthecustomerfacingteamintheFMorganisationsstrategydevelopment process,Towellsetalladvisesthatthelackofsuchinputfromcasesstudiesshowsthat strategiesdevelopedwithoutthisoperationalinputandclientinsight,endupbeingrevised duringimplementationduetothelackofinsight.Fromthislogicwouldsuggestthatinvolving thekeycustomerswouldfurtherenhancethestrategydevelopmentprocessoftheFM organisation.Ifnotforthewholeorganisation,certainlyforstrategicbusinessunits. TheapproachsuggestedbyTowellsisalsosupportedbyCarter,whopointstotheneedfora bottomupapproachtostrategydevelopment,asimportantdecisionsarebeingmadetofar awayfromthosewhowillberesponsibleforthedeliveryandimplementationofit.Bylooking attheorganisationanditsperformanceyouwillbeabletoestablishthegaps,thismaybe referredtoasgapanalysis,butCarterseesthisasWhiteSpace,wheretheorganisations establishesthosegapswherethecustomerneedsarenotbeingfilledatall.Anemerging approachistobringboththecustomerandsuppliers,withtheorganisation,toopen communicationandunderstandingwhateachpartythinksofeachother.Thisbringing togetherofthepartiesallowstheorganisationtoestablishtheissuesandtherealstrengthsof

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theorganisationorcorecompetence.Atthispointtheorganisationcanthenchoosetobuild thiscompetenceorfocusontheweakerareas,itwillineffectunderstanditcompetence betterandallowbetterpositioningoftheorganisationandofferinggoingforward.These reviewscanbeoneoffsorpartofanongoingprocess(Carter1999).Againtheresearch indicatesthatcustomerinsightandvaluecancomefromthoseatthecoalfaceorasCarter suggestgetthecustomerinvolved,ifthisisworkingfromtheresearchcompleted,thenwhy notconsiderthiscustomerinteractionasbeingpartofthestrategyprocessfortheFM organisation. Overtimecustomercentricstrategiesfordeliveringvaluecanevolveintovalueeroding,not surprisinglywhenafriendlierrivalwithanalternativecomesalongcustomerdefect.Overly complexpricingstructurestakeadvantageofthefactthatsomecustomersfinditdifficultto predicttheirneeds.Organisationscanblindcustomerswithcontractsbleedthemwithfees, becausebewilderedcustomerswhooftenmakebadpurchasingdecisionscanbehighly profitable.Mostfirmsthatprofitfromcustomerconfusionareonaslipperyslope(McGovern 2007). Inindustrieswheresqueezingvaluefromcustomersiscommonplace,pricingdesignedto discouragecustomerspoorbehaviourcaninfactbecomeasourceofprofit.Forexample overdraftandlatepayment feesusedbybanks,mobilephonepricingstructurewithrestriction ontimeoruseandtypeofcallsattachedpremiumrates.Companiesthatdismantlethese harmfulpracticesanddesigntransparent,valuecreatingofferscanspurrapidgrowth. Companiesshouldlookoutfortheharmfulsignsandaskthemselvesthefollowingquestions (McGovern2007).

Areourmostprofitablecustomerthosethathavethemostreasontobedissatisfied. o Iftheanswerisyesthenthecompanyisextractingvaluefromacustomer whodoesnotfeeltheyaregettingafairreturn

Dowehaverulesthatwewantthecustomertobreakbecausebydoingsoit generatesprofit. o Rulesandpenaltiesareacceptablesolongastheyfollowsomeprincipals, doesbreakingtheruleresultinaloss,costordestroyvaluetothe organisationoritsothercustomers.Ifnotthentheruleissimplyaprofit generatingmechanism

Dowemakeitdifficultforcustomerstounderstandorabidebyourrulesanddowe actuallyhelpcustomersbreakthem. o Organisationsshouldexaminewhethertheyactivelyfacilitateprofitablebad customerbehaviours.Theyshouldlookattheirdiverseofferingsand establishiftheyprovidevalueortakeadvantageofcustomerignorance

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Dowedependoncontractstopreventcustomersfromdefecting o Organisationsdoneedcontractsformanyreasons,buttheyshouldnot becometheoppositeofserviceguarantees.Organisationshouldbeconfident abouttheirservicequalitytotheextentitprovideaguaranteeondeliveryor satisfaction. Attheotherendifthereislittleconfidenceoverdeliverythenthe longtermcontractisbeingusedtolockclientsintovalueextracting arrangements.

WhilsttheexampleprovidedbyMcGovernaremoreobviousaroundbankcharges,latefees etc,fortheFMindustryperhapssuchexamplesarenotevident.Certainlyclientshave significantbuyingpowerandintermsofcontractsmostsecondgenerationoutsource arrangementhaveperformancestandardsthatineffectbecomeaguaranteeonservice,as noncomplianceresultsinsomeformofcostreductionbytheclient.Thisisanalternative propositiontoMcGovernwhobelievesthatotherservicesectorprovidersusecontractsto protecttheirorganisationsratherthanbeconfidentaboutofferingservicelevelguarantees. Whilsttherecouldbesignificantdebateoverthistypeofapproachandifthosesystemsare themselvesencouragingFMproviderperformanceormerelyapenaltyforasubjective assessmentofservice.InpracticewhatweseetodayinFMcontractsisthatperhapsFM providershavebeenreluctanttoinitiateserviceguaranteesandthroughincreasedknowledge andimprovedbuyingposition,clientshaveinstigatedasubtlechangeinapproach,oneof performandgetpaid,dontperformanddontgetpaid.WhatarerelevantquestionsforFM organisationsaretheconceptsinvolvedhere.Ifclientsatisfactionispooronthemost profitablecontractsthenitwouldindicatethatboththebusinessisatriskatoneendofthe scaleandattheotherthereexistsopportunitytoreleasethisvalueandtaketherelationship withtheclienttoanotherlevel.ThroughprovidingimprovedlevelsofsatisfactionFM organisationscouldchangethelifetimevalueofparticularclientsfortheorganisation.The mysticalwinwinsituation. Fromexperienceandliteratureresearch,itisclearthatlikemostserviceprovidersFMsuffers fromthesubjectivenatureofservicequality.WorkcompletedbyHaynesandShawwithFM clientsidentifiedamodelforthemeasurementofserviceimportanceandservicequality,this modelbeingproposedtoguideFMorganisationsandalsoovercomesomeofthesubjective natureofFMservicedeliveryandperceptionissuesthatclientshave.Theirworkfocusedon identificationofamodelwhichwouldallowFMtobemeasuredintermsofcustomerservice ratherthanunitcosts/commoditypurchase.Fromthiswork,usingthemodelcontained withinfigure3.7,andvarioussurveysofFMuserstheyestablishedthefollowingattributesas beingimportantintheeyesoftheclientataservicedeliverylevel.Thesearecontainedwithin table3.3below.Whilsttheyadvisethattheseservicedimensionsshouldnotbeusedina genericsensetheydocapturethemaincustomerserviceelementsthatshouldformthebasis ofdiscussionwithusersoftheservices.Fromthiscoreofrequirementscanbebuiltandthe

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customisationoftheservicethatcomesfromunderstandinghowincreasedvaluecanbe createdintheclientproviderrelationship.Whilstthismodelandthefindingsconcentrate essentiallyonthecoalfacemeasurementoftheserviceandnotthemorestrategicvalue creatingopportunitiesthatmaycommencefromtheoutsetorduringthelifeofthe relationship,itshouldnonethelessbeusedtoconfirmorotherwisethatthecoreservice requirementsarebeingmetandthatthecorecompetenceoftheFMproviderismeeting expectations.Bydoingthisandapplyingsuchmeasurementandservicequalitydefinitionat thislevelitsshouldenableFMorganisationcertainlytousethisasafacilitatingpieceof quantitativedatatohelpmovemeasurementawayfromsimplecostbasedmetric. Figure3.7ServiceQualityImportance(Shaw&Haynes2004)
High

AttributestoImprove Importance

AttributestoMaintain

Attributestomaintain

AttributestoDeemphasise

Low

ServiceQuality

High

Table3.3

KeyFacilitiesManagementCustomerServiceDimensions (Shaw&Haynes2004)
Attribute Descriptors Theabilitytoadoptandconscientious attitude,balancingcustomerneedswith Professionalism statutoryrequirements Thetimelyprovisionofemployeeswhomeet Provisionofcompetent thetechnicalandprofessionalrequirements staff. oftheproject Thepresenceofadequatecommunication linksthatfacilitatearesponsive,accurate Communications andfriendlycustomerinterface Understandingthe Thisisthewillingnesstoexhibitaproactive approachtocustomerrequirements customer theabilitytoperformthepromisedservice Reliability dependableandaccurately Theabilitytodemonstratethatthecustomer Demonstratingvalue isobtainingthebestpossiblevaluefor moneythroughouttheprojectlife

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3.6.

Summary

Thereviewofthestrategicplanningprocessesidentifiedanumberofconceptualmodelsand significantdebateonhowstrategyisdevelopedforthebestwithinanorganisation.Having commencedthischapterwithanumberofyearsexperienceinoperationaldelivery,contract andcommercialdevelopmentwithintheFMindustry,coupledwithmorerecentlytheoretical understandingofstrategydevelopmentprocesses,itissomewhatofaconcernperhapsthat thereexistnodefinitiveviewonconceptualmodelsorapproachesthatshouldyieldsuitable andsufficientresultsiffollowedinthedevelopmentoftheorganisationsstrategicplans.The subjectareaappearsoverlycomplicatedbyviewsandcounterviewsfromacademicsatone endofthespectrumandattheotherendaretheorganisationswhichappeartoadoptonly thoseideastheyarecomfortablewithorhavehadprevioussuccesseswith,whilstdismissing thosethatsitoutsidetheorganisationalcomfortzone. Anumberofthemodelsandtheorysassociatedwithstrategicmanagementsystemsand processeshavebeensummarisedinthischapter.Thishasshownthatthereisongoing debatesurroundinghoworganisationsshouldlooktoachievecompetitiveadvantage,isthis throughcorecompetence,applicationofgenericstrategies,customercentricapproaches, valueaddingcapacityorisitindeedablendofalloftheseandmore.Withinthedebate howeverthereissomelevelofagreementonthewideroverarchingframework,whichis applied,tothedevelopmentoftheorganisationsstrategicobjectivesandplans.Anextensive partofbusinessmanagementliteratureconsidersthatplanningthoughtasgonethrough threestages: LongRangePlanning StrategicPlanning StrategicManagement

Whatisclearisthatanorganisationwillneedtohaveathoroughunderstandingofits capability,competence,markets,andcustomersinordertopositionitselfanddevelopits organisationalstrategyfortodaysbusinesssituation.Theprocessesfordevelopingthe organisationalstrategyarecomplexintheirnatureandmanyintheiralternativemethods.A numberofgenericapproachesexistintermsoftheprocessdeployedinordertoarriveata organisationalstrategy,howevergiventhecomplexityofthemarkets/environmentsthat organisationoperatewithinandthattheverynatureoftheorganisations,capability,capacity, culture,systemsandprocesses,tonameafew,meanthattheorganisationalfitwiththe externalenvironmentandprevailingeconomicconditionsisonewhichisanindividualtime relatedposition.Thereforegenericapproacheswillonlydeliversuboptimalresultsfora specificorganisation.

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Fromtheliteraturereviewandresearchcompletedbyotherstheredoesnotseemtobea widelyacceptedagreementthatthestrategicplanninganddevelopmentprocessbringsvalue toanorganisation.Howeveritisidentifiedthatsimplyhavingaprocessinplaceimprovesthe organisationalperformanceevenifitsasuboptimalsolution. Havingmethodstounderstandtheissuesaroundtherolethatcustomerknowledge,insight andvaluecreationplaysinthisdevelopmentprocess,shouldbeasignificantpartofasound strategicplanningtechniquesutilised.Allthisisleadingtohavinginplaceaplanorstrategy thatsatisfiesanumberofcompetingfactors,insuchawaythatthebusinessissustainablein thelongtermandmeetingstakeholderrequirementsthroughout.Itsisclearthatdependant uponthesizeoftheorganisationthelevelofinvestmentrequiredtoarriveorworktowards thisstrategicpositionisconsiderable.Howeverthisinvestmentoftime,researchandchange isbecomingmorefocusedforserviceorganisations,andFMorganisationofwhatistermed customercentricstrategies.Insimpletermshavingabusinessstrategythatisfocusedonthe customer,theirneeds,wantsandalsovaluecreatingopportunitiesthatdesignandprovide newneedsandwants.

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CHAPTERFOUR,RESEARCHDESIGN.

4.1.

Introduction.

Thischaptersetsouttherationalefortheresearchdesign.Theprevioussectionsofthis reporthavesuggestedthatthereisalackofimplementationandunderstandingoflongrange strategicplanningandexternalenvironmentalscanningpracticeswithintheFacilities Managementindustry.Coupledwiththisisthatwheresuchmethodsareutilisedtheremay notbeanintegrationwiththecustomer. Astandardquestionnairewasdevelopedwhichspecificallytargetedtheviewsoftheindustry fromtwoareas.FirstlyfromaFMbuyersperspective,theindustrysclientbaseandsecondly fromaprovidersperspective.Thequestionnairewasdividedintotwoforms,whichwasissued tothosewithinthevariousorganisationsthatoperatedataDirectorLevel.Itwasfeltthatat thislevelthereshouldbeagreaterexperienceofstrategicplanningissuesandunderstanding ofbothproviderandclientrequirements. Thedivisionofthequestionintotwoformshadbeentoaccomplishagreaterlevelof contextualclarityfortherespondents.ThequestionnairefortheFMprovidersconsistedofsix sectionsand26mainquestions,somewithsublevelquestions.TheBuyersquestionnaire wasmadeupoffivesectionsand23mainquestionswithsomesublevelquestions. ThefullquestionnaireiscontainedwithinAppendixC.Thequestionsaredevisedtoestablish keyaspectstounderstanding,policy,procedures,practice,andunderstandingandcrucially thelevelofclientinteractionintheprocessofstrategydevelopmentasawhole.

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4.2.

ResearchAims&Objectives.

Theaimofthisreportistodevelopaframeworkfortheimplementationofbestpractice embracingtheuseoflongrangeplanningtechniques,organisationalenvironmentalscanning interlinkedtothekeydriversoftheorganisationscustomers.Thisframeworkbeingatoolfor thedevelopmentandimplementationofcorporatestrategy,forFMprovidersandaguidance toolforFMbuyers. TheobjectivesofthisreportaresetoutinChapterOnesection1.3.Fromthistheobjectives ofthefieldworkaresetoutbelow 1. Definelongrangeplanningandorganisationalenvironmentalscanningtechniquesin thecontextofcorporatestrategydevelopment. 2. IdentifythekeybusinessdriversintheFacilitiesManagementservicessectorandits customers 3. Identifypolicyandmanagementtrendswithinfacilitiesmanagementsectorwith regardstostrategydevelopment 4. Analysecurrentthoughtswithintheindustryonlongrangeplanningand environmentalscanningandtheeffectsonstrategydevelopment 5. Developaframeworkfortheimplementationofbestpracticeembracingtheuseof longrangeplanningtechniques,encompassingenvironmentalscanningandscenario planning

4.3.

RationaleoftheResearchQuestionnaire.

Thequestionnaireconsistsofsixsections,whichcontaindescriptiveandnumericalbased questions,asdetailedbelow. SectionOne,CompanyDetails. Thissectionofthequestionnaireconsistsofquestions,whichidentifythecompanydetails andpointsofcontact. ThissectionwasutilisedforbothBuyersandProvidersofFMservices. SectionTwo,ServicesProvided Thissectionconsistedofquestionswhichrelatetothetypeofservicesofferedbythe companyandtheclassification/mainactivitiesofthecompany.Thisquestionwassetin ordertoestablishtheresearchsampleandtoassessiftheresponsetothequestionsvaried

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withdifferentsizesoforganisationandscopeofservicesprovided.Thisdatawasintendedto provideanindicationofanylinksbetweenthem,forstrategypractices,customerrelationships andtheoverallsizeoftheorganisation,insupportofobjectivetwoandfour. ThissectionwasutilisedforbothBuyersandProvidersofFMservices. SectionThree,ClientSectors Thissectionconsistedofquestionrelatingtothebroadtypeofclientsectorsthatservicesare providedwithinbyrespondents.Thisdataisintendedtoanalyseifdifferenceexistfroma serviceprovidersperspectivewithparticularclientsthisistoachieveobjectivefour. ThissectionwasusedonlyforprovidersofFMservicesasitwasnotrelevanttobuyers. SectionFour,Strategy Thissectionconsistedofquestions,whichrelatetostrategydevelopmentprocesses,thelevel ofawarenesswithintheorganisationandapproachtakenbytheorganisation.Thisdataisin supportofobjectivethree. ThissectionwasutilisedforbothBuyersandProvidersofFMservices. SectionFive,ExternalScanning Thissectionconsistedofquestionsrelatingtotheboththeforcesactingupontheindustry andtheuseofscanningtechniquesusedbyorganisations.Thisdatawasintendedtobeused toachieveobjectivetwoandfour. ThissectionwasutilisedforbothBuyersandProvidersofFMservices. SectionSix,ClientSuccessFactors Thissectionconsistedofquestions,whichrelatedtohowclientsgaugesuccessfromtheirFM providers,whatlevelofinteractiontakesplaceandhowthemarketisperceivedatpresent andfuturedirection.Thisdatawasintendedtobeusedtoachieveobjectivefour,andfive. ThissectionwasutilisedforbothBuyersandProvidersofFMservices.

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4.4.

MethodofAnalysis.

Theanalysisofthequestionshasbeensplitintotwosections.Thisisdonebecausethe questionsthemselvesareoftwotypes,numericalanddescriptive.Thisanalysishasbeen completedseparatelyforFacilitiesManagementServiceprovidersandClient,sothat comparisoncanbemadebetweenthetwo. Forthenumericalbasedquestionsthemethodofanalysisisdetailedbelowandisrelevantto thetablesproducedinthefollowingsections.

Question1.1to1.4

Thesequestionsdetailtherespondingcompaniesfinancialstatusandstaffinglevels. Averageshavebeenproducedforallrespondentsandtherangebetweentheupperand lowerlimitsoftherelevantdataisalsoindicated.

Question2.1to2.2

ThisquestionslooksatthescopeofservicesofferedbytheprovidersofFMservices,thisis toassessthecapabilityoftheindustryandthelevelofhorizontalintegrationwithinthe respondingorganisations.Tableshavebeenproducedtoindicatethisalongwithpiecharts.

Question3.1

Thisquestionlooksattheclientsectorsfortherespondentandthe%ofturnoverrepresented byeachform.Averagefiguresareprovidedalongwiththerangebetweentheupperand lowerlimitsoftherelevantdata.

Question4.1

Thisquestionlooksatthedefinitionofstrategydevelopmentandthelevelofagreementheld byrespondentsonthedefinitionprovided.Thequestionrequiresanimportanceweightingto begiventoeachfactoronascaleofstronglyagreetostronglydisagree.Thescoresgivenby therespondentshavebeenaddedtogethertoprovideanoverallscoreforthefactor.Thishas thenbeenrankedrelativetotheotherfactorsonascaleof1to20,with1beingthemost important.

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Question4.2

Thisquestionlooksathowstrategyisdevelopedwithintherespondentsorganisation,using thecriteriaprovidedwithinthequestion.Thequestionrequiresanimportanceweightingtobe giventoeachfactoronascaleofstronglyagreetostronglydisagree.Thescoresgivenbythe respondentshavebeenaddedtogethertoprovideanoverallscoreforthefactor.Thishas thenbeenrankedrelativetotheotherfactorsonascaleof1to20,with1beingthemost important.

Question4.3

Thisquestionlooksathowthepresentstrategydevelopmentprocesstakesplacewithinthe respondentsorganisationandhowtheybelievetheprocessshouldtakeplace.Thescores givenbytherespondentshavebeenaddedtogethertoprovideanoverallscoreforthefactor. Thishasthenbeenrankedrelativetotheotherfactorsonascaleof1to20,with1beingthe mostimportant.

Question4.4.1to4.4.3

Thisquestionlooksattherelativeimportanceplacedbytherespondentonthefactors,which encompassstrategydevelopment.Thequestionrequiresanimportanceweightingtobe giventoeachfactoronascaleofstronglyagreetostronglydisagree.Thescoresgivenbythe respondentshavebeenaddedtogethertoprovideanoverallscoreforthefactor.Thishas thenbeenrankedrelativetotheotherfactorsonascaleof1to20,with1beingthemost important.

Question5.1.

Thisquestionaskedrespondentstoindicatethefrequencyatwhichtheyundertakereviewsof factorsthataffecttheirmarketplace.Theresponsesareindicatedinorderofresponserate foreachelementinordertoestablishtheextentofactiveinterestintheexternalbusiness environmentfortheFMindustry.

Question5.2

Thisquestionsoughtrespondentstoindicatetherelativespeedofimpactforkeycriteria affectingtheorganisationalexternalenvironment.Thequestionrequiresascoretobegiven toeachfactoronascaleof1to6,with1beingthemostimportant.Thescoresgivenbythe respondentshavebeenaddedtogethertoprovideanoverallscoreforthefactor.

Question5.3.

Thisquestionsoughtrespondentstoindicatethefrequencyonwhichcertainscanning techniquesareusedbytheirorganisation.Fromthisarankingofimportanceandutilisation wasestablishedalongwiththerangebetweentheupperandlowerlimitsoftherelevantdata.

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Question5.4

Thisquestionsoughtrespondentstoindicatethelevelofagreementtheyhadwitha statementonwidermarketandeconomicfactorsassociatedwithacquisitionsbeingmadeby largerCorporations.Fromthisarankingofimportanceandutilisationwasestablishedalong withtherangebetweentheupperandlowerlimitsoftherelevantdata.

Question5.5

Thisquestionsoughtrespondentstoindicatethelevelofagreementtheyhadwitha statementonnontraditionalcompetitorsenteringintothewiderFMmarket.Fromthisa rankingofimportanceandutilisationwasestablishedalongwiththerangebetweentheupper andlowerlimitsoftherelevantdata.

Question5.6

Thisquestionsoughtrespondentstoindicate,againstanumberofstatements,thosethat werefelttobemostrepresentativeoftheirorganisation.Fromthisarankingofimportance andutilisationwasestablishedalongwiththerangebetweentheupperandlowerlimitsofthe relevantdata.

Question5.7

Thisquestionsoughtrespondentstoindicate,againstanumberofstatements,whichrelated totheuseofforecastingwithintheirorganisation,thosethatwerefelttobemost representativeoftheirorganisation.Fromthisarankingofimportanceandutilisationwas establishedalongwiththerangebetweentheupperandlowerlimitsoftherelevantdata.

Question5.8

Thisquestionsoughtrespondentstoindicate,againstanumberofstatementswhichrelated tocustomermeasuresandrequirementsplacedontheirorganisation,thosewhichwerefeltto bemostrepresentativeoftheirclients/experience.Fromthisarankingofimportanceand utilisationwasestablishedalongwiththerangebetweentheupperandlowerlimitsofthe relevantdata.

Question6.1to6.3

Thisquestionlooksattherelativeimportanceplacedbytherespondentonthefactors,which encompassstrategydevelopment.Thequestionrequiresanimportanceweightingtobe giventoeachfactoronascaleofstronglyagreetostronglydisagree.Thescoresgivenbythe respondentshavebeenaddedtogethertoprovideanoverallscoreforthefactor.Thishas thenbeenrankedrelativetotheotherfactorsonascaleof1to20,with1beingthemost important.

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Question6.4

Thisquestionlooksattherelativeimportanceplacedbytherespondentonthefactors,which encompassstrategydevelopment.Thequestionrequiresanimportanceweightingtobe giventoeachfactoronascaleofstronglyagreetostronglydisagree.Theresultshavebeen addedtogethertoprovideanoverallscoreforthefactor.Thishasthenbeenrankedrelative totheotherfactorsonascaleof1to20,with1beingthemostimportant.TheSpearmanrank correlationcoefficientisusedtomeasurethedifferenceinrankbetweenthetworespondent groups.

Question6.5to6.7

Thisquestionsoughtrespondentstoindicatealevelofagreementtoanumberofstatements whichencompassstrategy,marketconditions,costandservicemattersfortheindustryfrom aproviderandclientsperspective.Thequestionrequiresanimportanceweightingtobe giventoeachfactoronascaleofstronglyagreetostronglydisagree.Thescoresgivenbythe respondentshavebeenaddedtogethertoprovideanoverallscoreforthefactor.Thishas thenbeenrankedrelativetotheotherfactorsonascaleof1to20,with1beingthemost important.

Question6.8

Thedescriptivequestion6.8isanalysedseparatelywithcommonthemes,contradictionand comparisonbeingmadebetweentherespondents.

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4.5.

ResearchSampleDetails,Questions2.1.To2.2.

Fromthe200questionnairesissuedresponseswherereceivedfrom35Consultantsand30 Contractors,thisisfelttobeahighresponserate.Thefollowingtableprovidesdetailsonthe researchsample. Table4.5.1. ResearchSample.

Classifiedas Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Provider Provider Provider Provider Provider Provider Provider Provider Provider Provider Provider Provider Provider Provider Provider Provider Provider Provider Response No No No No No Yes Yes Yes Yes No No No Yes No No No No No No Yes Yes Yes Yes No No No No No Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes No Yes Yes Yes Yes No 47 14 51.06% 78% 10 34% Providers Buyers JobTitle Director FMDirector Director PropertyDirector FMManager CountryHeadofProcurement DirectorofOfficeServices DirectorEMEARealEstate Director ProcurementManager FMProjectManager Director Director HeadofFM HeadofFM HeadofFM Director FMDirector FMManager VicePresidentCorporateRealEstate HeadofPropertyServices Director MaintenanceManagement EMEAHeadofProcurement CorporatePropertyManager FMManager EnergyConsultant FMDirector ManagingDirector CommercialDirector SeniorCommercialManager BusinessDevelopmentDirectors CommercialManager OperationsDirector SeniorDevelopmentManager AccountDirector SeniorCommercialManager ManagingDirector OperationsDirector OperationsDirector ManagingDirector AccountDirector AccountDirector BusinessImplementationManager ManagingDirector ManagingDirector BusinessDevelopmentDirector

Organisation/Sector Investment Bank Media Consultant Bank Bank Accountants OutsourceIT Consultant ITManufacturer ITManufacturer Bank Bank Government Law Consultant PropertyLandlordDeveloper Consultant Law Bank Bank Consultant Bank Communications Government Bank Consultant Consultant Consultant FMProvider FMProvider FMProvider FMProvider FMProvider FMProvider FMProvider FMProvider FMProvider FMProvider FMProvider FMProvider FMProvider FMProvider FMProvider FMProvider ServiceProvider FMProvider TotalIssued ResponseVolume Overall ResponseRates

1 1 1 1

1 1 1 1

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

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CHAPTERFIVE,FIELDWORKANALYSIS

5.1.

Introduction.

Theresultsoftheanalysisarecontainedinthissectionofthereportonaquestionby questionbasis,withgeneralcommentsbeingmadeoneachquestion.Thesecommentsare summarisedtotherearofthischapter.Theanalysisalsoincorporatestheoutcomeof interviewsconductedpostcompletionofthesurvey.Duetowordcountconstraintsthis ChaptershouldbereadinconjunctionwithAppendixC1&Dsupportinganalysis: C1 D1 D2 D3 ResearchQuestionnaire Buyer&ProviderAnalysis CombinedAnalysisHighLevelVariance Question6.8WrittenResponses

Theresponseshavebeenbrokenintofourssectionsasbelow SectionOne SectionTwo BuyersofFMServices ProvidersofFMServices

SectionThree Consultants SectionFours CombinedResults

5.2.

AnalysisQuestions1.1to1.4Buyers

Thesequestionsrelatedthesizeoftherespondingorganisationandaresummarisedin Charts5.1to5.3below Commentary Chart5.1 ThesamplesizeoforganisationintermofpropertyportfolioandFMrelatedservicesarea functionoftheemployeelevelswithintheUK.Fromtheresponsestothesurveythereisa significantleveloforganisationalpropertyrelateddemandinordertoaccommodatethelevel ofofficebasedworkers.Thisthereforeshouldbereflectinginthequalityoftheresponsesas beingrepresentativeofhowFMispurchasedbyclients. Chart5.2 ShowtheUKbasedexpenditureandthroughfollowupinterviewswithkeyrespondentsit becameclearthatatthehigherendofthescale,1.5billion,thefiguresquotedwereforthe organisationsUKturnoverandnotFMrelatedexpenditure.Howeverthiserrorisnotfelttobe significantasthekeyfactoristhecontextoftherespondentsexperienceintheFMindustry andthelevelofservicesbeingpurchasedexternaltotheclientorganisation. horsnep Page 64 7/29/2009

Chart5.3 Fromthesurveysampletherewasahighdegreeoffeedbackfromseniormanagersand Directorswiththeclientorganisationsthathaveasignificantnumberofyearsexperiencein clientandproviderroles.Fromthisitistakenthattheaccuracyandqualityoftheinformation obtainedishighlyrepresentativeoftheirorganisationsandgeneralFM Chart5.1 Buyers:EmployeeNumbers

BuyersEmployeeVolumes

0100 20% 7000+ 40%

1001000 20% 50007000 30005000 0% 10003000 20%

0100 1001000 10003000 30005000 50007000 7000+

Chart5.2

Buyers:UKBasedFMExpenditure

BuyersUKFMExpenditure

20% 30% 100kto3M 3mto30m 30mto100m 100mto500m 500mto700m 700mto1.5bn 0% 20% 1.5bn+

30%

0%

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Chart5.3

Buyers:RespondentsJobTitles

BuyerRespondentJobTitles

Manager Director ManagingDirectoror VicePresident HeadofService

20%

10%

20% 50%

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5.3.

AnalysisQuestions2.1.2.2Buyers

ThesequestionsaredesignedtoestablishthelevelofFMoutsourceservicethatthe respondenthaswithintheirorganisation.Italsoprovidesaninsightintothemethodology takenwhenbuyingthisserviceeitherbundledthroughoneproviderorseparatedto specialistsandmanagedthroughaninhouseteamorthirdparty.Theresultsareshowin tabularandgraphicalformbelow. Commentary Table5.3.1 ThistableindicatesthelevelofFMservicespresentlyoutsourcebytheclientorganisations.It canbeseenthatthetraditionalFMhardandsoftservice SoftServices o Catering o Cleaning o MannedGuarding o VendingSecurity

HardServices o M&Emaintenance, o MobileServices o Building&M&Eprojectwork

Theaboveservicelinearetypically86to100%andisinlinewithexpectationgiventhatthese havealwaysbeenthefirstserviceclientstendtooutsourceastheyformthecoreofservice provisionformayproviders.Forthemostparttheseserviceslinesareoutsourceintheir entiretywith,frominterviewwithrespondents,asmallinhouseteamthatareresponsiblefor thecontractmanagementoftheproviderandsomeinternalcustomerliaison. ThosespecialistareasofpropertyandFMrelatedservicesthatarenotatthislevelof outsource,arefrominterview,predominantlyduetotheclientsretainingcontrolandstaffin housefortheseservices.Evenhelpdesks/callcentresareretainedinhouseforsome clients.ITsupportservicesappearstobeverymuchtobeatanearlystageofoutsourcing. Table5.3.2 ThelevelofexternallyprovidedconsultancyservicesisconsistentwiththeFMserviceswhich havebeenoutsourcedbybuyer/clients.Itisworthnotingthatitwouldappearfromthe respondentanswerstothequestionsthatFMprovidersarenotofferingorprovidingan

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integrateddesignandsupplysolution,ifcorrectitwouldsuggestaverytraditionalapproachto FMisbeingtakenbyrespondents,withthisandthecombinedinhouseteams. Spaceplanningandmanagementservicesurroundingaccommodationremainlargelyin houseandoninterviewitappearsthatthemanagement,coordinationetcisthroughthein houseteamandthelabouronlyelementsareoutsourced. Procurementfunctionsremaininhouseandthroughinterviewtheseappearonthemostpart tobeseparatesectionswithinclientorganisationsoutsideofthepropertyorFMfunctionand arethereforelookingatoverallorganisationalcostsfromoutsourcedservices. Charts5.3.15.3.2 Thesearegraphicalrepresentationsofthesameinformationandfromthisandthrough interviewitwouldappeartoindicatethatthoseservicesatofbelowthe60%thresholdare largelyprovidedthroughinhousefunctionswithcapacityandspecialisttopupservices providedasneededfromoutsidethebuyersorganisation. Table5.3.1 ProviderScopeQuestion2.1
2.0.CompanyClassification.

Indicatebelowwhichservicesareprovidedbyexternalorganisations.

Buyers
2.1.ProviderScope/CoreServices: HardServices SoftServices FullyIntegratedFacilitiesServices PlannedMaintenance. MobileSupportServices Cleaning FleetServices Catering MannedGuarding FMHelpDeskServices Vending Security RealEstateServices ProjectManagement ITsupportServices BuildingProjectWorks M&EProjectWorks

100% 86% 29% 100% 86% 100% 43% 86% 86% 71% 86% 86% 57% 57% 29% 100% 86% 76%

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Table5.3.2

ConsultancyServicesQuestion2.2
2.2.ConsultancyServices:

Ofthegeneralserviceheadingsbelowindicatewhichservices areprovidedexternallytoyourorganisation.
BuildingServices. QuantitySurveying. EnvironmentalManagementConsultancy RealEstateConsultant ProjectManagement. ProcurementConsultancy EnergyManagementConsultancy H&SConsultancy BuildingSurveying Design&BuildConstructionServices SpaceplanningandmanagementServices

86% 86% 57% 71% 71% 29% 57% 43% 86% 71% 57% 65%

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horsnep FMServicesPurchased
Har dSer vices Sof tServi ces FullyInte gra tedFac ili tiesSer vi ces PlannedM ainte nanc e . MobileSup portSe rv ic es Cle aning FleetSer vi ces Caterin g Mann edG u ard ing FMHelp D eskSer vi ces Ven ding Sec ur ity RealEstat eSer vice s ProjectM anagemen t ITsup port Ser vi ces Bui ldingP roject Wor ks M& EProje ctW orks

Chart5.3.1

100% 90% 80% 70% 60% %Outsourced 50% 40% 30% 20% 10% 0%

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FMServicesPurchased

ServiceProvidedExternally

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horsnep ConsultancyServicesPurchased
%ofServiceBoughtin

Chart5.3.2

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10% 20% 30% 40% 0%

50%

60%

70%

80%

90%

B u i ld i n gS e rv ic e s. . s u lta te C o ct M u re m a na g n s u lt a na g e n tC em e n c y a n t eme ons u n tC o H &S D e s ig S pa c B u i ld n & B epl a u i ld C nni n g a n o ns t dm a n t. lta n c n su l C o n i n g S r u c ti y ta n c y su l ta n u rv e o n S n a ge c y yi n g e rv ic me n t S e r e s vi ce s e yi n g Su rv E n v ir on m e nt a lM a na g e me n t C o n E s t a R e al Proje Pro c E ne r g y M n tit y Q ua

BuyersConsultancyServices

ConsultantServiceTypes

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Series1

5.4.

AnalysisQuestions4.1.4.4.3Buyers

Thissectionofquestionswasfocusedonthebuyers/clientorganisationsapproachto strategy,thelevelofunderstanding,howthestrategyiscommunicatedandimplemented. Thisistoseeifthereisarealdepthinunderstandingwithintheresponsesandthe awarenesswithintheoriginationsgiventhatthetargetrespondentsareatseniormanageror directorlevelwithintheirrespectiveorganisations. Commentary Table5.4.1 Definition

Thereisageneralagreementthatthisdefinitionrepresentedinsimpletermswhatstrategy meantfortherespondents.Oninterviewhowevermosttendedtobelievethattheprocessand requirementswheremuchwiderthanthescopeofthedefinitionandthiswasreflectedbythe 14%whodisagreedwiththedefinition.Whatcanbesaidisthatisanunderstandingaround whatformsstrategyandstrategicobjectives,thiswouldbeexpectedgiventheseniorityof respondentsintheirrespectiveorganisations. Table5.4.2` Process

Thereisahighlevelofagreementthatthestrategicprocessandstrategyisadeliberate processanddirection,whichisbuiltaroundtheannualbudgetsettingrequirements.Thisis supportedwithintheresponseratesandagreementlevelsindicated. Whilstthereisahighlevelofagreementthatthereexistsreinforcementandreassessment thereisacorrespondinglowlevelofagreementontheuseofthemissionstatementand goals,drivingdecisionmaking.Itwouldsuggestsomefragmentationbetweenstrategy setting,communicationandimplementationatanoperationallevel. Thereisanagreementthattheprocessadoptedformostorganisationsinthesurveythatthe strategyisdevelopedinanincrementalwayandnotlinear.Againthisisconsistentwiththe responseonotherpartsofthissection. Table5.4.3 Sequence

Therewerequitewideswingsonthesequencefortheprocessestobefollowedinstrategy development.Anaggregatedvalueisprovidedbasedontherankingofeachitemtakenfrom therespondentthisissetagainstwhatthewriterbelievesshouldbethecorrectsequence.By doingthisthereisinfactonlymarginalvarianceinposition/rank,oneoftwoplaces.However theswinginrankformaximumandminimumrankingismostpronouncedaroundthe followingthreeitems horsnep Page 72 7/29/2009

StrategyEffectiveMeasurement PresentStrategyReview StrategyImplementation

Itisnotclearifthisisofsignificancewithoutmoredetailedanalysisandaccesstoagreater levelofrespondentsinternalinformation.Itdoessuggestsomeinconsistencyinapproachor understandingofhowandwhenorganisationalstrategicplansshouldbemeasured,reviewed andthenimplemented.Thiscouldbeconsistentwiththeresponsesonthemissionstatement andincrementalnatureofdevelopmentrecordedearlierinthissectionofquestions. Table5.4.4 TheStrategy

Fromtheresponsesitappearsthattherearedocumentedstrategicplansinplacewith associatedmeasurementmetrics.Howevertherearelowlevelofagreementonthealignment ofthemetricstothestrategyandalsothatstaffareabletoarticulatetheorganisational strategy.Thismaybeindicativeofabreakdownincommunicationoroverallunderstandingof strategicobjectivesandthatthemeasurementsinplacearemoreassociatedwithstaff performanceratherthanthatofthestrategy. Table5.4.5 Process

Therearehigherthanexpectedlevelofdisagreementaroundcommunication,goalsand customerfeedback,thisisnotconsistentwithearlierresponses.Inparticular71%advisethat Strategyiscommunicatedatbudgetsetting,yet57%disagreethatkeyprovidersare communicatedwith.Againterminologyandunderstandingmayplayaparthereinthat perhapsobjectivesarecommunicatedatbudgetsettingbutwithoutthecorrespondinglinkto theoverallstrategyfortheorganisation. Itwouldbeindicativeofstrategybeingdominatedbythebudgetsettingprocesswiththislevel ofrespondent.Thiswouldbeaconcernasmostareseniorpeoplewithinthererespective organisations. Table5.4.6 Implementation

Therearestronglevelsofagreementindicatedfortheuseofmetric,whichagainisconsistent withearlierquestion.Thelevelofagreementforkeystaffandinparticularthesupporttaken fromtheirFMproviderisonlyamarginalagreement,suggestingthatthisisnotasfully integratedorasregularasperhapsitcouldbe.

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Table5.4.1

Definition

4.1Definition
Initssimplestformstrategyformulationisdefinedas: Strongly Agree 0% Agree Disagree Strongly Disagree 0% Commentary

"Whereyouare,whereyouwanttobeandhowyouwillgetthere" Towhatextentdoyoubelievethisisapplicableinpracticetohowstrategyis formulatedwithyourorganisation

86%

14%

Highlevelsofagreementtothisquestion

Table5.4.2

Process

4.2Process
TheStrategydevelopmentprocesscanbedescribedinmayways.Inthe contextofyourorganisationwhichbestdescribeshowyoubelievestrategy isdeveloped Strongly Agree Agree Disagree Strongly Disagree Commentary

LinearProcess IncrementalProcess Emergent Deliberate Continuousprocessofreassessmentandreinforcement Annualprocessbuiltaroundbudgetingandfinancerequirements Themissionstatementandgoalsdriveallourstrategicdecision

57% 57% 29% 29% 43% 43% 29% 14% 14% 14% 14% 43%

43% 14% 29% 14%

Mostdisagreethattheprocessislinear Strongagreementlevels Agreement Strongagreementlevels Mosttendtoagreewiththisapproachbeinginplace Itappearsthatanannualcycleisdominate Themissionstatementdoesnotappeartohavethe significanceexpected

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Table5.4.3

Sequence

4.3Sequence
Inyourexperiencewhichofthefollowingprocessesdoyoubelievecomes firstwithinyouorganisation.Secondlywhatdoyoubelieveshouldbethe correctsequence.Indicateintheboxesprovidedthesequenceona1to8 scalewith1beingthefirstprocessundertaken AggregatedSequence (SuggestedSequence) RangeMax RangeMin Commentary

ExternalBusinessEnvironmentalAnalysis InternalSituationAnalysis BudgetSetting StrategyCommunication StrategyImplementation PresentStrategyReview PresentStrategyRevision Strategyeffectivenessmeasurement

3(2) 1(3) 5(5) 7(6) 8(7) 2(1) 4(4) 6(8)

4 5 6 7 8 7 8 8

1 1 3 5 2 1 4 1

Table5.4.4

TheStrategy

4.4OverallDevelopment
Foryourorganisationcouldyouindicatetheextenttowhichyouagreewith thestatementsprovided Strongly Agree Agree Disagree Strongly Disagree Commentary

4.4.1TheStrategy
Wehaveawrittenandregularlyupdatedstrategydocument Seniormanagersmakereferencetothestrategydocumentonaregularbasis Ourstrategyalsoincludesquantitativemetricsforassessmentofoverall performance Departmentalperformancemetricsarealignedtoourstrategy Ourstrategyassessesbothinternalandexternalconditions Organisationalprioritiesaresetaroundourstrategy Ourstaffcanarticulateourstrategy 29% 14% 43% 43% 14% 14% 14% 57% 57% 29% 14% 71% 57% 43% 14% 29% 29% 43% 14% 29% 43%
Indicativeofawrittenandcommunicateddocument Documentexistsbutlevelofreferencequestionable Suggestmetricinplaceformost Overhalfreportstrategyrelatedmetricinplace Highlevelsofinternal/externalassessment Inkeepingwithresponsetometrics Justoverhalfreportstaffknowledgeofstrategy

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Table5.4.5

Implementation

4.4.3Implementation
Strongly Agree Agree Disagree Strongly Disagree Commentary Marginalagreementonstructureapproachand communication Higherthanexpectedlevelsofdisagreement Consistentwithearlierresponsesmetricbeingused Marginalagreementonstructureanddevelopment Only14%morereportFMprovidersbeingbroughtinat operationallevel Higherthanexpectedlevelsofdisagreement

Wehaveastructuredapproachtostrategyformulationandthisis communicated Keystaffhavespecificrolesinthedevelopmentprocess Weapplymetricstoensurethattheimplementationiseffective Ourprocessisbrokenintofunctionalstrategydevelopment WerefertoourFMproviderforsupportinthedevelopmentofourown operationalandstrategicplans,whereisrelatestotheirpresentorfuture servicetous Ourprocessiscrossfunctionalandincludesdiscussionsandinputfromallareas ofourbusiness

29% 29% 29%

29% 29% 43% 57%

43% 43% 29% 43% 43% 43%

14% 14%

43% 43%

Table5.4.6

Process

4.4.2Process
Strongly Agree Agree Disagree Strongly Disagree Commentary Budgetandstrategylinkedincommunication Mostagreemarketreviewed Indicativeofsomebenchmarkingtakingplaceformost Higherlevelofdisagreementaroundcustomer measurement Higherthanexpectedlevelsofdisagreement Higherthanexpectedlevelsofdisagreement Higherthanexpectedlevelsofdisagreement

Thestrategyiscommunicatedpriortobudgetsetting Wecontinuallyanalysemarketconditions Webenchmarkourselvesagainstourcompetitors Ourprocessincorporatesmeasurestoassessclientdemandsandindustry feedback Overallourprocesstranslatesbroadgoalsintospecificactions Ourstrategyiscommunicatedinternallyateverylevelinadocumentedformat Wecommunicateourstrategywithourkeyprovidersonaregularbasis

14% 43% 29% 14% 29% 14%

71% 71% 14% 43% 57% 14% 29%

29% 14% 43% 29% 29% 57% 57%

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5.5.

AnalysisQuestions5.1.5.8Buyers

Thisseriesofquestionswasfocusedonhowthebuyers/clientorganisationsscanthe externalenvironmentforchangesthataffectboththeirbusinessandforchangetotheFM industrythatmayaffecthowtheybuyservicesfromtheproviders. Itlookedtoestablishthelevelofsophisticationandtechniquesinusebyclientsandif forecastingisactivelyadoptedattheleveloftherespondentswithintheorganisation.The questionswerealsousetoestablishthelevelofunderstandingrespondentshaveaboutthe widermarketforcesofconglomerateandglobalisationactivitythatcouldimpactboththeir organisationthattatoftheirFMproviders. Commentary Table5.5.1 ExternalEnvironmentScanning Theresultsappeartoindicatethatahighdegreeofscanningtakeplacewithinthe organisations.Competitormovementsseemtodominatefocusbutsomedisparityaroundthe resultsforinvestorsandmarketsharewherebothacontinuousandannualapproachscore equally. Table5.5.2 SpeedofChange

Fromtheresultsitcanbesaidthatcustomersarethekeychangedriver,followedby competitoractionsandregulation.Therankingoftheissueswouldbeasbelow: 1. Customers 2. Competition 3. Regulation 4. Globalisation 5. Technology 6. Investors Thismaybeindicativeofareactiveapproachtochangewithtechnologyandglobalisationlow inranking. Table5.5.3 Techniques

Thescoringandresponseonthesetechniqueswaslowacrossallareas,whichdoesbring inconsistencywiththereportedhighlevelsofscanningrecordedinotherquestions.Thismay beindicativeofalessstructureapproachbeingtakenandtheuseofthesetoolsbeingvery limited.

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Itwasnotedbyonerespondentthatthesetechniqueswouldonlybeusedafterasignificant marketshiftorchange.Againsupportingareactiveapproachtochangeconditions. Table5.5.4 WiderMarketChanges

ThegrowthofconglomerateactivityisseenbyrespondentstobeafactorthatwillaffectFM. IfthisisinthecontextofconsolidationoftheFMmarketplacethenthisneedstobe consideredbyproviders,thebuyersinthissurveyareindicatingthatsingleservicelinesare thepreferredoptionandsinglesuppliersforallservicesarenot.Serviceisbeingbought basedoncompetence. Table5.5.5 Competitors

ThereisahighdegreeofagreementthatsizeoftheFMorganisationbringsalessagilityfor theclient/buyerofservicesandthatsmallersizedorganisationbringimprovedresponse.As withearliersectionagilityandresponseisamajorpartoftheclientsperceptionofservice andakeyrequirementfromtheirFMproviderinsupportoftheirbusiness.

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Table5.5.6

StructuredorUnstructuredApproach

Itwouldappearfromtheresultsthatagilityisseenthroughanunstructuredapproachto strategydevelopment,howeverthisisnotconsistentwithearlierresponsesandinparticular thefactthatmanyrespondentshaveadvisedthatseparatefunctionsexistforplanningand scanninginsupportoftheorganisationalstrategy. Table5.5.7 Forecasting

Whenforecastingrespondentsuselastyearperformanceandbudgetsplayapartinthe respondentsplans.Theresultsalsoindicatethatthefiveyearplaneitherdoesnotexistin documentedformorisnotcommunicated,thisthendoe'snotsitwiththedisagreement indicatedaroundlongrangeplanning,inthatsomevalueisperceivedfromhavingalong rangeplan.Thereisalsodisagreementthatastructureprocessforplanningbringsanegative impactonorganisationalagility. Table5.5.8 Quality&Cost

RespondentsappeartoacknowledgethatthereislittledifferentiationintheFmmarketplace butindicatethatthisencouragesthemtolookatbetterwaysofworking.Howeveronthe successrelatedquestionsitappearsclient'swanttoexpandservices,butisperhapslimited bycapabilityconcernsofthemarketandwhereexpansionhastakenplaceitappearstobe confirmedtotraditionalFMscopesofservice. Theresponsivenessoftheprovidersserviceisakeyattributethatclientslookfor,withquality andcostdominatingtheirdecisionprocess,thisconflictswiththeearliersectionsofthe survey,whichindicatedqualitywasthepriorityissue. ThereisalevelofuncertaintyovertheformsofSLAindicatedinthesurveyastowhichones clientsperceiveisbest.Oninterviewclientsrespondedthatprescriptivemayhinder innovationhoweverwhenoutputbasedSLAareusedthelocalserviceprovisioncanfallback tobeingprescriptiveduetothesubjectiveassessmentsofstandardsandbuildinguser requirements. Respondentshaverecorderthatonlineauctionsdobringoperationalconcernsforthem, whilstlongertermcontractsappeartobebeneficialforbothparties.

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Table5.5.1

ExternalEnvironmentScanning

5.1ExternalEnvironmentScanning
Towhatextentwouldyousayyourorganisationregularlyundertakes reviewsinthefollowingareas,inaefforttounderstandits competitiveenvironment Continuous Monthly Half Yearly Annually Other (Please indicate interval) Commentary Highlevelsofscanningreported Highlevelsofscanningreported Highlevelsofscanningreported Highlevelsofscanningreported Disparitybetweenthisandothermeasures Disparitybetweenthisandothermeasures Highlevelsofscanningreported

RegulatoryChangesProposedandActual Monitoringoftheglobalmarketplaceandeffectsofglobalisationonyour business TechnologicalChanges Competitormovement/actions Marketsharemovement Investor/sharemovement Customerrelatedfeedbackandcustomermarketreviews

57% 71% 71% 86% 43% 43% 71% 14% 14% 14%

29% 14%

29% 43% 14%

Table5.5.2

SpeedofChange

5.2SpeedofChange
1 Pleaseindicatetheperceivedimpactandspeedofchangethatthe factorsbelowrepresentforyourbusiness.Pleasescoreonthescale of1to5asindicated Slowrateof change/Low Impact 2 3 4 5 Highrateof change/ HighImpact Commentary Thisisindicatedasanimportantissues Thisisindicatedasanimportantissues Highestareaofconcern Investorsnotseenassignificantasotherchanges Technologynotseenassignificantasotherchanges Highestareaofconcern

Regulation Globalisation Customers Investors Technology Competition

14% 29% 14% 29% 14%

14%

14% 29% 14%

43% 29% 57% 29%

29% 43% 14% 29% 29%

43%

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Table5.5.3

Techniques

5.3Techniques
Whichofthefollowingtechniquesdoyouadopttosupportyour understandingofyourmarkets HardlyEver Annual BiAnnual Quarterly Other Commentary Acrossallareasthesetechniquesdonotformakeypart ofscanning Acrossallareasthesetechniquesdonotformakeypart ofscanning Acrossallareasthesetechniquesdonotformakeypart ofscanning Acrossallareasthesetechniquesdonotformakeypart ofscanning Acrossallareasthesetechniquesdonotformakeypart ofscanning

PESTEL(Political,Economic,Social,Technical,Environmental,Legislative) SWOTAnalysis Porters5forces StakeholderMapping IndustryCoreCompetenceandmarketthresholdreviews

14% 14% 43% 14%

43% 14% 14% 14% 43% 43% 0% 29% 14%

29% 14% 29% 29% 29%

Table5.5.4

WiderMarketIssues

5.4WiderMarketChanges
1 StronglyAgree thiswillaffect thesector 2 3 4 5 Strongly Disagree, thiswillnot affectthe sector

Thefollowingstatementrelatestolargeglobalorganisations.Towhat extentdoyoubelievethatthisisanissuewhichwillaffecttheFM sector.Usingthescaleof1to5toindicate Withstronggrowthinanumberofmarketsthereisarisein conglomerateactivityasorganisationsundertakeanabsorption strategyacrosstheglobe,withtheaimofbeingtobiganddiverseto fail

Commentary

29%

43%

14%
Highlevelofagreementthatthesemarketforceswillaffect theFMindustry

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Table5.5.5

WiderMarketIssues

5.5Competitors
1 Towhatextentdoyouagreewiththestatementbelow,inthecontext oftheFMsector.Usingthescaleof1to5toindicate StronglyAgree 2 3 4 5 Strongly Disagree Commentary

Nontraditionalcompetitorsarechangingtherulesofthegameinwhich organisationshavepreviouslyplayed.Thisandthecombinedeffectsof largeorganisationsbecomingdrivenbystability,process,andprocedure whichprovidesaslowresponsetochange.Thisresultsinnewentrants, typicallyenteringthemarketfresh,unclutteredbybureaucracy,andwithan entrepreneurialspirit,briningimprovedservicetoclients.

57%

14%

14%
HighlevelofagreementthatthisisanissueforFM providers.

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Table5.5.6

StructureorUnstructuredApproach

5.6StructuredorUnstructuredApproach
Whichofthefollowingstatementsdoyoubelievebestdescribesyour organisation StronglyAgree Agree Neither Disagree Strongly Disagree Commentary

Wefollowastructuredapproachtoexternalscanningofourmarketand organisationalenvironment Weinvestinresourcetimeandresearchtounderstandfullytheforces actingupontheorganisation Webelievethataagileorganisationisneededtorespondtochangeand actonopportunities.Thisisbestachievedthroughhavingan unstructuredapproachtoexternalscanningandstrategy Wehaveinternalnetworkswhichmonitorcompetitormovements Wehaveaseparatedivision/groupwhoarefocusedonthisinsupportof ourstrategy

29%

43%

14%

14%

Indicativeofastructureapproach,howevernotconsistent withotherresponse

14%

29%

14%

29%

Noconclusiveresponsehere,tendingtowardagreement butverymarginal

14%

57%

14%

14%
Strongpreferenceforanunstructuredapproachforagility

14%

29%

14%

29%

Noconclusiveresponsehere,tendingtowardagreement butverymarginal Someorganisationappeartohaveahigherlevelof sophisticationviadepartments,thisisoffsetbythosewho appeartohavenowdedicatedresourceinthisarea

14%

43%

29%

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Table5.5.7

Forecasting

5.7Forecasting
Thisquestionrelatestotheuseofforecasting,theanticipatingand projectingofthefuturepositionofthemarketplacewhendeveloping strategy.Foreachofthequestionsindicatetheextenttowhichyou believeitbestdescribesyourorganisationorpresentpracticewithin it. Strongly Disagree

StronglyAgree

Agree

Neither

Disagree

Commentary

Whenforecastingwemakeuseofpreviousyearsfinancialperformance againsttargetsandthisplaysthemajorpartofaplanforthecomingyear Ourorganisationusesadocumented5yearstrategicplanwhichisusedto guideallstrategicdecisions

14%

29%

29% 57%

14% 29%

Noconclusiveresponsehere,tendingtowardagreement butverymarginal Highlevelofdisagreement,suggestnocommunicated5 yearplan

Weuseamixofindicatorsfromourmarketresearch,thatarebrought togethertoprovideanoverallassessmentofourmarketplaceatpresent. Managersthenusethistoguideourstrategicplan Ourforecastingandplanningprocessesallowustohaveaclearvisionof ourfuturemarket,organisationalcapabilityandmarketrequirements overthenext5years

57%

14%
Indicatorsmeasuresandusedforguidance Noconclusiveresponsehere,buttakingresponseabove thiswouldindicatenoformal/communicated5yearplan knowntorespondents

43%

43%

Ourcorporateagilityisrestrictedbyastructuredapproachtoplanning andstrategydevelopment,assuchweplanonanannualbasisonly successfulstrategyplanningandimplementationisbuiltfroma foundationbasedonalongtermplanwhichisreviewedthroughadefined processandtimelineeachyear Longrangeplanningisinherentlyfloored,asinthelongtermstructural changesinourmarketandourclientsmarketmakesforecastingbuilton falseassumptions

14%

14%

43%

14%
Thisistendingtodisagreement

29%

43%

14%
Responsetendtoindicateagreementbutmarginal

29%

29%

29%
Noconclusiveresponse

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Table5.5.8

Quality&Cost

5.8Quality&Cost
Towhatextentdoyouagreewiththefollowingstatements StronglyAgree Agree Neither Disagree Strongly Disagree Commentary Suggestthatclientwouldliketoexpandservicescopesto bringvalue Capabilitydriveoutsourcedecisions SuggestthatsuccessachievedbutconfinedtoFMservice onlyorcontractscope Noconclusiveresponsehere,tendingtowardagreement butverymarginal FMprovidersneedtoberesponsive,keyclientissue Lackofdifferentiationmeansclientwillswitch Qualityandcostmeasuresdominatedecisions Highlevelofagreement

WithLittledifferentiationintheFMservicesectoritisimportantthat clientsareabletodevelopotherareaswhichbringbenefitfromtheirFM providers Weassesswhattooutsourcebasedonmarketcapability Ourmostsuccessfuloutsourcerelationshipshavebroughtvalueinareas outsideofFM OurAnnualbudget,targetsalesandgrossprofitistheonlyplanthat counts. OurmarketisfastmovingandwerequireourFMproviderstobeagile.In ordertosupportourchangingrequirements Itissaidthattheservicesectorclientshavelowlevelsofloyalty,dueto providersofferinglittleornodifferentiationinservice. Wearecontinuallylookingforimprovedservicequalityandlowerprice fromourFMproviders. InmanywaysFMprovidersareseeingthemarketpressuresoncefeltby manufacturing,increasedqualityandlowercost. Clientsstriveforinnovationandserviceimprovement,thiscanbe compromisedbyprescriptivetypecontractsoronlypartialFMservice outsourcestrategies. Greaterefficiencyandserviceisonlyachievedthroughlongterm contracts,whichallowforinvestmentbytheFMprovider Thegrowthofonlinereverseauctionsbringslowerfirstcostforclients butthepostcontractoperationalexperienceislesssuccessful.

14% 14%

43% 57% 14% 43% 14% 14% 29%

29% 14% 29% 29% 0% 29%

14% 57% 14% 14% 29%

29% 14% 14% 71% 57% 71%

14%
Highlevelofagreement

14% 14%

57% 29%

14% 29% 14%

Highlevelofagreement

Highlevelofagreement

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5.6.

AnalysisQuestions6.1.6.8Buyers

ThissectionlooksatourbuyersselectandthenworkwiththeirFMproviders.Inadditionsit seeksopinionsontheindustryabasedontheirexperienceandhowoperatingatamore strategiclevelwouldimproveorotherwisetheserviceandvaluereceived. Table5.6.1 ProviderStandards

Bymeasuringacrossthescaleofimportantandveryimportantthehighestscoringissuesare asbelowinpriorityorder: 1. HealthandSafety 2. Previouscostefficiencywithclients 3. Abilitytoexpandandcontractservices 4. Financialsecurity 5. DemonstrationofEuropeanCapability 6. MobileServiceCapability Health&safetyiswithoutadoubtanexpectationwhichmustbemetinallareasofservice provisionandastrongrecordinitsmanagementisnaturaltoexpect,whatisconsistentisthe themeofagilityinserviceprovisionandcostsavings. Table5.6.2 Approach

Whilstthereisnomoredominantcriteriawithintheresponsethereisatendencytowardsthe following Selfdeliveryofservices Clientinhouseteams PrescriptiveSLAtypespecifications Fromtelephoneinterviewsthereexistedsomedebateoverthebenefitsandpitfallsofoutput basedSLAandthiswascoveredearlierinthebuyercommentaryforquestion6.8. Table5.6.3 SuccessCriteria

Fromtheresponsesprovidedtherearefourelementsthatdominatetheclientsuccessfactor fortheFMprovisiontheserelatetocustomerservice,understandingtheclientsbusiness, attainmentofcontractKPIsandannualcostsavings.Attheotherendofthescalehaving specialityknowledgeandrealestatecapabilityscoresrelativelylow. Oncost715ofrespondentsseethisasimportant,thiswouldsuggestthatquality,consistency andcustomerservicearethemajorpartsofassessingtheFMserviceprovisioninuse. horsnep Page 86 7/29/2009

Table5.6.4

WorkingTogether

Theresultsfromtherespondentsaremoststrikinginthissection,fromearlierquestionsthe themesisoneofcollaborationandstrategysharing,howeveratbestFMprovidersare communicatedwithonissuesofastrategicnatureannuallyatworstonappointment.With regardstopropertyrelatedmattersatastrategiclevelfewFMprovidersattendanyclient meetings,43%arerecordedasneverhavingtheirFMproviderattend. Table5.6.5 WorkingTogether

Thesignificant factorintheresponseisthatcollaborativeworking,innovationandyearon yearsavingsareofvaluetotheclient.Whilstlowestcostisimportanttheresponsetoonline auctionssuggestthatvalueisofgreaterimportancethaninitialcost.Againtheindicated importantofsupplierdifferentiationwouldsuggestthatclientsareusingothercriteriawhen evaluatingprovidersattenderstage. Table5.6.6 Opinions

Theresponseprovidedallowthefollowingobservationstobemade ClientperceivetofewFMorganisationswhichwouldimplytheyhavelimitedchoices SmallerFMorganisationsarenotdifferentiatingthemselvesofservicequality ClientseethatincreasedandtotalFMoutsourcewillhappen Innovationishappening StrategicoperationofcontractwithFMprovidersshouldbringincreasedvalue FMprovidersdonotunderstandtheirclientsbusiness ClientwouldlikegreatertransferofpropertyrisktoFMprovidersbutfeelthemarket isnotready Clientdonotseetheresurgenceofinhousesolutions ClientsrecognisethatFMprovidersgobeyondtheircontractrequirementsindelivery ofservice Strongdisagreementthatoutsourcinginhouseteamaddsvalue ClientsarerecognisingthatFMisbecomingacommoditypurchaseandthereisa highlevelofagreementonthis

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Table5.6.7

General

Fromtheresponsesprovidedthefollowingobservationsaremade EnvironmentalpracticeandclientsupportisakeyrequirementfromtheFMprovider Longertermallinclusivecontractsarenotseenasawayforward Clientswouldlikeservicelinereviewedandlinkedtostrategy LocalFMrelationshipsarekey Agilityforexpansionandcontractionofserviceiskey Havingameasurabletrackrecordinrelationshipswithotherclientiskey 71%ofrespondentsreportthattheyhaveoperatedatastrategiclevelwiththeir providerandachievedbetterthanexpectedresults Collaborativeworkingbringbetterthanexpectedresults 14%ofclientshavenothadexpectationsmetbymultipleservicelineproviders

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Table5.6.1

ProviderStandards

6.1ProviderStandards
WhenconsideringyourFMproviderpleaseindicatetherelativeimportanceyou placeonthefactorsbelow,eitherattenderstageorduringthecontractlife Essential Very Low Not Important Important importance significant Commentary Agreementthatfinancialstandingis ofimportance,asexpected important Therearedifferenceinapproachhere Againnosingleviewdominates H&Skeycriteria important Agilityisagainrecordedinimportance

Theorganisationmustmeetathresholdleveloffinancialsecurity OurprovidersneedtohaveEuropeanwidecapability Demonstrationofcapabilityinafullrangeofhardandsoftservices UKwidemobileservice AgoodrecordofHealth&Safetyperformanceacrossthewholeoftheproviders business Beabletodemonstratepreviouscostefficiencieswithotherclients Havetheabilitytoexpandandcontractservicesinlinewithourbusinessneeds

71% 14% 14% 57% 14% 43%

14% 29% 43% 43% 71% 43%

14% 71% 29% 14% 14% 29% 43%

14% 14%

Table5.6.2

Approach

6.2.Approach
Pleaseclassifytheimportancethatyouplaceonthetypeofapproachtoservice provisionbyyourFMprovider Essential Very Low Not Important Important importance significant Commentary Thisisnotseenwithhighimportance Thisisnotseenwithhighimportance

OurFMprovidershouldhaveinhousedeliveryofallservices Managingagentapproachtoensureserviceexcellenceineacharea,usingtheirsupply chain Asaclientweretainaninhouseteamandfindthatperformance,serviceandquality, isbetterprovidedinthisway AppointmentofourFMprovidersisbasedonprescriptivetypecontract/ specifications AppointmentofourFMproviderbasedonanoutputbasedtypecontract /specifications

14%

14% 29%

43% 43% 29% 29% 57%

29% 29% 14% 29% 29%

29% 14%

29% 29% 14%

Inhousecapabilityseentobe important Thereisatendencyforthisapproach Outputisseenasbeingimportant

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Table5.6.3

SuccessCriteria

6.3.SuccessCriteria
Pleaseindicatetheimportanceofthefollowingitemsasindicatorsofthe successfulnessoftheFMservicesprovision Essential Very Important Important Low Not importance significant Commentary Initialcostishighinimportance Lifetimecostisgivenahigherrating respondents importance

Initiallowestcost Contractlifetimecost Attainmentofyearonyearsavings MeetingcontractKPI's Havingthecapabilitytomanageourcompletepropertyportfoliofromleaseto maintenanceservices Bringingnewwaysofworkingthatpromotecostefficiencyorserviceimprovements Bringsectorspecialistforthemanagementofourpropertyportfolio WehaveanopenapproachwhichbringsnoboundariesforinnovationfromourFM provider Havingadetailedunderstandingofourbusinessandthemarketsweoperatein SuccessishavingFMserviceprovidedinmannerthatrequiresminimalmanagement inputordirectionbyus Havinghighlevelsofcustomerserviceskills,whichareusedbytheprovidersteam,at everylevel

14% 14%

14% 71% 100% 71%

71% 14% 14% 29%

14%

57%

14%

Thiscapabilityisoflowimportance Alternativemethodsareimportant essential Boundariesareovercomefor innovation Understandingtheclientbusinessis key Autonomyandselfregulationiskey forclients Customerskillssignificantin perceptionofservice

71% 14% 29% 14% 57% 29% 43% 29%

29% 57% 71% 29% 71% 29% 14% 14%

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Table5.6.4

WorkingTogether

6.4WorkingTogether
Monthly TowhatextentdoyouundertakethefollowingwithyourFMprovider WeundertakestrategicreviewswithourSeniorTeamandFMproviders,which promotesgreaterunderstandingbetweenallpartiesofourrespectiveorganisations. Quarterly At Annually Appointme nt Never Commentary Thereappearstobeagoodlevelof interactionwithFMproviders Businessissuesarenotconsistently communicatedwithFMproviders SupportfromtheFMproviderisnot consistentlybeingsoughtatregular intervals Agoodleveloftargetsettingforthe FMproviderwiththeclient Strategydiscussionsappearannual only LittleinvolvementfortheFMprovider onStrategicpropertyissuesona regularbasis LittleinvolvementfortheFMprovider onStrategicpropertyissuesona regularbasis

43% 29%

43% 29%

14% 43% 14% 14% 14% 43% 29% 14%

WeadviseourFMproviderofthechangeswithinourbusiness WelooktoourFMproviderforsupportconcerningourbusiness,outsideofnormalFM servicesscope WeworktoestablishspecificgoalswithoutFMproviderwhichmatchourbusiness strategy WeshareourannualstrategywithourFMprovider OurFMproviderattendsourstrategicproperty/businessreviewsonthefrequencyof thatindicated OurFMproviderattendsallinternalmeetingsconcerningthecompany'sproperty portfolio

14%

29% 57%

43% 29% 86%

29% 14% 14%

29% 29%

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Table5.6.5

WorkingTogether

6.5WorkingTogether
WhichdoyoufeelbestdescribeshowyouworkwithyourFMprovider WeseparateindividualFMservicesintoitsspecialistareastoattainlowestcost Weappointoncriteriadominatedbycostandthenmanageservicequalitythrough performancemetricswhichplacetheprovidersprofitatrisk WedonotseethatourFMprovidercanaddvalueotherthantominimiseproperty chargesthroughcompetitivetenders Onlineauctionsdrivevalue,whichbringsimprovedclarityonpriceandperformance Postonlineauctionrelationshipswithourprovidersarenodifferentthanthatachieved throughanyotherprocurementroute OurapproachtoFMservicesistolookatvaluefirst,costsecond WithlittledifferentiationbetweenFMproviders,theonlyselectioncriteriaisthatofcost WehaveachieveyearonyearsavingswithourFMproviderbyworkingtogether WeactivelypromoteinnovationfromourFMproviderandhavebenefitedfromthis throughimprovedserviceandoverallcost AsabuyerofFmserviceswefeelthatvalueisonlyachievedfrommorecollaborative workingpractices WearenonspecialistandthereforebaseourselectionandmanagementofFMservices throughseparateconsultancyservices Strongly Agree Agree Neither Disagree Strongly Disagree Commentary Respondentsseecostimprovements throughsinglesourcearrangements stickforcontractsawardedoncost basis ClientbelieveFMproviderscanadd value

14% 29%

29% 29% 14% 14% 14%

29% 14% 29% 29% 29% 14% 14% 14% 14%

29% 29% 57% 43% 43% 29% 71% 14% 14% 14% 14%

14%

29% 14%

14% 14% 14%

57% 57% 86%

29%

43%

29%

Onlineauctionshavealowrating Relationshipdifferentthroughonline auctions Valueassessmentsmarginallymore importantthatcost Selectionassessments,strong preferenceforfactorsotherthancost Agreementthatsavingsthrough collaborativeworking Agreementthatsavingsthrough collaborativeworking Agreementthatsavingsthrough collaborativeworking ConsultancysupportforFMprovision notseenatimportant

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Table5.6.6

Opinions

6.6Opinions
Towhatextentwouldyouagreewiththefollowingstatements TheFMmarketisnowdominatedbytoofewlargeorganisations Strongly Agree Agree Neither Disagree Strongly Disagree Commentary suppliers

14%

43% 29%

14% 29%

29% 43%

QualitytendsonlytocomefromsmalltomediumsizeFMorganisationdueto customerserviceandtheimportanceplacedonthebusinesswerepresenttoour providers TheFMindustryisnowenteringaphaseofsecondandthirdgenerationoutsourceand clientaretreatingthiswithmoreofacommoditytypeapproachtoselectionand appointment Itisdifficulttoseeafutureforsingleservicecompanies,clientsrequirecompanies withthecapabilitytomanageallourpropertyneeds AsaclientorganisationwedonotseethatatotaloutsourceofFMandProperty serviceswouldeverhappen InnovationwiththeFMindustryismerelyabuzzword,wehaveyettoseereal evidenceofthis OperatingatamorestrategiclevelwithyourFMprovideristheonlywaytodrive furthervalueonceyouhaveestablishedabaselineserviceandcost. Propertyisabusinessoverheadandassuchcostistheonlycriteria FMprovidersunderstandtheirclientsbusiness AsaClientweseethatgreatertransferofpropertyrelatedriskisthewayforward,but themarketisnotreadyforthisatthemoment Thegrowthofclientsaleandleasebackpropertydealsprovidesanindicationthat clientorganisationswouldideallyliketohavefullyservicedaccommodation,but chargesforthisarrangementmeanthatgreaterclientcontrolbringsalowercost alternative WebelievethatthefutureofFMserviceswillseeareturntoinhousemanagement andservices IngeneralmyexperienceshowsthatFMprovidersmakecontributionstoclient organisationsobjectiveswhichgobeyondthebasisoftheirinitialcontractaward ResearchindicatesthatFMoutsourcearrangementsthatbringrealvaluetoclients, commenceatastrategiclevelwithinthetwoorganisationsandgenerallyinvolvethe completeoutsourcingofallnoncoreactivitiesinclusiveofanyinhouseproperty functions.Basedonyourexperiencepleaseindicateyourlevelofagreementtothis statement

Sizeoforganisationthatsignificant

71% 14% 29% 14% 14% 71% 43% 14% 29% 43% 14% 14% 57% 43% 43%

29% 29% 57% 43% 14% 29% 43% 14% 14% 14%

Clientsagreecommoditypracticein place Nopreference Clientindicatethattotaloutsourceif possible Indicatesthatsomeinnovationis reachingtheclients Agreementthatstrategicoperation withFMproviderswillbringvalue Indicatesthisisnotagreed Indicativethatprovidersdonot understandtheclientbusiness Thisisagreedtransferdesirablebut providersnotready

29%

14%

57%

Clientdonotagreewiththis assumptiononcost Thetendencyistowardsexternal

14% 14%

14% 43%

29% 29%

29% 14%

14%

servicesmanagementbutits marginal FMprovidergobeyondthecontract obligations

43%

14%

29%

14%
Thestrengthofdisagreementis higherthanthatofagreement

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Table5.6.7

General

6.7General
Whatlevelofimportancewouldyouplaceonthefollowing,usingthescaleof1to 5toindicate,whenassessingaFMprovider OurFMprovidermustoperateasanenvironmentallyresponsibleorganisation Critical Not important Commentary requirement Thisisimportancetoclients

29%

57% 57% 29% 57%

14% 14% 14% 29%

OurFMprovidershouldhavethecapabilitytoprovideenvironmental&energy managementservices Wewouldlikeproviderstoofferallinclusivelongtermcontractsforallproperty/FM relatedservices OurFMprovidersmustcontinuallyreviewtheirservicestomeetwithourbusiness objectives

Theworkingrelationshipwiththeprovidersstafflocally

inclusivecontractsnotseentobe important servicelineslinkedtoobjectsseento beakeyrequirement key AttainmentofKPI'siskey key Adaptationofserviceisakey requirement Demonstrationofclientrelationships isakeyconsideration

43% 43% 71% 71% 29% 29%

57% 14% 29% 29% 57% 71% 29% 14%

Meetingbaselineservicerequirements Theyshouldseekoutserviceimprovement Demonstratecapacitytomeetourfutureneedsbothexpansionandcontractionof service

Providersshouldbeabletodemonstratestrongrelationshipswiththeirexistingclient

14%

BasedonyourexperienceoftheFMindustry,fromaclientorproviders perspective,identifyusingthelevelsindicatedthehighestlevelofrelationship youhaveexperiencedwithyourclientorFMprovider.Thenforeachlevelindicate onascaleof1to4theresultingperceptionofvalueachieved. Level/TypeofRelationship Level1SingleServiceLineProvider(i.e.cleaningonly,orcateringOnly) Level2MultipleServiceLineProvider Level3Collaborativeworkingandjointlearning Level4JointOrganisationalStrategyAwareness&RegularCommunication Level5JointInnovationandadvantagetorespectivebusinesses Level6Operatingatastrategiclevelwhichenhancedourbusiness

Consistently Highest Value Lowerthan Failedto brought Levelof above expected bringvalue value Relationshi expectation valuein insome acrossa pAchieved inanumber manyareas areas numberof (Level16) ofareas Commentary areas

14% 14% 14% 71% 29% 14%

29%

atthislevelwhichbringsgreaterthan expectedresults

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5.7.

AnalysisQuestions1.1to1.4Providers

Thesequestionsrelatedthesizeoftherespondingorganisationandaresummarisedin Charts6.7.1to6.7.3below CommentaryChart5.7.1 TherespondingFMorganisationsemployeenumberisindicatedinthischart,themajorityof organisationhasbetweenwithinthe3000pluscategoryfollowedbythe100pluscategory. Thisgivesagoodindicationoforganisationcomplexityandsystemisedapproachrequiredto manageanddeliveryserviceacrossabroadclientbasewithareasonablehighnumberof staff.Fortheresearchitwouldnotbeunreasonabletoassumethatforthelarger organisationsthatmoresophisticatedpracticesintermsofstrategyarebeingutilised. Chart5.7.2 Thisindicatestheturnoverintermsofsalesfortherespondents,againaswithstafflevels, thereisonedominantcategory,butwithanevendistributionofsaleswithotherrespondents. Chart5.7.3 Fromthesurveysampletherewasahighdegreeoffeedbackfromseniormanagersand Directorswiththeclientorganisationsthathaveasignificantnumberofyearsexperiencein clientandproviderroles.Fromthisitistakenthattheaccuracyandqualityoftheinformation obtainedishighlyrepresentativeoftheirorganisationsandgeneralFM Chart5.7.1 Providers:EmployeeNumbers

ProvidersEm ployeeVolum es

500 0 700 0 700 0 + 0 100 0 % 7% 7% 10 0 100 0 2 1%

10 00 30 0 0 0 % 3 0 00 500 0 6 5%

0 100

10 010 00

10 00 3 0 00

3 0 00 500 0

500 0 700 0

700 0+

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Chart5.7.2

Providers:UKBasedFMTurnover

ProvidersUKFMTurnover

0% 29%

7% 21% 100kt o3M 3mt o30m 30mt o100m 100mt o500m 500mt o700m

0%

700mt o1.5bn 1.5bn+ 43%

Chart5.7.3

Providers:RespondentsJobTitles

ProviderRespondentJobTitles

Manager Director ManagingDirectoror VicePresident HeadofService

14%

21%

29% 36%

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5.8.

AnalysisQuestions2.1.2.2Providers

Thesequestionsaredesignedtoestablishwheretherespondingorganisationssecuredthe majorityoftheirturnoverintermsofthegenericFMservicesheadingprovided.Thiscould thenbecheckedagainsttheclientsoutsourcetendencies.Theresultsareshowintabular formbelow. Commentary Table5.8.1 ThistableindicatesthelevelofFMservicespresentlyoutsourcebytheclientorganisations. Fromtheresponsesobtaineditcanbeseenthatthebulkofserviceprovisionisthoroughthe hardserviceclassification,theseappearinthetopfourinorderofpriority/highest percentageoforganisationalturnoverfromrespondent.Thegenericsoftserviceheadingis fifthbutafterthisthenextpuresoftserviceheadingisnotuntiltheninthposition.Whatcanbe saidisthattherespondingorganisationsaremorebiasedtowardshardservicethantheyare softservices. Table5.8.2 Theconsultancyservicespriorityisaswouldbeexpectedgiventheresponseidentifiedin table5.7.1above.Thebulkofadditionalservicesofferedtoclientsundertheconsultancy headingarewithinthehardservicesandbuildingfabricrelatedscope.Realestateand procurementservicefeatureinthebottomtwosuggestthatthesearenotpopularfor providerstoofferclients.

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Table5.8.1

ProviderScopeQuestion2.1
2.0.CompanyClassification.

Indicatebelowwhichservicesareprovidedby externalorganisations.

2.1.ProviderScope/CoreServices: HardServices PlannedMaintenance. FullyIntegratedFacilitiesServices MobileSupportServices SoftServices M&EProjectWorks FMHelpDeskServices ProjectManagement Cleaning FleetServices ITsupportServices BuildingProjectWorks RealEstateServices Catering MannedGuarding Security Vending 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Table5.8.2

ConsultancyServicesQuestion2.2

2.2.ConsultancyServices:

BuildingServices. ProjectManagement. H&SConsultancy EnvironmentalManagementConsultancy

EnergyManagementConsultancy Design&BuildConstructionServices

SpaceplanningandmanagementServices 7 QuantitySurveying. BuildingSurveying ProcurementConsultancy RealEstateConsultant 8 9 10 11

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Rank 1 2 3 4 5 6

Ofthegeneralserviceheadingsbelow indicatewhichservicesareprovided externallytoyourorganisation.

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5.9.

AnalysisQuestions4.1.4.4.3Providers

Thissectionofquestionswasfocusedontheprovidersapproachtostrategy,thelevelof understanding,howthestrategyiscommunicatedandimplemented. Thisistoseeifthereisarealdepthinunderstandingwithintheresponsesandthe awarenesswithintheoriginationsgiventhatthetargetrespondentsareatseniormanageror directorlevelwithintheirrespectiveorganisations. Commentary Table5.9.1 Definition

Thereisahighlevelofagreementthatthisdefinitionreflectedtherespondentsunderstanding ofstrategyandtheirorganisation. Table5.9.2 Process

Therespondentstendencyismoretowardsthestrategybeingdevelopedaroundtheannual budgetinground,supportedthroughtheyearwithreassessmentandreinforcement.These twoareasobtainthehighestlevelofsupport/agreement. Thelinearprocessfromtheresponsesisthelowestscoringwithover50%disagreeingthat itsshouldfollowalinearprocess. Themissionstatementandgoalsscorefavourablyfortherespondentsandthelinktohowthe organisationstrategyisreflecteddinthesegoalsandstatement.Thiswouldsuggestthat thesearecommunicatedinamannerthatrespondentsatleastcanestablishatangiblelink. Table5.9.3 Sequence

Thereissomeswingintherangeofvaluesandsequencingoftheprocessesofstrategy development,howeverthatismostlywithinonepositionofthesuggestedsequence.This thenisindicatedthattherespondentshaveagoodunderstandingofwhatismeantand involvedintheprocessesthathavebeenidentifiedforthemtoprioritise.Thisshouldthen meanthattheresultsofthelaterquestionsareofdrawnfromhavingagoodunderstandingof theoverallissues. Table5.9.4 TheStrategy

Overallthereisaconsistentlevelofagreementwiththisgroupofquestions.Thoseareas stronglyagreedwithcentrearoundtheuseofmetricsforassessingstrategy,departmental performanceandthesettingoforganisationalpriorities.Itwouldsuggestthatthe respondentsareawareoftheorganisationsstrategyanditslinktodaytodayrequirements. horsnep Page 99 7/29/2009

Howeverthereseemtobesomedisagreementonarticulationofthestrategybystaffandthe referencethatismadetothecommunicatedanddocumentedstrategyduringthecourseof business. Table5.9.5 Process

Againstthepreviousquestionsthissectionshowsandincreasinglevelofdisagreementby respondents,overallthereisaslighttendencytoagreewiththestatementsonwhat processesareusedtocommunicatestrategyandhowcustomersareincorporatedintothe process. Whatdoesconflictwithearlierresponseisthatoncommunicationtostaff,asthereisa36% disagreementtothis,thiswouldhoweversupportwhytheearlierresponsetoarticulationof thestrategyscoredlow.Thehighlevelofagreementtocommunicationpriortobudgetsetting wouldindicatethatthisishowtheorganisationalstrategyisformulatedi.e.aroundthe commercialprioritiesofthebusinessforeachfinancialyear. Agoodindicatoristhatthereare14%ofrespondentthatstronglyagreethattheorganisations strategyisbeingcommunicatedtotheirclients/customers,howeveroverallthereisequal agreement/disagreementlevelonthisparticularquestionsuggestingthatsomedothisvery wellbutthelargerpartoftheresponddentsdonotfeelthattheydothisatall. Table5.9.6 Implementation

Thereisaneutralpositiononthestructuredandcommunicativeapproachtostrategy developmentbyrespondentsorganisations,thisisalsoindicativeofotherresponseinthis particulargroupofquestions,metricarenotbeingusedtoassesstoeffectivenessof implementationandthereisdisagreementthatinputtakesplacefromalldepartmentsand functions. Howevertherearestronglevelsofagreementonspecificrolesforkeystaffandthatthe strategydoesenduptranslatedintoafunctionalrequirement. Onthelevelofclientsupportrequested,thereisasignificantlevelofdisagreementhere, suggestingthatclientsarenotinvolvingorcommunicatingatastrategiclevelwiththeirFM providers.

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Table5.9.1

Definition
4.1Definition

Initssimplestformstrategyformulationisdefinedas: "Whereyouare,whereyouwanttobeandhowyouwillgetthere" Towhatextentdoyoubelievethisisapplicableinpracticetohowstrategyis formulatedwithyourorganisation Strongly Agree 21% Agree 64% Disagree 14% Strongly Disagree Commentary Thereisastrongagreementthatthisdefinition reflectsrespondentsunderstandingofstrategy

Table5.9.2

Process

TheStrategydevelopmentprocesscanbedescribedinmayways.Inthe contextofyourorganisationwhichbestdescribeshowyoubelievestrategy isdeveloped LinearProcess

Strongly Agree

Agree 21%

Disagree 50% 29% 14% 21% 14% 7% 14%

Strongly Disagree 7% 0%

Commentary Mostdonotseetheprocessaslinear Thereisastrongagreementthatstrategyis incremental Highlevelofagreement Highlevelofagreement Highlevelofagreement Thisisthehighestlevelofagreement Themissionstatementholdvaluein respondents

IncrementalProcess Emergent Deliberate Continuousprocessofreassessmentandreinforcement Annualprocessbuiltaroundbudgetingandfinancerequirements Themissionstatementandgoalsdriveallourstrategicdecision

29% 21% 29% 43% 43% 21%

29% 50% 43% 36% 43% 50%

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Table5.9.3

Sequence
4.3Sequence

Inyourexperiencewhichofthefollowingprocessesdoyoubelievecomes firstwithinyouorganisation.Secondlywhatdoyoubelieveshouldbethe correctsequence.Indicateintheboxesprovidedthesequenceona1to8 scalewith1beingthefirstprocessundertaken ExternalBusinessEnvironmentalAnalysis InternalSituationAnalysis BudgetSetting StrategyCommunication StrategyImplementation PresentStrategyReview PresentStrategyRevision Strategyeffectivenessmeasurement

AggregatedSequence (SuggestedSequence)

RangeMax

RangeMin

Commentary

1(2) 2(3) 4(5) 3(6) 6(7) 5(1) 7(4) 8(8)

5 6 8 7 8 7 8 8

1 1 3 2 3 3 4 5

Table5.9.4

TheStrategy

4.4.2Process
Strongly Agree Agree Disagree Strongly Disagree Commentary Budgetandstrategylinkedincommunication Mostagreemarketreviewed Indicativeofsomebenchmarkingtakingplaceformost Higherlevelofdisagreementaroundcustomer measurement Higherthanexpectedlevelsofdisagreement Higherthanexpectedlevelsofdisagreement Higherthanexpectedlevelsofdisagreement

Thestrategyiscommunicatedpriortobudgetsetting Wecontinuallyanalysemarketconditions Webenchmarkourselvesagainstourcompetitors Ourprocessincorporatesmeasurestoassessclientdemandsandindustry feedback Overallourprocesstranslatesbroadgoalsintospecificactions Ourstrategyiscommunicatedinternallyateverylevelinadocumentedformat Wecommunicateourstrategywithourkeyprovidersonaregularbasis

14% 43% 29% 14% 29% 14%

71% 71% 14% 43% 57% 14% 29%

29% 14% 43% 29% 29% 57% 57%

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Table5.9.5

Process
4.4.2Process Strongly Agree 21% 14% 7% 14% 29% Agree 50% 43% 57% 79% 29% Disagree 29% 43% 36% 7% 43% Strongly Disagree Commentary Highlevelofagreement Marginalagreementonthis benchmarkinginplace Clientsarebeingconsidered Thereisahighlevelofdisagreementhere 7%

Thestrategyiscommunicatedpriortobudgetsetting Wecontinuallyanalysemarketconditions Webenchmarkourselvesagainstourcompetitors Ourprocessincorporatesmeasurestoassessclientdemandsandindustry feedback Overallourprocesstranslatesbroadgoalsintospecificactions

7% Ourstrategyiscommunicatedinternallyateverylevelinadocumentedformat Wecommunicateourstrategywithourcustomersonaregularbasis 14% 36%

36%

Thiscontradictsearlierresponsesbutsuggests communicationlackingforthewholeteam Marginalagreementthatcustomers communicatedwith

50%

0%

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Table5.9.6

Implementation
4.4.3Implementation Strongly Agree 14% Agree 43% 57% Disagree 43% 14% Strongly Disagree Commentary Onlyslightlymoreagreement,suggestsvery unstructuredapproachbeingtakenbymost Highlevelofagreement Metricreportedearlierasinplacesuggest thesemaybepersonalmeasurementsno strategyeffectiveness Functionalrequirementsincludedin development Thisisgenerallydisagreedwithcustomersand providersdonotseentocommunicateatthis level Highlevelofagreement

Wehaveastructuredapproachtostrategyformulationandthisiscommunicated Keystaffhavespecificrolesinthedevelopmentprocess 29%

14% Weapplymetricstoensurethattheimplementationiseffective 14% Ourprocessisbrokenintofunctionalstrategydevelopment WerefertoourFMproviderforsupportinthedevelopmentofourown operationalandstrategicplans,whereisrelatestotheirpresentorfutureservice tous Ourprocessiscrossfunctionalandincludesdiscussionsandinputfromallareas ofourbusiness 7%

29%

57%

57%

29%

14%

64%

7%

79%

14%

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5.10.

AnalysisQuestions5.1.5.8Providers

ThisseriesofquestionswasfocusedonhowtheFMorganisationsscantheexternal environmentforchangesthataffectboththeirbusinessandforchangetotheFMindustrythat mayaffecthowtheybuyservicesfromtheproviders. Itlookedtoestablishthelevelofsophisticationandtechniquesinusebyclientsandif forecastingisactivelyadoptedattheleveloftherespondentswithintheorganisation.The questionswerealsousetoestablishthelevelofunderstandingrespondentshaveaboutthe widermarketforcesofconglomerateandglobalisationactivitythatcouldimpactboththeir organisationthattatoftheirFMproviders. Commentary Table5.10.1 ExternalEnvironmentScanning Theresultsfromthisgroupofquestionsarespreadquitewide.Anumberofrespondents populatedtheothercategoryandonreviewwiththeseorganisationsthiswasusedto indicatethateithertherespondentwasnotawareoftheactuallevelofmonitoringinplaceor infact,thatnoscanningwasbeingformallyundertaken. ThecustomeristhemostsignificantchangedrivefortheFMorganisationfollowedbymarket andinvestormonitoring,thiscouldbeduetothehighlycompetitivenatureoftheservices sectorandthelevelofchangewithintheindustryitself.Afterthisregulatoryandtechnology changearethemostsignificant,asyouwouldexpectregulationpotentialimpacthow buildingsareoperatedandmaintained,withassociatedcostimpactoropportunitytosell additionalservicestoclients.Technologyisthenasourceofserviceefficiencythatneedsto berealisedASAPforcompetitiveadvantageintheshortterm.

Table5.10.2` SpeedofChange Fromtheresultsitcanbesaidthatcustomersarethekeychangedriver,followedby regulationandcompetitoractions.Therankingoftheissueswouldbeasbelow: 1. Customers 2. Regulation 3. Competition 4. Technology 5. Investors 6. Globalisation

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Thecustomerisseenaskeyherefromtheresponseandtheneedtokeepupwiththeir changesandrequirements.RegulationgiventhenatureofFMisasignificantaspectof servicedelivery,thereisanumberofstatutorymaintenanceandcontrolproceduresrequired intheoperationandmaintenanceofbuildingsanditiscorrecttoseethesignificanceofthis reflectedinthesurvey. Table5.10.3 Techniques

Thescoringandresponseonthesetechniqueswaslowacrossallareas,whichdoesbring inconsistencywiththereportedhighlevelsofscanningrecordedinotherquestions.Thismay beindicativeofalessstructureapproachbeingtakenandtheuseofthesetoolsbeingvery limited. Theothercategorywaspopulatedbyanumberofrespondentsandgainthiswastoreflect therespondentsunderstandingthatnoprocessortechniqueswhereinplaceorthatthey themselveswereunawareofthetechniquesidentifiedbeingusedbytheirorganisation. Theresultsareaconcerninthatserviceorganisationsshouldbeundertakingreviewsat regularintervalsiftheyaretokeepaheadoratleastkeeppacewiththemarket. Table5.10.4 WiderMarketChanges

ThegrowthofconglomerateactivityisseenbyrespondentstobeafactorthatwillaffectFM. IfthisisinthecontextofconsolidationoftheFMmarketplacethenthisneedstobe consideredbyproviders. Table5.10.5 Competitors

Theresponsefromproviderstothisquestioncouldbeindicatingthattherespondent,whoare mostlylargeFMorganisationsarefeelingunderpressurefromsmallermorenimbleFM organisationsinthemarket,sincethereisahighlevelofagreementwiththisstatement. Table5.10.6 StructureorUnstructuredApproach

Fromtheresultsthereisanindicationthatalargelyunstructuredapproachisbeingtakenon scanning,thisisconsistentwithotherpartsofthissection,inthatinformalinternalnetworks seemtodominate,andalsoearlierquestionswhichindicatedthatveryfewscanning techniquesareusedonaregularbasis.Thefactthatveryfewrespondentshaveaseparate teamforscanningandstrategysupportmaybeindicativethatthisactivityisundertakenas partofanexistingroleratherthanbeingaroleinitselfwithintheorganisation. Table5.10.7 Forecasting

Fromtheresponsethefollowingobservationsaremade:

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Financialperformanceandbudgetingplaysthemostsignificantpartintheforecasting processandapproach

Veryfewrespondentsindicatethataformalfiveyearplaniscommunicated Agilitydoesnotratehighlyforrespondent.

Howeverlongrangeplanningisseenasavaluableexercise,whichshouldlinktoalonger rangeplanfortheorganisation,inotherareasofforecastingandindicatorsthereisonly marginalagreementtothesestatement.Lookingbackatearlierresponsesitremains consistentwithpreviousviewsonindicators.

Table5.10.7

Quality&Cost

FMprovidershaveastrongagreementtothestatementregardingdifferentiationofservice andtheneedodevelopotherareasoftherelationshipwithclientsinordertobringeither valueordifferentiationfromcompetitors.Howevertheyequallynotethatcustomerloyaltyis lowasaresultofthisissue,whichmaynotencourageFMorganisationsinvestinginthe relationshipsifthereisnoguaranteeofservicecontinuity.Longtermcontractfromthe responsesseemtobethewayforwardonthisforFMproviderscoupledwithlessprescriptive typeservicecontracts. Fromtheresponseoninvestmentitseemsthatproviderwillinvestifthetermofthecontract encouragesit. Theresponseonagilityiscontratotheprevioussection,asagilitywasnotnotedinthe responsesassignificantissues,whencomparedwithotheraspects.Howeveritisnothereby therelativelyhighscore. TheviewsonreverseauctionsandongoingrelationshipsareconsistentinthatFMproviders donotseethisasavaluablemechanismforbringrealvaluetocontractsforclients. TheFMprovidersviewoncapabilityassessmentsbyclientsonthemarketplacepriorto outsourceinneutral,butthereremainsaviewthatcostisthedriverofclientdecisions,when outsourcing.

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Table5.10.1

ExternalEnvironmentScanning
5.1ExternalEnvironmentScanning Other (Please indicate interval) 14%

Towhatextentwouldyousayyourorganisationregularly undertakesreviewsinthefollowingareas,inaeffortto understanditscompetitiveenvironment

Continuous

Monthly

Half Yearly

Annually

Commentary

50% RegulatoryChangesProposedandActual Monitoringoftheglobalmarketplaceandeffectsofglobalisationon yourbusiness 21% 14%

36%

Whereotherreportedindicatesno measurementinplace Ingeneralallreportcontinuousbutwould appeartobeannual

36%

29%

50% TechnologicalChanges 21% Competitormovement/actions 36% Marketsharemovement 36% Investor/sharemovement 29% Customerrelatedfeedbackandcustomermarketreviews 29% 7% 7% 21%

14%

29%

7% Technologyappearhighinimportance

29%

29%

Ingeneralallreportcontinuousbutwould appeartobeannual 7% Ingeneralallreportcontinuousbutwould appeartobeannual ingeneralallreportcontinuousbutwould appeartobeannual Ingeneralallreportcontinuousbutwould appeartobeannual

14%

36%

7%

7%

21%

29%

14%

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Table5.10.2

SpeedofChange

5.2SpeedofChange 1 Pleaseindicatetheperceivedimpactandspeedofchangethat thefactorsbelowrepresentforyourbusiness.Pleasescoreon thescaleof1to5asindicated Regulation Globalisation Customers Investors Technology Competition 7% 7% 14% Slowrateof change/Low Impact 14% 64% 14% 50% 14% 7% 29% 43% 21% 7% 14% 43% 7% 43% 21% 36% 43% 21% 43% 2 3 4 5 Highrateof change/ HighImpact 36% Commentary

Regulationmostsignificant Globalisationnotseenasthatsignificant Customersdominatechangedrivers Notthatsignificant Notthatsignificant Changesincompetitormovementvery important

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Table5.10.3

Techniques
5.3Techniques

Whichofthefollowingtechniquesdoyouadopttosupportyour understandingofyourmarkets PESTEL(Political,Economic,Social,Technical,Environmental, Legislative) SWOTAnalysis

HardlyEver 36% 29% 79%

Annual BiAnnual Quarterly 14% 14% 7% 43% 36% 14% 7% 7% 14% 36% 21% 14%

Other 14% 7% 14%

Commentary Standardtoolsnotbeingusedtolookat marketconditions Difficulttounderstandhowassessmentsare beingmade Moreinformalsystemslikelytobeinplace

Porters5forces 43% StakeholderMapping IndustryCoreCompetenceandmarketthresholdreviews 29% 7% 7%

Table5.10.4

WiderMarketIssues
5.4WiderMarketChanges 1 StronglyAgree thiswillaffect thesector 2 3 4 5 Strongly Disagree, thiswillnot affectthe sector

Thefollowingstatementrelatestolargeglobalorganisations.To whatextentdoyoubelievethatthisisanissuewhichwillaffect theFMsector.Usingthescaleof1to5toindicate Withstronggrowthinanumberofmarketsthereisarisein conglomerateactivityasorganisationsundertakeanabsorption strategyacrosstheglobe,withtheaimofbeingtobigand diversetofail

Commentary

29%

21%

21%

21% Highlevelofagreementonthiswhich conflictswithviewsonglobalisation

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Table5.10.5

WiderMarketIssues
5.5Competitors 1 2 3 4 5 Strongly Disagree Commentary

Towhatextentdoyouagreewiththestatementbelow,inthe contextoftheFMsector.Usingthescaleof1to5toindicate Nontraditionalcompetitorsarechangingtherulesofthegamein whichorganisationshavepreviouslyplayed.Thisandthecombined effectsoflargeorganisationsbecomingdrivenbystability,process, andprocedurewhichprovidesaslowresponsetochange.This resultsinnewentrants,typicallyenteringthemarketfresh, unclutteredbybureaucracy,andwithanentrepreneurialspirit,brining improvedservicetoclients.

StronglyAgree

36%

21%

7%

36%

Slightlymoreagreementonthis

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Table5.10.6

StructureorUnstructuredApproach

5.6StructuredorUnstructuredApproach Whichofthefollowingstatementsdoyoubelievebestdescribes yourorganisation Wefollowastructuredapproachtoexternalscanningofourmarket andorganisationalenvironment StronglyAgree Agree Neither Disagree Strongly Disagree Commentary

29%

36%

7%

21%

7%

Agreementonthisbuthigherthanexpects disagreement

Weinvestinresourcetimeandresearchtounderstandfullytheforces actingupontheorganisation Webelievethataagileorganisationisneededtorespondtochange andactonopportunities.Thisisbestachievedthroughhavingan unstructuredapproachtoexternalscanningandstrategy

14%

29%

21%

36% Limitedresearchtakingplace

14%

14%

29%

36%

7% Agilitynotseenassignificant

21% Wehaveinternalnetworkswhichmonitorcompetitormovements Wehaveaseparatedivision/groupwhoarefocusedonthisin supportofourstrategy 14%

36%

14%

21%

7%

Internalnetworksusedforcompetitor knowledge Mostdonothaveaseparatefunctionfor supportonstrategy

21%

7%

29%

14%

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Table5.10.7

Forecasting
5.7Forecasting

Thisquestionrelatestotheuseofforecasting,theanticipating andprojectingofthefuturepositionofthemarketplacewhen developingstrategy.Foreachofthequestionsindicatetheextent towhichyoubelieveitbestdescribesyourorganisationor presentpracticewithinit.

StronglyAgree

Agree

Neither

Disagree

Strongly Disagree

Commentary

Whenforecastingwemakeuseofpreviousyearsfinancial performanceagainsttargetsandthisplaysthemajorpartofaplanfor thecomingyear Ourorganisationusesadocumented5yearstrategicplanwhichis usedtoguideallstrategicdecisions Weuseamixofindicatorsfromourmarketresearch,thatarebrought togethertoprovideanoverallassessmentofourmarketplaceat present.Managersthenusethistoguideourstrategicplan Ourforecastingandplanningprocessesallowustohaveaclearvision ofourfuturemarket,organisationalcapabilityandmarketrequirements overthenext5years Ourcorporateagilityisrestrictedbyastructuredapproachtoplanning andstrategydevelopment,assuchweplanonanannualbasisonly successfulstrategyplanningandimplementationisbuiltfroma foundationbasedonalongtermplanwhichisreviewedthrougha definedprocessandtimelineeachyear Longrangeplanningisinherentlyfloored,asinthelongtermstructural changesinourmarketandourclientsmarketmakesforecastingbuilt onfalseassumptions

50%

50%

Processdominatedbybudgetrequirements andpreviousyearsperformance 7% 29% 21% Mostdonothaveadocument5yearplan

21%

21%

14%

21%

43%

21%

0%

Someindicatorsbeingusedand communicated Thereisagreementonthisbuttheresponse conflictswithearlierresponse Thereissomestrongagreementonthisbut overallonlymarginallyagreedwith

21%

29%

7%

29%

14%

7%

36%

14%

43%

29%

43%

21%

7% Highlevelsofagreement

7%

21%

21%

36%

14% Valueseeninlongrangeplans

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Table5.10.8

Quality&Cost
5.8Quality&Cost

Tow hatextentdoyouagreewiththefollowingstatements W ithLittledifferentiationintheFMservicesectoritisimportantthat clientsareabletodevelopotherareaswhichbringbenefitfrom their FMproviders Clientsassesswhattooutsourcebasedonmarketcapability Ourmostsuccessfuloutsourcerelationshipshavebroughtvaluein areasoutsideofFM OurAnnualbudget,targetsalesandgrossprofitistheonlyplanthat counts. OurClientmarketsarefastmovingandtheyrequireFMprovidersto beagile.Inordertosupportourchangingrequirements Itissaidthattheservicesectorclientshavelowlevelsofloyalty,dueto providersofferinglittleornodifferentiationinservice. Clientsarecontinuallylookingforim provedservicequalityandlower pricefromourFMproviders. Inm anywaysFMprovidersareseeingthemarketpressuresoncefelt bymanufacturing,increasedqualityandlowercost. Clientsstriveforinnovationandserviceimprovement,thiscanbe comprom isedbyprescriptivetypecontractsoronlypartialFMservice outsourcestrategies. Greaterefficiencyandserviceisonlyachievedthroughlongterm contracts,whichallowforinvestm entbytheFMprovider Thegrowthofonlinereverseauctionsbringslowerfirstcostforclients butthepostcontractoperationalexperienceislesssuccessful.

StronglyAgree

Agree

Neither

Disagree

Strongly Disagree

Commentary

93%

7%

Differentiationseenasanissuefor providers 43% 14% 29% Marginallym oreagreem entonthis Marginallym oreagreem entonthis

14% 14%

43% 43%

14%

36%

14%

36% Marginallym oreagreem entonthis Highlevelofagreem entontheneedfor agility 21% Mostbelieveloyaltyislowwithclients

36%

57%

7%

36%

36%

7%

50%

50% Qualityandcostaredrivingclientdecisions

43%

57% Agreed

21%

57%

21% Agreementonthis

50%

36%

14%

Highlevelofagreem entandvalueseenin thelongerterm Auctionsseenasaproblem areafor providers

57%

43%

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5.11.

AnalysisQuestions6.1.6.8Providers

ThissectionlooksathowFMprovidersbelieveclientsselectandthenworkwiththeirFM them.Inadditionsitseeksopinionsontheindustryabasedontheirexperienceandhow operatingatamorestrategiclevelwouldimproveorotherwisetheserviceandvalue received. Table5.11.1 ProviderStandards

Bymeasuringacrossthescaleofimportantandveryimportantthehighestscoringissuesare asbelowinpriorityorder: 1. HealthandSafety 2. Financialsecurity 3. Previouscostefficiencywithclients 4. Abilitytoexpandandcontractservices 5. Fullrangeofhardandsoftservicescapability 6. Mobileservicecapability 7. DemonstrationofEuropeancapability Health&safetyiswithoutadoubtanexpectationwhichmustbemetinallareasofservice provisionandastrongrecordinitsmanagementisnaturaltoexpect,whatisconsistentisthe themeofagilityinserviceprovisionandcostsavings,whichpreviousresponseshave indicatedthatprovidersbelievebuyervaluetheseattributes. Table5.11.2 Approach

Theareasofimportanceforprovidersareseeninthefollowingfromtheresponses: Useofoutputbasedservicespecifications Strongsupplychainmanagementbytheprovider

Thelowimportanceitemsarethatofretainingtheclientsinhouseteamtoensure performanceandvalue,thisgainsahighpercentageofthescorefromtheFMproviders,as doeshavingafullinhousecapability.Thiscouldbeindicativeofprovidersunderstandingthat theyneedtooutsourcethemselvesinordertoachievevalueandbydoingsoperceivethey canactintheclientsbestinterests,aswouldtheinhousefunction. Thescoringforprescriptivetypecontractsisinconsistentwiththatoftheoutputbased approachtocontractsandthisneedstobefurtherexamined. horsnep Page 115 7/29/2009

Table5.11.3 follows:

SuccessCriteria

Thekeyaspectstosuccessfromtheresponsesformtheprovidersperspectiveareas

1. MeetingtheContractKPIs 2. InitialCost 3. Contractlifetimecost 4. CustomerService

Sectorknowledge,openrelationshipsandinparticularbeingabletomanagethewholeofthe propertyfunctionisplaceinlowimportancefortheproviders.Whilstthepreviousquestions indicatedthatFMproviderfeltthattheinhouseteamwasnonessentialtheyequallydonot seemtosupportthemanagementofallservicesgoingexternaltotheclientorganisation. Table5.11.4 WorkingTogether

Fromtheresultsofthissectionofquestions,thereisastrongindicationthatthelevelof strategicdialogbetweentheproviderandbuyersisatbestannualandatworstnever.Most haverespondedinawaythatconfirmsthatdiscussiontakeplaceatinitialappointmentbutis mostlikelyquicklydilutedbytheoperationalfocusofthetwogroups.Itisalsoworthnoting that30%ofrespondentneverattendclientmeetings,whichconcerntheclientsproperty portfolio. Table5.11.5 WorkingTogether

TheviewfromtheresponsesappearstobethatFMproviderseesthatclientsfocusvery muchoncostthehighestlevelofagreementfromthesurveyisinthosequestionswhere clientsconsidercostfirst.Thedisagreementlevelsonthesuggestionthatclientsaremoving tomorevaluebasedappointmentcriteriasupportthis. FmprovidersbelieveclientsuseFMconsultancyteamforprovisionofmanagementsupport andthatcollaborativeworkingbringsgreatervalue. Theviewonauctionsremainsconsistentwithotherresponses,inthatqualityandvalueare noteffectivelyachievedthroughthisprocurementmechanism. Table5.11.6 Opinions

Theresponseprovidedallowthefollowingobservationstobemade

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ProviderdonotperceivetheretofewFMorganisationswhichwouldimplythatthere ischoiceandcompetition

SmallerFMorganisationsarenotdifferentiatingthemselvesofservicequality Clientbehavioursandpurchasedecisionsaremoreandmorecommoditystyle purchases

FMprovidersfeelthatmultiservicecapabilitywillcontinuetobethewayforward ProvidersseethatincreasedandtotalFMoutsourcewillhappen Innovationishappening StrategicoperationofcontractwithFMprovidersshouldbringincreasedvalue Propertyisanoverheadandcostwilldominateclientsfocusanddecisions FMprovidersperceivethattheydounderstandtheirclientsbusiness ProvidersbelievethatclientswouldlikegreatertransferofpropertyrisktoFM providersbutfeelthemarketisnotready

Providersdonotseetheresurgenceofinhousesolutions Providersbelievethattheygobeyondtheircontractrequirementsindeliveryof service

Strongagreementthatoutsourcinginhouseteamaddsvalue

Table5.11.7

General

Fromtheresponsesprovidedthefollowingobservationsaremade EnvironmentalpracticeandclientsupportisakeyrequirementfromtheFMprovider Longertermallinclusivecontractsarenotseenasbeingsignificant Clientswouldlikeservicelinereviewedandlinkedtostrategy LocalFMrelationshipsisthemainpriorityforproviders Meetingcontractservicerequirementsissecondonlytolocalrelationships Bringongoingimprovementsisakeyrequirement Servicelinemustchangewithbusinessneeds Havingameasurabletrackrecordinrelationshipswithotherclientiskey 57%ofrespondentsreportthattheyhaveoperatedatastrategiclevelwiththeir clientsandthisachievedthehighestlevelofvalueattainment(29%consistently broughtvalueacrossanumberofareas) Singleservicelinecontractshavethehighestfailureresponse(21%lowerthan expectedinmanyareas)forattainmentofvalueforFMproviders

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Table5.11.1

ProviderStandards
6.1ProviderStandards

WhenconsideringyourFMproviderpleaseindicatetherelativeimportance youplaceonthefactorsbelow,eitherattenderstageorduringthecontract life Theorganisationmustmeetathresholdleveloffinancialsecurity OurprovidersneedtohaveEuropeanwidecapability Demonstrationofcapabilityinafullrangeofhardandsoftservices UKwidemobileservice AgoodrecordofHealth&Safetyperformanceacrossthewholeoftheproviders business Beabletodemonstratepreviouscostefficiencieswithotherclients Havetheabilitytoexpandandcontractservicesinlinewithourbusinessneeds

Essential

Very Important 36%

Important

Low importance

Not significant

Commentary

50% 7% 14% 21% 64% 29% 21%

14% 21% 43% 43% 7% 29%

Agreed Europenotseenassignificant Fullcapabilitynotseenassignificant Seenasessential Seenasessential Seenasessential Seenasessential

36% 21% 7% 50% 50%

7% 50% 29% 21% 29%

Table5.11.2

Approach

6 .2 .Ap pro ac h P le as ec la s sify the im po rta nc etha tyo upla ce o nthe typ eofap pro ac hto se rv ice p rov is io nby yo urF M p ro vid er O u rF M pro vid ersh o uldh avein h ou sed elive ryo fallservice s M an a ging ag en ta pp roa chtoen sure se rvice e xcelle nce in ea chare a,usin gthe ir sup plycha in A sa clie ntwe re tain a ninh ou setea m an dfind th a tp erform a nce ,se rvicea nd qu ality,isbe tte rp ro vid ed inthiswa y A pp oin tm e ntofo urFM p ro vid e rsisba sed o np re scrip tive typ econ tra ct/ spe cification s A pp oin tm e ntofo urFM p ro vid e rba se don an o utp utba sed typ eco ntract /sp ecifica tio ns E ss en tia l V e ry Im p ortan t 1 4% 2 9% 2 9% 3 6% 3 6% 29 % 57 % Im porta nt 36 % 43 % Low im p ortan ce 50 % 29 % 71 % 36 % 7% N o t s ign ifica nt Co m m e ntary in ho use cap ab ilityno treg ard ed a s im p ortan t Su p plycha in m an ag em e ntisim p o rtan t In ho use ca pa b ilityforth eclien tn ot re ga rd ed asim po rta nt Pre scrip tiveco ntractim po rta nt prefe ren cefo ro utpu tb ase dS L A 's

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Table5.11.3

SuccessCriteria
6.3.SuccessCriteria

Pleaseindicatetheimportanceofthefollowingitemsasindicatorsofthe successfulnessoftheFMservicesprovision Initiallowestcost Contractlifetimecost Attainmentofyearonyearsavings MeetingcontractKPI's Havingthecapabilitytomanageourcompletepropertyportfoliofromleaseto maintenanceservices Bringingnewwaysofworkingthatpromotecostefficiencyorservice improvements Bringsectorspecialistforthemanagementofourpropertyportfolio Wehaveanopenapproachwhichbringsnoboundariesforinnovationfromour FMprovider Havingadetailedunderstandingofourbusinessandthemarketsweoperatein Havinghighlevelsofcustomerserviceskills,whichareusedbytheproviders team,ateverylevel

Essential 21% 36% 14% 36%

Very Important 50% 43% 50% 36% 14%

Important 21% 7% 36% 29% 36% 29% 36% 43% 50% 36%

Low importance 7% 14%

Not significant

Commentary Lowcostseenasveryimportant Lifetimecostisveryimportant Savingsareveryimportant KPIcomplianceveryimportant Lease/Realestatecapabilitynot important Newideasandsavingsveryimportant

36%

7% 7% 14% 21% 21%

64% 29% 29% 29% 43%

21% 14%

Specialistareveryimportant Removalofboundariesisimportant Understandingtheclientsbusinessisvery important Customerserviceisveryimportant

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Table5.11.4

WorkingTogether
6.4WorkingTogether Monthly Quarterly Annually At Appointment Never Commentary

TowhatextentdoyouundertakethefollowingwithyourFMprovider WeundertakestrategicreviewswithourSeniorTeamandFMproviders,which promotesgreaterunderstandingbetweenallpartiesofourrespective organisations. WeadviseourFMproviderofthechangeswithinourbusiness WelooktoourFMproviderforsupportconcerningourbusiness,outsideof normalFMservicesscope WeworktoestablishspecificgoalswithoutFMproviderwhichmatchour businessstrategy WeshareourannualstrategywithourFMprovider OurFMproviderattendsourstrategicproperty/businessreviewsonthe frequencyofthatindicated OurFMproviderattendsallinternalmeetingsconcerningthecompany'sproperty portfolio

14% 29% 21% 21% 7%

29% 36% 7% 14% 14% 21% 7%

29% 7% 29% 29% 36% 21%

29% Reviewseitherannualoratappointment 14% 29% 29% 36% 43% 64% 14% 14% 7% 7% 14% 29% Quarterlyupdatesinplace Supportdrawnannuallyoratappointment Annuallyoratappointment Annuallyoratappointment Atappointment Atappointmentornever

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Table511.5

WorkingTogether
6.5WorkingTogether Strongly Agree Agree Neither Disagree Strongly Disagree

WhichdoyoufeelbestdescribeshowyouworkwithyourFMprovider WeseethatsomeclientsseparateindividualFMservicesintoitsspecialistareas toattainlowestcost Clientsappointoncriteriadominatedbycostandthenmanageservicequality throughperformancemetricswhichplacetheprovidersprofitatrisk ManyClientsdonotseethatourFMprovidercanaddvalueotherthanto minimisepropertychargesthroughcompetitivetenders

Commentary Agreedcostdriversdominatestyleof tender/appointment Agreedcostfocus

100% 36% 14% 64% 43% 14% 29%

Agreed 21%

Onlineauctionsdrivevalue,whichbringsimprovedclarityonpriceand performance PostonlineauctionrelationshipswithourClientsarenodifferentthanthat achievedthroughanyotherprocurementroute Weseethatmoreclientsarelookingtoappointonvaluefirst,costsecond ForclientstheissuesisthatwithlittledifferentiationbetweenFMproviders,the onlyselectioncriteriaisthatofcost Wehaveachieveyearonyearsavingswithourclientsbyworkingtogether WeactivelypromoteinnovationfromourClientsandtheyhavebenefitedfromthis throughimprovedserviceandoverallcost Wefeelthatvalueisonlyachievedfrommorecollaborativeworkingpractices ClientsthatarenonspecialisttendtowardstheuseofmanagementofFM servicesthroughseparateconsultancyservices 21% 21% 36% 50% 21%

7%

71%

Stronglevelsofdisagreementwhichis consistentwithotherrelatedquestions Relationshipsseentobedifferentforthe provider Valueassessmentsarelow Differentiationisdrivingcommoditybuying styles/practice Savingsthroughcloserworking Innovationworksfortheproviderand client Collaborativeworkinghelpsimprovevalue

7% 29% 50% 43% 43% 43% 57%

21% 14% 14% 21% 14% 7% 14%

43% 43% 14% 7% 7%

29% 14%

7%

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Table5.11.6

Opinions
6.6Opinions Strongly Agree Agree 29% 21% Neither 21% 7% Disagree 43% 57% Strongly Disagree 7% 7%

Towhatextentwouldyouagreewiththefollowingstatements TheFMmarketisnowdominatedbytoofewlargeorganisations QualitytendsonlytocomefromsmalltomediumsizeFMorganisationdueto customerserviceandtheimportanceplacedonthebusinesswerepresenttoour providers TheFMindustryisnowenteringaphaseofsecondandthirdgenerationoutsource andclientaretreatingthiswithmoreofacommoditytypeapproachtoselection andappointment Itisdifficulttoseeafutureforsingleservicecompanies,clientsrequirecompanies withthecapabilitytomanageallourpropertyneeds AsaproviderofFMservices,wedonotseethatatotaloutsourceofFMand Propertyserviceswouldeverhappen InnovationwiththeFMindustryismerelyabuzzword,wehaveyettoseereal evidenceofthis OperatingatamorestrategiclevelwithyourFMprovideristheonlywaytodrive furthervalueonceyouhaveestablishedabaselineserviceandcost.

Commentary Ingenerallyprovidersdonotagree Sizeoforganisationnotseenas significantforproviders Commodityapproachisgrowinginclients buyingbehaviours

21%

71%

7%

21% 7%

36% 7% 21%

7% 0% 14%

21% 79% 64%

14% 14%

Mostagreemultiserviceprovisionwill continuetogrow Providersseethenextphaseisthrough completeoutsource Somelevelofagreementherebutmost disagree Strategicoperationwithclientsseento assistinimprovingvalueandsolutions

21%

79%

14% Propertyisabusinessoverheadandassuchcostistheonlycriteria FMprovidersunderstandtheirclientsbusiness Manyclientsseethatgreatertransferofpropertyrelatedriskisthewayforward, butthemarketisnotreadyforthisatthemoment Thegrowthofclientsaleandleasebackpropertydealsprovidesanindicationthat clientorganisationswouldideallyliketohavefullyservicedaccommodation,but chargesforthisarrangementmeanthatgreaterclientcontrolbringsalowercost alternative WebelievethatthefutureofFMserviceswillseeareturntoinhouse managementandservices IngeneralmyexperienceshowsthatFMprovidersmakecontributionstoclient organisationsobjectiveswhichgobeyondthebasisoftheirinitialcontractaward ResearchindicatesthatFMoutsourcearrangementsthatbringrealvalueto clients,commenceatastrategiclevelwithinthetwoorganisationsandgenerally involvethecompleteoutsourcingofallnoncoreactivitiesinclusiveofanyinhouse propertyfunctions.Basedonyourexperiencepleaseindicateyourlevelof agreementtothisstatement 7% 14%

21% 50% 43%

29% 14% 21%

21% 29% 21%

14%

Highlevelofagreementthatpropertyis anoverhead Somelevelofdisagreementhere Mostagreethatthemarketsnotreadyfor greaterrisktransfer

43%

7%

36%

14%

Onslightlymoredisagreementtothis statement Someagreementthatinhouseprovision willgrow,butmostseethatitwillnot Highlevelofagreementthatprovidergo beyondcontractrequirements

7%

14%

14%

43%

21%

14%

71%

7%

7%

14%

64%

14%

7% Highlevelsofagreementonthisstrategic operation

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Table5.11.7

General
6.7General

Whatlevelofimportancewouldyouplaceonthefollowing,usingthescale of1to5toindicate,whenassessingaFMprovider OurFMprovidermustoperateasanenvironmentallyresponsibleorganisation OurFMprovidershouldhavethecapabilitytoprovideenvironmental&energy managementservices Wewouldlikeproviderstoofferallinclusivelongtermcontractsforallproperty/ FMrelatedservices OurFMprovidersmustcontinuallyreviewtheirservicestomeetwithourbusiness objectives Theworkingrelationshipwiththeprovidersstafflocally Meetingbaselineservicerequirements Theyshouldseekoutserviceimprovement Demonstratecapacitytomeetourfutureneedsbothexpansionandcontractionof service Providersshouldbeabletodemonstratestrongrelationshipswiththeirexisting client

Critical 36% 7% 57% 43% 36% 36% 36% 57% 43% 36% 36% 50% 57% 36% 50% 50% 36% 14% 14% 14% 7% 0% 29% 43% 14% 7% 7% 21%

Not important

Commentary Thisisseenasakeyrequirement Thisisseenasakeyrequirement Notseenasoverlyimportant Flexibilityseenasimportantforserviceto theclient Localstaffarekeytosuccess Corecompetenceisessential Serviceimprovementsareimportant Agilityandscaleimportant Customerretentionimportant

BasedonyourexperienceoftheFMindustry,fromaclientorproviders perspective,identifyusingthelevelsindicatedthehighestlevelof relationshipyouhaveexperiencedwithyourclientorFMprovider.Thenfor eachlevelindicateonascaleof1to4theresultingperceptionofvalue achieved. Level/TypeofRelationship Level1SingleServiceLineProvider(i.e.cleaningonly,orcateringOnly) Level2MultipleServiceLineProvider Level3Collaborativeworkingandjointlearning Level4JointOrganisationalStrategyAwareness&RegularCommunication Level5JointInnovationandadvantagetorespectivebusinesses Level6Operatingatastrategiclevelwhichenhancedourbusiness

HighestLevel Consistently Lowerthan Failedto Valueabove of brought expected bringvalue expectation Relationship valueacross valuein insome inanumber Achieved anumberof manyareas areas ofareas (Level16) areas 7% 7% 7% 0% 21% 57% 21% 14% 7% 14% 14% 14% 36% 21% 14% 7% 7% 14% 7% 36% 29% 21% 43% 7% 21% 7% 14% 21% 21% 29%

Commentary Failurehighatthislevel Valuebeingcreated

Valuebeingcreated Strategicoperationimprovesvalue creation

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5.12.

Question6.8.

ThewrittenresponsesobtainedfromsomerespondentsarecontainedwithinAppendixA12. Belowisareviewofthemainfindingsandobservations. ThequestionitselfsoughttheviewsofboththeprovidersandbuyersofFMservicesandhow theyfeltthefuturemaylookfortheindustry,whatwouldbethecriticalsuccessfactorsand specificallyhowclientswouldimprovethevaluetheyobtainfromFMorganisations.

5.13.

CombinedAnalysis

TheresultsofthefieldworkhavebeenreviewedunderthetwomainheadingsofBuyersand Providersthissectionwillreviewtheresultsofthecomparativestudyofbothsetsofdata.To dothisresponsehasbeencombinedtoproduceapercentagevariancebetweeneach respondentgroupforthelevelofagreementordisagreementtotheparticularquestions raised.Itisnotpossibletoanalyseallquestionsinthiswayduetotheirconstruction.This approachwastakenonthosecontainedwithinAppendixDthisalsoprovidesthefull comparisonandvariancelevelsagainstallquestionsandresponses.Fromthiscombinedset ofdataathresholdvariancelevelof20%wastaken,inordertoidentifywherethetwogroups hadmoresignificantdifferenceinviews,thesearescheduleinAppendixD2,whichcontainsa summaryofallthosequestions,whichgeneratedavarianceinresponselevelbetweenthe twogroupsabovea20%threshold. Forthesequestionsthereisanadditionalcommentaryprovidedbelow,intables5.13.1to 5.13.6.Thesetablesshouldbereadinconjunctionwiththeappendicesabove.Withinthe tableisaspecificreviewnumber,whichrelatestotheaboveappendicesandtheoriginal surveyquestion.

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Table5.13.1 Review Item

CommentaryonHighVarianceAreas Commentary

21%ofProviderstendtoagreethatdevelopmentfollowsalinearprocess,noBuyers believethisobetrue

71%ofProviderstendtoagreethatdevelopmentfollowsanemergentprocess,only 29%ofBuyersbelievethisobetrue

BuyersfavourtheviewthatStrategyisadeliberateplanandprocess

Providersfavourthecontinuousreviewapproachtoplanninganddevelopment

71%ofProvidersreportthatthemissionstatementandgoalsdrivedecisions,only43% ofBuyersbelievethisisthecase

Providersreportgreateruseofdepartmentalmetrics,(86%)derivedfromstrategic objectivesandbuyers(57%)

Buyersrecordalevelof86%agreementtoundertakingacontinuousreviewofthe marketandconditions,but43%ofprovidersdisagreewiththis

93%ofProvidersbelievethattheyhaveinplacecustomerassessmentmethodsthat allowsthemtolookatdemandandchange

ThelevelofcommunicationonorganisationalstrategyislowforbothProvidersand Clients

10

86%ofproviderreportthatkeystaffhavespecificstrategyrolesinthedevelopment process,43%ofBuyersdonotfeelthattheirorganisationshassuchroles

11

71%ofBuyersreportthatthehavemetricstomeasuretheimplementation effectivenessoftheirstrategy,57%ofProvidersdisagreewiththisfortheirorganisation

12

64%ofprovidersdonotfeelthatBuyersrefertothemforsupportintheirstrategic objectives

13

86%ofProvidersreportthattheirdevelopmentprocessescutacrossalldepartments, 43%ofBuyersdonotagreethattheirorganisationundertakesthesameapproach

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Table5.13.2 Review Item

CommentaryonHighVarianceAreas Commentary

14

29%ofBuyersassessRegulatorychangeannuallyorless,asopposedto50%for Providers ProvidersdonotperceivethatGlobalisationisanissueforthem,Buyerdo

15

16

BuyershavegreaterfocusonTechnologythanFMproviders

17

Buyersreviewcompetitormovementsmonthly,but29%ofProvidersdothisannuallyor less

18

79%ofProvidersfeelthatRegulationisthecauseofhighspeedchange,only57%of Buyersagreewiththis

19

ProviderfeelthatGlobalisationcausesaslowrateofchange,but57%ofBuyerfeelitis ahighspeedchangeissue

20

ProvidersappeartohaveagreaterinterestininvestoractionsthanBuyers

21

BuyersandProvidershavelowuseofallscanningtechniques.Buyertendtoundertake /usethesemorefrequentlythanProviders

22

BuyersandProvidershavelowuseofallscanningtechniques.Buyertendtoundertake /usethesemorefrequentlythanProviders

23

BuyerhaveahigherlevelofagreementthatconglomerateactivitywillaffecttheFM industry

24

BothProvidersandBuyeragreethatFMcompetition,broughtaboutthroughnew entrantstotheindustry,isathreatforestablishedFMproviders

25

Buyerplacegreaterimportanceonorganisationalagilitythanproviders

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Table5.13.3

CommentaryonHighVarianceAreas

26

57%ofBuyeraremorelikelytohaveaseparateStrategyfunctionthantheirFM Providers Providersforecastingisdominatedbythepreviousyearsfinancialtargetsfor100%of respondents,Buyerhoweverreportthatonly43%aredrivenbylastyearsnumbers andtargetperformance

27

28

Therearehighlevelofdisagreementontheexistenceofafiveyearplan

29

BuyersaremorelikelytouseamixofindicatorsthanFMproviderswhenundertaking marketresearch

30

43%ofBuyersreportthattheydonthaveclarityoftheirfiveyearplan,organisational capabilityandmarketneeds

31

57%ofBuyersdonotbelievethattheirstructureapproachtostrategyaffectstheir organisationalagility

32

71%ofbuyersfeelthereisvalueinhavingalongrangeplan,only29%ofBuyersshare thisview

33

BothBuyerandProvidersseevalueinlongrangeplanning

34

Allbuyersseethattheyshouldhaveafocusonserviceexpansiontoovercomethelack ofdifferentiationintheFMmarketplace

35

71%ofBuyersadvisethatFMcapabilitydrivesoutsourcedecisions

36

57%ofProviderreportthattheyhavebroughtvaluetoClientsoutsidethecontract requirements,only14%ofBuyeragreethatthisisthecase

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Table5.13.4 37 38

CommentaryonHighVarianceAreas

93%ofProvidersrecognisetheneedtobeagileandadaptingtoclientsrequirements 71%ofProvidersbelieveclientsarenotloyal,Buyersareneutralonthis

39

ProvidersandBuyersagreethatprescriptivetypecontractslimitserviceimprovements

40

Allprovidersagreethatrelationshipsfollowingappointmentthroughauctionsarenot successful

41

EuropeancapabilityimportantforbuyersandoflowimportancetoProviders

42

UKwidemobileserviceoflowimportancetoBuyersbuthighimportancetoProviders

43

ProviderinhousecapabilityimportantforBuyersbutlowerimportancetoProviders

44

ClientinhousecapabilityhighimportancetoClientslowimportancetoProviders

45

Outputbasedcontractslowerimportancetoclients,providerspreferredcontract specification

46

HavingthecapabilitytomanagetheClientsentirepropertyrequirementsisoflower importancetoBuyersthanProviders

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Table5.13.5 Review Item 47

CommentaryonHighVarianceAreas Commentary

Providersdonotbelievetheyarebeingadvisedofchangeswiththeclientsbusiness, 43%ofBuyerrespondentscommunicateatappointmentornever 29%ofBuyerrespondentsdonotapproachtheirFMproviderforsupportforitems outsidethescopeofcontract

48

49

36%ofProviderrespondentsaresetclientgoalsatcontractcommencementornever, however57%ofBuyerrespondentsadvisethattheysetthesequarterlyatleast

50

43%ofprovidersdonthavetheclientsbusinessstrategysharedwiththemat appointmentornever 93%ofProvidersrespondedthattheyattendclientpropertymeetingsatappointmentof never,Buyersrespondedthatthisis43% 100%ofProvidersbelievetheseparationofservicelinesisacostdrivenexercise,29% ofbuyersdisagreethatthisisthecase 100%ofprovidersbelievethatclientsappointonpurecostdrivencriteriawith performancemetricusedtoensurequality.Only57%ofBuyersagreethatthisistheir approach 57%ofBuyersbelievethatFMproviderscanaddmorevalue BuyersandProvidersdisagreethatonlineauctionsbringvalue 43%ofBuyersbelievetheyareincreasingappointingProvidersbasedonvalue assessments,however57%ofProvidersdisagree 71%ofBuyersdonotagreethatthelackofdifferentiationbetweenProviderscauses themtoselectoncostonly,howevermostprovidersagreethatthisistheselection criteriabeingusedasaresultofdifferentiationofoffering Providersseethatclientsarenonspecialistandasaresultutilisetheservicesof separateconsultants BuyerbelievethattherearetoofewlargeprovidersandProviderseethattherearetoo many BuyersandProvidersdisagreethatqualityandservicecomesfromsmallerFM organisations

51

52

53

54 55

56

57

58

59

60

61

BothBuyerandProvideragreethatFMisnowseeingthemorecommoditytypebuying fromclients,however93%ofprovideragreewiththisbuton71%ofBuyeragree

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Table5.13.2 CommentaryonHighVarianceAreas Review Item Commentary

62

Totaloutsourceofclientservicesislikelytohappen,butprovidersaremoreoptimistic thanBuyersonthis BothBuyersandProvidersagreethatinnovationistakingplaceintheirrespective contracts BuyersandProvidersbothagreethatvaluewillbederivedfromamorestrategic approachtoFM Providersbelievetheyunderstandclientsneedsandwants,Buyersbelievethatthey dont 29%ofBuyersbelievethatinhousecapabilityandservicewillreturnforclient organisations Providersratetheiraddedvaluecontributionsoutsidethecontractscopeat86%, howeverBuyeragreementisonlyat57%onthis

63

64

65

66

67

68

Providerbelievestrategicoutsourcebringsvalue,Buyersareneutralonthispoint

69

ProviderbelieveClientswouldlikelongterminclusivecontracts,butBuyersratethisa slowinimportance

70

ThelocalFMstaffperformanceisakeycriteriaforboththeBuyerandprovider

71

Buyersseethatexistingcustomerstrackrecordisanimportantmeasureofthe Providersoffering

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CHAPTERSIX.RESEARCHSUMMARY

6.1.

Introduction

Thischapterwillprovideasummaryoffindingsfromtheprevioussixchaptersandwillfocus onthemainissuesthathavebeenidentifiedinrelationtotheoverallobjectivesofthis research. Theoriginalobjectsfocusedonthefollowingitems: Useofenvironmentalscanningtechniques Keydriversfortheindustryfromthecustomersperspective StrategydevelopmenttrendswithinFM Longrangeplanning ScenarioPlanning

Fromthisaframeworkwouldbedevelopedtoencompassbestpracticeforthedevelopment oforganisationalstrategywiththefacilitiesmanagementindustry. Fromtheresearchthesubjectareaisverywideandverymuchdebatedoverdefinitions,what constitutesbestpracticeandvaluefromastrategydevelopmentperspective.Froma FacilitiesManagementview,definitionsaremany,valuemeasurementsaremostlyaround individualperception,thescopeofFMservicesiswideandmostservicesolutionsare bespoke.Thereforetoensurethattheseissuesdonotallblendintooneandsothatthekey findingsfromboththeliteraturereviewandfieldresearcharedocumentedwithsomeclarity, thischapterwillbebrokenintosubheadings,whichwillpickouttheoriginalresearch objectives.

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6.2.

DefinitionsSummary

Thestartingpointforthisresearchwastoobtainadefinitionorconsensusthatclearly identifiedthecomponentsoftheFMindustryandstrategyitself.Whatwasfoundwasthat thereexistsandnumberofdefinitionsforFMandthiscreatesdifficultiesforclientsand prospectivebuyersofFMservicesinunderstandingthewidercontextofFM.Thepotential multiservice,multiprovidermazeandcontractualvariantsthatclientscanfacemakebuying difficult.Thisisespeciallytruewhenyoubegintounderstandhowbuyersformulatetheir decisionsforthepurchaseofservicesingeneral.(RefertoappendixAFigureA11.1and AppendixBFigureB41.1) FromtheresearchitisproposedthatthedefinitionofFacilitiesManagementshouldbeone, whichencapsulatestheprimaryfunctionsofManagement,Servicedelivery,Customer service,buildingfunctionalityandtechnicalfunctioninabusinesscontext.Thisshouldbein thecontextofbothpresentandfuturerequirements.Thereforethedefinitionbelowisput forward. FacilitiesManagementistheprovisionofmanagementandserviceswhichsupport boththeoperationalandstrategicneedsoftheCustomersorganisation&business objectives,byallowingtheseparationofnoncoreandcoreactivities.Theserviceand itsmanagement,shouldbeprovidedinacollaborativewaywhichdeliversvalueina mannerwhichisfocusedontheimmediatecustomerneedsandfutureorganisational requirementsinresponsetoexternalforcesactingupontheCustomersbusiness

Itwasalsofoundtobeasimilarsituationonstrategy,thereisextensivedebatearound definitionsandrequirementsassociatedwithStrategyandStrategicplanningandonasubject matterthatseemstobepromotedasamysteriousartform.Theliteratureidentifieda significantlevelofcomplexityinthesubjectarea,withagreementofdefinitionsandissues surroundingstrategy,strategicplanninganddevelopmentremaininglargelyelusivebetween thevariouswriters.Thiscoupledwiththehighlyvariableandvolatilenatureofthe environmentthatmostbusinessoperatein,meansthatunderstandingtheconcepts, techniquesandprocessesinapracticalandusablewayfortheaverageseniormanager, createsalevelofuneasewhichislikelytoresultintheavoidanceofthereuse.Witha potentialcompromiseonlongtermorganisationalperformanceasaresult.Thisisevidenced inthesurveyresponses,inthatbuyersandprovidersorganisationsdonotappeartohavein placeadvancedtechniques,whichareusedregularlyoreffectivelycommunicated. Alargepartofstrategyanditsprocessdevelopmentcouldbebetterunderstoodifitwas consideredasadecisionsupportprocessforabusiness.Inordertomakegoodbusiness

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decisionstheirneedstobeanumberofdatasources,analysis,overallclarityonobjectives andjustificationforsuchdaytodaydecisionsthatareofamorestrategicnature.Ifitis viewedinthiscontextitshouldprovidegreaterunderstandingandvisibilityformanagerson theissuesthathaveaneffectontheirbusiness.Gooddecisionsareformedfromhavinga soundunderstandingoftheissues,thevariables,anassessmentoftheleveloferror,the probabilityofthedesiredoutcomeanditsimpact.Agooddecisionisstillgoodevenifitdoes notendinthedesiredoutcome,solongasallmattersareconsideredandevaluatedwithin theconstraintsoftime,effortandcostofcompletingtheevaluation.Ifstrategyisconsidered inthiscontextitprovidesclarityaroundwhatshouldbeconsideredandwhystrategicplanning needstobeinplace.

6.3.

StrategySummary

Objective1:Definelongrangeplanningandorganisationalenvironmentalscanning techniquesinthecontextofcorporatestrategydevelopment.

Inthebusinessenvironmentoftodaythechangedriversaremany,nonemoresothat changesintheglobaleconomy.Theresearchshowstheeffectofthis,throughfreeingupof capitalpromptingglobalacquisitions,whichthenbringnewcompetitiveforcestotheUK.It canbesaidthattheglobaleconomynowremovesoldboundariesorrestrictionsandmost areasofbusinessarefeelingtheeffectsofthisincreasedlevelofcompetitionasaresult.The buyersofFMservicesacknowledgedthistobethecaseandplacesignificantimportanceon theeffectsofglobalisationontheirbusiness.ThisisincontrasttotheFMproviderswhodo notclassifyglobalisationasasignificantchangedriverandtendtowardstheirprioritiesbeing thecustomerandinvestors.Theissuehereisoneofunderstandingthebusinessenvironment outsideoftheimmediateoperationalneedsfortheFMorganisationandhowtheircustomers businesseshavetoadaptandchangetotheseexternalenvironmentforces,witharesult changeinwhattheyneedfromtheirFMservicesprovider. Fromtheliteraturereviewthereisadifferenceininterpretationoverthetimeperiodsinvolved forstrategicplanningandlongrangeplanning.Addedtothistheliteraturethenbringsin CorporateStrategyanddevelopsthisasanoverarchinglongertermplanintowhichindividual businessunitscontribute/proposetherestrategicplans.Opinionexiststhatthestrategicplan andlongrangeplanshouldbedevelopedastwoentitieswiththelaterbeingtheresponsibility oftheseniormanagementteamandtheformertheoperational/businessunitsmanagers. Itisthewritersviewthataconvergencebetweenstrategydevelopmentandplanning approachesistakingplaceasthespeedofchangeanddriversofchangearenowdifferent fromthatofthe1960swhenmanyoftheconceptswhereoriginallydeveloped.This convergencebringsablendofapproaches,whichisrightfortodaysorganisationsand

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businessconditions.Assuchtheorganisationalstrategyneedstobepartplan,partemergent andasaresult,throughaframeworkorplanningprocess,goodstrategywillbedeveloped overtimeasthevariousmanagersbecomeinvolved. Theconceptsofstrategyandstrategydevelopmentappearoverlycomplexandasaresultdo notseemtobefullyembracedacrossFMorganisations.Itwouldthereforebeofbenefitifthe concepts,ideasandlanguagecouldbesimplifiedtoencouragegreaterunderstandingand application,thisinthewriterviewwouldbetoconsiderstrategicplanning,corporateplanning undertheheadingoflongtermplanning,coveringaperiodoffiveyearsinoutlook. ForFM,providerorganisationsneedtodevelopcloserlinkstotheclientandthisisseenin thegrowthofcustomercentricstrategiesbymanyserviceorganisations,addedtothisthere isaneedfortheFMstrategicdevelopmentprocessestoincludegreaterinvolvementfromthe operationalteamstoallowcustomerinsighttobeobtained.Thisisalsotrueofhowtheclient relationshipneedstobeapproached,fromtheclientprioritiesandoutsourceexpectations clientsexpectvalueanddeliveryofthecorecompetenceitemsforFM.Thisismeasured throughtheattainmentofKPIs,howeverthereisstrongevidencewhichshowthatfollowing appointmentthoseinitialoutsourceexpectationaredilutedbythefocusonoperationalKPIs byboththeproviderandthebuyer.Thisisthereforedetrimentaltothecreationofvalueand furtherpushesFMdownthevaluechain.Aswasnotedbyonebuyer,beingabletochange supplierandstaffatwillisseenasabenefittotheclient.Withsuchanapproachthereare fewincentivestoinvestinrelationshipsforbothparties.Thereforetheapproachneedsto adoptatwotierformat,firstlyafocusonoperationaldeliveryandmeetingservice expectationsandsecondlyoperationwiththeclientatastrategicleveltoprovidethefocusof managerssotheysourceandimplementmorestrategiclevelchangesandimprovements. Thiswillrequiremorecollaborativeworkingataseniorlevelwithintheclientorganisationand thedevelopmentofaservicecultureforboththeFMandclientorganisations,whichsupports thecorebusinessoperation. ThedevelopmentoftheFMstrategywillinpartrelyonthistwotierapproachwiththeclient andtheoperationalteams,butbehindthisthereneedstobeeffectiveuseofexternal scanningsystemandawillingnessandabilitytochangepresentpractice.Clientsarelooking forFMproviderstobeadaptableandscalableintheirservicesolution,astheyneedtobein themarketstheyoperatewithin.Thisorganisationalagilitycancreatecompetitiveadvantage whichissustainableinthelongterm,beingfirsttomarketandhavingaculture,which embraceschange,willimprovetheorganisationslikelihoodofsuccess.Howeversuccess needstoflowfromtakinginformeddecisions,whichdemonstrateathoroughunderstandingof capabilityandtheabilityoftheorganisationtotakeabestfitapproachtotheexternal environment,clientsandtheirorganisationalstrategicaims.

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Thisthereforerequiresenvironmentalscanning,fromtheresearchmostorganisationshave someformofscanningtakingplaceeitherdistributedthroughdepartmentalorfunctional structuresorareformalorinformalindesign.Theresultsofthesurveyshowthatprovidersdo nothaveasophisticatedmeansofscanningandappeartobefollowingtheclientinrespectof changesandimprovements,whilstthisisbringsresultsformanyitshouldberecognisedthat undertherelativelystableeconomicconditionsoftheUK,inasectorwhichisgrowing,such approachesorlackofapproachmeansthatinefficienciesarebeingmasked.Itisthewriter viewthataseconomicconditionschangemanywithintheFMindustrywillbecaughtoutby theneedforchange,theinefficienciesoftheorganisationandmoreimportantlybythe inabilitytoanticipateormakechangetotheirorganisationsothattheyhaveappropriatefit withthenewfoundconditions.Thisorganisationalfitisthereforecriticalforreturningtoa positionofstabilitywithintheorganisationandremainingcompetitiveforthelongerterm. Objective3: Identifypolicyandmanagementtrendswithinfacilitiesmanagement

sectorwithregardstostrategydevelopment

Itisthewritersviewthatthelevelofinformalscanningandmeasurementtakingplacewithin FMorganisationsisfragmentedandinconsistentinstyleanduse.Anindicatorofthisisthat providersbelievetheyaddvalueandthemajorityofbuyersinthesurveyscorethisverylow, suggestingagapinunderstandingofrelativeserviceperceptionbyclients.Thislackof systematicandstructuredapproachtoexternalenvironmentalscanningandMISisanissue, asthereexistastrongcaseforhavingsuchsystemsandapproachesinplace.Research completedagainstanumberofmajorbrandsovera10yearperiodidentifiedthatthose organisationwiththisinplaceperformedabovetheircompetitorsintermsofvaluecreationfor shareholders(RefertoappendixB1TableB11.2).Ifprovidershaveexternalenvironmental scanninginplace,whyaretheyoutoflinewithclientsonorganisationalcapabilityissues,the surveyshowsthatbuyersandprovidervaluedifferentserviceattributes. Itisclearthatpresentacademicthinkingisthatanannualcalendardrivenstrategy developmentcycledoesnotenhancedecisionmakingandcanbeabarriertothebusiness. Thesurveyresponsehoweverleavesastrongindicationthatbudgetsandfinancialtargets dominatetheFMprovidersobjectives.Itisidentifiedwithintheresearchthatbusinessagility isofgrowingimportance.Tobeagilethereneedstobeflexibilityinstrategytoaccommodate change,butmoreimportantlythedevelopmentneedstobebasedonathorough understandingofthemarketplacesothatthenumberandofsurprisesarelimited.Againthis emphasisestheneedforhavingexternalenvironmentalscanningandMISsystemsinplace withintheorganisation. Whilstthereareviewsonhavingstructuredandunstructuredapproachestostrategy developmenttheredoesneedtobeabasicstructureandsysteminplacetocapturethe

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indicatorsofchange,inissuesthathaveadirectimpactonthebusiness.Informationonthese indicatorsshouldthenbeusedtomakemoreinformeddecisions.Inthetypeofresponses indicateditwouldappearthattheclientorganisationsmayhaveinplacegreaterstructureto theirapproachtostrategicdevelopment,thereviewstendtowardsadeliberateprocesswith anemergingstrategy.Whatthisisbelievedtorepresentisthatthereexistsaformalplanning calendarbutthereisflexibilityinhowtheoverallstrategyisrealisedthroughthecourseofthe year.Allrespondentperceiveavalueinplanningforthelongertermandthatthisshoulddrive decisionmakingineachyear,howeververyfewactuallyreportedthatafiveyearplanor documentexistsfortheirrespectiveorganisations,ifitdoes,communicationandsharingofits requirementsappearstobelacking.

6.4.

LongRange&ScenarioPlanningSummary

Objective4:Analysecurrentthoughtswithintheindustryonlongrangeplanningand environmentalscanningandtheeffectsonstrategydevelopment 6.4.1 LongTerm

Forstrategicdevelopment,whichisofalongtermoutlook,theirneedstobeaprimaryplan, whichisforwardlookingatthebusinessobjectivesoverafiveyearperiod.Thisneedstobea referencepointthatprovidesmanagerswithclarityofthevisionforthefutureandhow decisionstodaysupportthisvision.Itshouldalsoprovideguidingprincipalsonwhichtobase todaysdecisionaround.Indoingthisshouldhelpretainfocusandvalueonthelongerterm andcounteracttheeffectsofstrategicdriftandagencytheoryintheeverydayprocessof operatingabusiness. Fromtheresearchitisclearthatbyformulatingalongertermviewbenefitsareobtained,asit isshownthatthisprocessinitselfhelpsmanagersstarttothinkandactmorestrategically whichshouldbenefitthebusinessthroughthequalityofdecisionmaking.Thelongerterm planneedstobebasedonsomefutureobjectiveandcondition,whichthebusinessislooking toattain.Clearlythereisasignificantelementofpredictionaroundfutureconditionsofthe organisationandbusinessenvironment.Thisiswhereothertechniquesneedtobeinplacein supportofthislongertermmethodology,thesetechniquesmaybeofananalyticalorintuitive innature,butareinsupportofthedecisionmakingprocessesthattheorganisationshould employ.Thisagainemphasisestheneedforviewingthetechniquesavailableinbuildingthe strategyasdecisionsupport,thisiscoveredinappendixB1&B4. Aswithmanyareasinthesurveythereisagreementthatlongertermrelationshipsbetween theproviderandbuyerwouldpromotemorevalueaddingpracticesandinvestmentby providers.Intheorythislongertermcouldpromotegreatertransferofriskandservice,ina controlledandopenmanner,somethingthatbothgroupsindicateasbeingapositive.By

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doingsoitsshouldestablishbettercontrolandawarenessoflongertermcostofservice.Itis pointedoutfromtheprovidersresponses,thatappointmentdecisionsarenotalwaysjoined upwhenitcomestobalancinglifecyclerevenueandcapitalexpense,thiscoupledwithacost orientationofbuyers,cancompoundtheilleffectsofashorttermapproach.Thereforethere mustcomeapointinthelifecycleofapropertyportfolioorFMservicecontract,whenthis shorttermapproachcoupledwiththeclientscontinuingaspirationsforyearonyearsavings mustreachapointwherefurthersavingbecomevaluedepletingduetothenegativeimpact onrelationships,innovation,goodwillandservicequality. ThelongertermforFMprovidersappearstoincludebuyerswithanappetiteforgreaterrisk transfer,longertermcontracts,thereductioninclientinhouseteamscoupledwithguarantees onserviceperformancelevelsfromtheFMprovider.Tomeettheseaspirations,FM organisationsneedtoplanaheadinordertodevelopthecapability.Providersrecognisethat improvementandefficiencywillcomethroughthegreateruseoftechnologyandsmarter operationalpractices,buttheseareasneedtobedevelopedtoasufficientlevelsothat buyerswilltakeuptheseserviceofferings.Theknockoneffectisthatclient/buyersthen needtoletgooftheserviceprovision,bewillingtoengageinalternativepracticesand manageatamorestrategiclevelwiththeirFMprovider,ifthisistobesuccessfulthenthere mustbeasharingandcommunicationofrespectiveorganisationalunderstandingand strategiesoutsideofthecoreFMservice. Thelongtermstrategicplanthenneedstoconsidersuchaspirationthatexisttodayfortheir clientsandalsotheinputsfromthevariousscanninganddecisionsupporttechniques availabletotheorganisation.Thefiveyearplanshouldbeaspirationalandchallengingforthe organisationandbeusedtohelpguidetheinyearplansfortheorganisationandasa communicationtoolforthewiderbusiness.Ifthewholeorganisationunderstandsthe strategy,aimsanddirectionthentheyshouldbeabletoarticulatethisinternallyand externally.Thedifficultyisthatofmovingthemindsetawayfromtheshorttermandalso buildingamanagementcapability,whichiscomfortablewithprojectionsonfutureconditions withthefiveyearplanningwindow. 6.4.2 ScenarioPlanning

Fromtheearlierpartofthischapteritcanbesaidthatthelongrangeplanisnodifferentin processthanthatoftheStrategicorCorporateplanningrequirements,howeveritdoesbring intoplaytheneedforvision,notonlyavisiononwhattheorganisationmaylooklikebutalso aroundwhattheopportunitiesandthreatsmaybeatafuturepoint.Thisthenwouldby implicationneedateamorindividualsthatareabletoconceptualisearoundwhatthefuture mayindeedlooklike.Bydoingsoyouthenstarttobringintheideaofscenarioplanningand furthertheboundariesoftheoryandapplicationbecomeblurred.

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Scenarioplanningshouldbeviewedasoneofthedecisionsupporttoolsavailabletothe organisation,whichareaimedatimprovingthequalityofthedecisionsmadetoday.Scenario planningbringsintheconceptsoflookingatwhatthelongtermfuturemayholdforthe organisation.TheresultsofthesurveyshowsthatFMorganisationsaremorefocusedon presentdayshorttermdemandsandthisineffectwillcompromisethechoicesavailablein thefuturefortheorganisation.Scenarioplanningshouldbeusedinordertohavesome foresightonhowtheorganisationmayneedtochangetodayinanticipationofexpectedfuture conditions,theyalsoprovideatestinggroundforthechoicesbeingmadetoseeifathorough evaluationoftheoptionsandalternativehasbeencompletedpriortoseekingboardapproval. TheliteraturesuggeststhatScenarioplanningisforlargercorporateorganisations,which operateonaglobalscale,withcomplexmethodologies.Itisthewritersviewthatsuch applicationneednotfollowsuchacomplexrouteforthetypicalFMorganisation.The applicationofthesetechniqueswillastheliteraturesuggestsidentifythevaluethat organisationsplaceonthefuture,identifyopportunitiesandassistinencouragingmanagers tothinkmorestrategically. Thescenariosthemselvesneedtoprovideachallengeonpresentdayassumptions,market andservicesolutions,asispointedoutintheresearchthetestisnottoproduceascenario thatcomestofruitionbuttocreatealeveloforganisationalawarenesssuchthatsurprises andshocksarefew.Thecomponentsthenneedtoconsistofthefollowingfunctionsand considerationstobeeffectiveinidentifyingopportunities,testpresentdecisionsand evaluatingrisks.

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Table6.4.1

KeyAspectsofScenarioPlanning

Thekeyaspectsofscenarioplanningthereare: 1. Fourtofivescenariosshouldbeconsidered 2. Theoutlookperiodshouldbeatleastfiveyearsintothefuture 3. Thescenarioschosenneedtobeplausibleandconsistentthroughouttheplanning process 4. Intuitivelogicbasedonreasonedjudgementfordescribingalternativefutures representsspecificthemesorassumptions.Thisisviewedasapopularmethod proposedbyWackdatingbacktothe1960s. 5. Trendanalysisbasedonstructuredsteps,tobringelementsofascenariotogether andgroupingthemintocompatibleassumptionstoformscenarios. 6. Proceduralandcrossimpactanalysis,thisisseenasaprocess,whichlinksthetwo extremesabovewherebythehighlyintuitiveandproceduralquantitiesextremes,is broughttogether 7. Narrativestobeformulatedthroughouttheplanningperiodtocaptureconcepts, assumptionsandlimitations 8. Scenariosshouldbeappliedtobothamacroandmicrolevelsothatmanagersstart tothinkandunderstandthewideropportunities 9. Scenarioschosenneedtobechallengingfortheorganisationandshouldnotbejust abestcaseworstcasesituation.Theyneedtoconsiderfarreachingimpacts 10. Historicalreview,anunderstandingofhowpreviouschangeshaveunfoldedinthe worldandthelessonsthatcanbedrawnfromthis.ConsidertheScurveofhownew technologyandpoliticalshiftcommencesbeforebeingfullyadoptedorrealised 11. Acontinuousdevelopmentandtestingofthescenariosshouldbeundertakenasnew dataandinformationbecomesavailable

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Table6.4.2

AimsofScenarioPlanning

AimsandAchievements: 1. Assessingpossibleconsequencesofpresentactions 2. Detectingandavoidingfutureproblems 3. Proactivestrategyformulationbyconsideringpresentimplicationsoffuture 4. Envisagingaspectsofpossibleordesirablefutures 5. Developmentofpreparedmanagementmindsonpotentialchanges 6. Establishmentofkeydriversofchange 7. Establishmentoftriggerpointsfororganisationaldecisionmaking 8. Theorganisationshouldnotbesurprisedbythefuture,itsshouldbeabletoadapt andaccommodatechangeasthescenarioplansshouldhelpprovideagilitybybeing anticipatory 9. Haveagreaterunderstandingofriskandthesensitivityaroundassumptions 10. Encouragemanagementthinkingthatchallengestheorganisationandbring innovativesolutionsandnotjusttheobviousones 11. Bybeinganticipatoryasanorganisation,itshouldimprovetheorganisations competitivepositionforthelongterm

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6.5.

CustomerSummary

Objective2:

IdentifythekeybusinessdriversintheFacilitiesManagementservices

sectoranditscustomers

Theconvergenceofstrategicprocessesandconsensusthatlongevityofbusinessisnow beingdrivenbymorecustomercentricstrategiesmeansthatFMorganisationshaveto rethinktheirapproaches.Gonearetheopportunitiesthatexistedfromfirstandsecond generationFMoutsource,whereclientscostsandriskwasreducedbyessentiallybundlingof servicesontooneFMproviderwhowasabletoreducecostthroughbetterpurchasingpower, moreaggressivesuppliermanagementandremovalofinflatedchargesfromincumbent providers.Itisthewriterviewthattheseinitialoutsourcearrangementsdidlittletolookathow servicewasbeingprovidedordevelopandimplementbestpractice.Ameasureofthiswould beperhapstoresearchhowmanyclientshaveactuallystayedwiththeirinitialchoiceoffirst timeoutsourceFMorganisation. Clientsarenowmoreinformedthroughdirectexperience,dispersingofknowledge,smarter procurementmethodsandmorecomplexcontracts.Thisresultsinwhatappearstobea situationwherebyclientorganisationsaretakingthechallengetotheFMindustry,ratherthan theindustryprovidingsolutionsthatclientswantorperceivetheyneed,thisisseeninthe providerresponsestoquestion5.2whichgivesafocusoncompetitionandinvestors,not technologyorglobalisation.TheFMprovidersapproachtostrategyseemsthereforetolead notleading,thiscouldbeathrowbackfromthefirstandsecondgenerationoutsource contractswhereFMorganisationsdidnotperhapshavetotrythathardtoachievethecost metricsandinvariablyhadasignificantpartoftheclientsinhouseFMteamworkingforthem tomanagetheserviceperceptionwiththeenduserbasedonoldpreoutsourcerelationships. ThusachangeinapproachisneededifFMorganisationsaretoraisethemselvesoutofthe growthincommodityapproachesandmargincompetition. Intheirdriveforvalue,fromamoreinformedfooting,buyersareadoptingsuchmethodsof externalprocurementconsultants,electronicreverseauctionscontractswhichare combinationofperformancebased,singleservice,multiservice,openbookandguaranteed maximumpricebasedcontracts.Howeverthewritersanalysisofthesurveycompletedbythe InformationFacilitiesManagement(IFM2007)indicatesthatsomecontradictionsexist betweendesiredrequirementsandmeasurement,thisiscontainedwithinappendixA8&A9 andisalsosupportedbythefindingsfromthebuyersurvey.Thechallengewouldseemtobe thatprovidersarebeingaskedforvalue,yearoncostreduction,innovationandaccepting increasinglevelsofriskagainstaservice,whichforthemostpartisintangibleandvery subjective.

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Asbuyersprocurementmethodsbringforthemincreasedtransparencyofchargesandtheir makeup,thismovestheoverallserviceprovisiontothatofacommoditypurchasewith potentiallylittleopportunitytocreatevalueintheofferingastheprocurementprocesscanbe designedtoprovideanevaluationreferencepointonwhichtocomparealternativecompany offers.Thiscommoditisationprocessmaynotthenrecognisethedifficultythenfacedbythe providerinhowtodifferentiatetheserviceofferingwhentheevaluationcriteriaisdrivinga vanillaresponsefromallproviders.Theuseofreverseauctionsareagreedbybothpartiesto deliversuboptimaloutcomesoncethecontractsmoveintotheiroperationaladeliveryphase, yetitremainsinuseformanybuyersofFMservices.Isthisthenasaresultofthedecision andevaluationprocessthatbuyersgothroughpretender(AsindicatedinappendixA1figure A11.1).FortheFMproviderandbuyertheprocurementcostsaresignificantandcanruninto hundredsofthousandsofpounds,toarriveatadisappointingend,withlittlemutual satisfaction,isanexpensiveresultforallconcerned. Bymakingtheassumptionthattheclientsperceivedbenefitsfromoutsourcingshouldbe thoseitemsthatareusedtoassessuitableproviders,andtheninturnbeusedtodrive/ indicateperformancefromtheprovider,sothatboththeclientandproviderarealignedin expectationanddelivery.Thiswouldbeafairassumption,howevertheresultsfromthe researchshowthatbuyersexpectationsandevaluationpriortocontractawarddifferfrom prioritiesoncethecontractsareputintofulloperation,doesthisthenprovidesomeinsight intowayreverseauctionsandcommoditystyleapproachesareincreasinginuseforbuyersof FMservices.Customervaluemanagementshouldallowthedevelopmentofappropriate strategiesandofferingstobeputtobuyersevenwhenprocurementmethodsaredriving blandresponses.Theresearchshowsthatbuyersreportafocusonvalueyetthethemeof theirexpectationsremainoneofcost,thereisaconsensusthatfinancialmeasureswill continuetoplayapartinhoworganisationsmeasuretherelationshipsthattheyhavewith stakeholdersandclients. Whilstotherservicesectorcompanieshavealreadydevelopedcomplicatedcustomer relationshipprogrammesandknowledgeacquisitiontechniquesitseemtobeatanearly stagewithinFM.DifficultiesariseforFMorganisationinthatcustomerknowledgeand perceptionsofservicerest,toalargedegree,investedintheonsiteteamthateither managesordeliverstheservicestothecustomer.Extractingthatknowledgeandensuring consistencyofapproachandstandardsacrossaFMworkforce,whichmaybethousandsof people,isahumanresourcechallengeinitself.Thechallengemustthereforebemetaspart ofthestrategydevelopmentprocessfortheFMorganisation.

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6.5.1

ValuevCost

Theutopiaofvaluecreationformedfromcustomercentricstrategiesisfoundtobethedesire ofbothbuyersandproviders,thisisnotnewandfromexperiencerelationshipsinFM commenceinthismannerundertheexcitementofanewcontract,newclientandnewFM providerbutiftheexpectation,clientsrealrequirementsandobjectives,arenot communicatedorunderstoodbythepartiesthenproblemswillarise.Giventhissituationit candevelopquicklyintoavaluereductionnotavalueadditionrelationship.Theresearch indicatesthatthis misalignmentandcommunicationisrealandrelatestobothpartiesnot communicatingeffectively. ThereisasignificantvariancebetweenthebuyersandprovidersofFMservices,the providerswhoseethatinpracticecostisthemajordriverforclientsandthewayinwhich servicesareprovided.Forexamplebuyershaveindicatedthatsingleserviceline procurementisforbestinclassandvalue,yettheprovidersseethisasapurecostorientated approachforlowestcost,ratherthanvalue.Thelackofvaluecreationisalsoidentifiedby buyers,wheretheresultsindicatethatmoreintegrateddeliverymodelsofserviceprovision bringgreatervalueandcanexceedexpectation.Itwouldappearthatlikeanycommercial organisationbuyersofFMservicemuststrivetopayacompetitivemarketrateforthe servicesrequired.Ifprovidersareunabletodifferentiatetheirofferingthenclientsandbuyers willcontinuetoactinbehavioursthataredominatedbycost.Itwouldalsoseemtruethatthe selectiontechniquesandmeasurearenotsophisticatedenoughtodrawoutanassessment ofoverallvalue,whichrepresentsthelifeofthecontract,ortheprovidersfuturecapacityand capabilityatastrategiclevel.Ifthenthemarginandheadcountefficienciesoffirstand secondgenerationFMoutsourceexerciseshavebeenrealisedforbuyersalready,then furthervalueneedstobeobtainedbyalternativeapproachesandassessmentfromthe outset.Whilstbuyercanhaveashorttermcostfocusontenderssotocanproviders,asone providerpointedouttherenewalcyclesofthreeyearsoncontractmeansthatproviderscan anddoadoptasimilarshorttermapproaches,inthattheyacceptworkbelownormallevelsof profit,formanyreasons.Thisapproachcouldindicativeoftheprovidersorganisations strategicshortcomingsbutitdoesnothelpeitherthebuyerortheproviderinthemediumto longterm. Intheresponsestothewrittenquestionsprovidersacknowledgethattheyhaveopportunityto investincontractsandserviceinordertobringvalue,yetadvisethatshorttermapproaches andloyaltydonotencouragesuchbehaviours.Thereisavarianceinprovidersperceptionof valuebeingaddedtoclients,86%ofprovidersreportedthattheygobeyondtherequirement forthecontract,whichshouldbeconsideredasavalueaddingservice,yetonly57%of buyersexpressedtosameview.Differenceexistsinviewsoverthedominanceorexistence totoofewlargeFMorganisations,clientsbelievesmallorganisationsdonotnecessarily meanhigherservicestandardsorcustomerfocusandthiswouldthereforewouldsuggestthat

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theyhavenomajorconcernovercontractingwithlargerFMorganisations.Theydohavea viewthough,thattherearetoofew,whichwouldsuggesttheywantmorechoiceorare unhappywiththefewthatdoexist.Evidenceintheproviderresponsealsoindicatesthat nicheserviceprovisionwillgrowasconsolidationofthelargerFMorganisationcontinuesso willtheopportunityoftechnicalspecialist.Thiswillthenbetherevalueadditionbacktoclient byofferingahigherdegreeoftechnicalexpertiseoverandabovewhatcouldbecomethis vanillaundifferentiatedserviceofferingfromthebulkofFMproviders.Thisresponseand developmentofnicheservicesisaboutcustomerfocus,customisationofservicesandhaving agreaterawarenessofthebuyersrealrequirements. Anumberofmodelshavebeenconsideredwithinthisreport,whichallprovidesanindication ofhowvaluecanbeaddedandhowFMandclientorganisationsshouldlooktoengagein ordertorealisethispotential.Theemphasisisthatthisengagementshouldbeatamore strategiclevel,suchthatthereisrealclientunderstandinginabusinesscontextandfromthis seekoutthoseopportunitiesthatcanbecreatedthroughcollaborativeworkingpractices. Fromaclientperspectivehoweversucharrangementsarenotinstantlyforgedandtheinitial relationshipsarebuiltaroundnoncoreandpotentiallylessimportantfunctions.Itistherefore importantthatthisnoncoreserviceisdeliveredinsuchawaythatthereisanatural progressionthroughthevaluechain.TheexampleprovidedfortheNHS,withitcourageto outsourcethemanagementfunctionfirst,indicatesthatoperatingatthisstrategiclevel allowedthenoncoreservicemanagementtobringvalueacrossthewholeofthetrust.Thisis seenasanexampletotheindustry(RefertoappendixA2). 6.5.2 Capability

Bothgroupsofrespondentsagreethatreverseauctionspromotedifficultrelationshipsanddo notbringvaluefollowingappointment.Iftheauctionapproachcouldbeassumedtobea worstcasesituationwherebyitscompletiondrivesdownthecostagainstafixedSLA/ specificationandbuyersacknowledgethistobethecase,thenthereneedstobesomeform ofmechanisminalternativemethodsthatbringtheclarityofcostandvaluewhilstallowing somemeansfortheprovidertobringalternativeapproachestotheneedsoftheclient.Ina similarwaybuyershavealsoacknowledgedthatprescriptivetypecontractscanhinder serviceinnovationoralternativeapproachesyettakecomfortfromhavingthecontrolthatthis canbringbeyondthatobtainedfromoutputbasedservicelevels.Ininterviewsthiswas supportedwhenbuyerswhohaveworkedonanoutputbasedarrangement,thenimplement measurementregimes,whichresultinaprescriptiveapproachlocallytosatisfythebuilding endusers. BuyersrecogniseandexpressadesirefortheirFMproviderstobringmorevaluetotheir organisationsandadvisethatthisisthroughserviceexpansion,howeverthereisareluctance totransferserviceswherethereislittleknowncapabilitywithintheFMmarketplace.Thisis

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seeninthelevelandtypeofservicesbeingoutsourcedbyrespondentsandthe correspondingofferingbeingmadebytheproviders.Itisdominatedbyhardservicesand doesnotexpandintoothersupportservices.Therethenexistsachickenandeggsituation, whichmayonlybeovercomethrough,arelationshipwhichisbasedonhigherlevelsoftrust loyaltyandlongertermcommitment.Bothacknowledgedthatamorestrategicapproachto FMwouldrealisemorevalue,takingtheexpectationsofclientswhentheyoutsourcethetop tenitemscontain,reductioninstaff,accesstobestpractice,flexibilityandallowingthein houseteamtoconcentrateoncorebusiness(IFM2007).Howeverthebuyersrespondedthat theydidnotfeelthatatotaloutsourceofFMwouldhappenwithintheirorganisation,but providersremainmoreoptimisticonthis. Iftheviewtakenisthatcapabilityisdrivingbuyersdecisionthenitshouldbekeytoprovider thattheymaketheircapabilityknowtopotentialclientsandindoingsomakesurethatthisis alignedtowhatisunderstoodtobetheirneeds.Onacoupleofpointsthereisadifferencein whatsimportantandwhatsnot,havingaEMEAandinhousedeliverycapabilityfromtheir providersisimportanttoclients,yetprovidersrankedthisaslowinimportance,bythesame tokenhavingamobileserviceoffering,andbeingabletomanageaclientsfullproperty portfolioneedswasseentobeofhighimportancetoprovidersyetscoredlowinimportance forclients.Thiscouldbeasaresultofthelackofsophisticatedprocurementmethodsof buyersorlackingcustomerandmarketingknowledgeoftheproviders,ineithersituation theseexamplesandfindingsshowthatbothgroupsdonothaveafullappreciationofeach other. 6.5.3 Differentiation

TheissuesofdifferentiationbetweenprovidersofFMserviceshavebeenhighlighted,they arenowbecomingmoreprominentforbothbuyersandproviders,astheearlywinsof outsourcinghavealreadyhappenedandfurthervalueneedstobecreatedratherthansimple costremovalexercisesoftheseearlyoutsourceexperiences.Theeffectofthisun differentiatedservicemeansthatwhilsttheresearchindicatesthatclientsdontbelievethisis thecauseofthecommodityapproachtobuying,theevidencewouldsuggestthatitisa significantfactor.ItisacknowledgethatalackofdifferentiationinFMprovidersoffering meansthatclients,fromaprovidersperspective,arenotbeingdrawnorwantingtopurchase servicesfromanyoneFMprovideroveranotheri.e.theyhavenostrongdesiretopurchasea particularofferingfromsayaperceivedmarketleadingorganisation.Buyershavedeveloped inhouseknowledgeandcapability,whichallowsthemtomakewhattheybelieve,arevalue judgmentsonhowtoprocureandmanagedtheprovisionofFMservice.Wheregapsexistin knowledge,thirdpartyconsultantsarebeingused.Buyersrecognisethattheyareadopting commoditybasedpurchasingcriteria/methods,butremainconsistentintheirviewthatvalue iswhattheyaspirefromtherelationshipwiththeirproviderfromtheoutset.

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FMprovidersacknowledgethatthisissueofdifferentiationisencouragingbuyertoactinthe waytheyare,butseethatserviceexpansionisameanstodifferentiateandsecureincreased clientloyalty.Thisagaincreatesasituationwherebyvalueadditiontononcoreservicesis increasinglydifficulttoachievethroughtraditionalapproachesandbyacceptingthatthereisa weakeningofthelocalserviceposition,setagainstcompetitorswithverysimilarofferings, differentiatedserviceshavetocomefromincreasedclientunderstanding,leadingtoamore customerfocusedofferingthatisabletomoveupthevaluechainwithintheclient organisation.Thisthenresultsincustomisationandpotentiallyaddstotheoveralloperational costoftheprovidersbusiness. Thevaluecreationprocessthatisneededforlongtermrelationshipandmutualgainwith clients,mustthencomefromhavingsufficientinsightaboutacustomersmarkets/products sothatalternativeofferscanbemadeinsuchawaythattheclientplacesgreatervalueon theofferduetoaperceptionoftheutilityorefficiencygained.Thisinsightneedstocomefrom thescanningandMISprocessesadoptedbyprovidersandnotleasttheoperational managerswhohavedirectcontactwithclients.Theyshouldbeinvolvedinthestrategy developmentprocessinordertoensurethatcustomerinsightisgainedthroughhavingthose peoplewhointeractwiththeclientatregularintervalsavailableandabletoinputintothe process.

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6.6.

ConceptualModels

Objective5:Developaframeworkfortheimplementationofbestpracticeembracing theuseoflongrangeplanningtechniques,encompassingenvironmentalscanningand scenarioplanning Fromtheresearchthereis,inthewritersview,aneedforgreaterunderstandingoftheissues whichsurroundthedevelopmentoforganisationalstrategy,strategicthinkingandtheuseof techniqueswhichsupporttheevaluationanddecisionmakingprocessesrequiredforthe developmentofrobuststrategies. Themodelscontainedwithinthissectionshouldbeusedtoincreaseunderstandingandallow theimplementationofsystemsandprocessesthatsupportthegreateruseoftheavailable techniquesbyFMorganisationintheirpursuitofanorganisationalstrategy.Thesemodels shouldbeusedasaframeworkforthedevelopmentoforganisationalthinkingandstrategy processdevelopment.Themodelsarenotproposedasprescriptiveprocesses,whichif followedwillprovidethestrategicsolutionfortheorganisation,itisaframeworkwhichlooks toaddressessomeoftheissuesforFMorganisationidentifiedintheresearch.

Figure6.6.1StrategyDevelopmentModel Thismodelisproposedasameansofidentifyingtomanagersthecontextofstrategy,the competingdemandsandissuesthatneedtobeaddressedbythemethodsemployedwithin theorganisation.Themanagersinvolvedwiththedevelopmentprocess,inhouseor otherwise,needtounderstandthisandbeopentothethinkingthatsurroundsthemodel. Fromtheresearchthereisstrongevidencethatavailabletechniquesarenotbeingusedto gaincustomerinsight,competitoraction,andknowledgeoutsidetheimmediateoperational needsorthewiderbusinesseconomy.Thismodelthereforehighlightstheneedforinputfrom bothwithintheorganisationandexternaltotheorganisationifthestrategydevelopment processistobestrongenoughtorespondtochangeorleadonchangeandindoingsobuild betterdecisionmakingwithintheorganisation.

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Figure6.6.2AchievingValueAddedServicesModel ThismodelsetsouttheconceptualfindingsofchaptertwoandappendixAandindicateshow theFMindustryshouldfocusitsresourcetoenableittomoveupthevaluechainthroughthe provisionofmeasuredservicecompetenceandthenintovalueaddingserviceareas.The ultimateaimoftheFMprovidershouldbethattheclientbecomesincreasinglydependant uponthem. ThemodelisaconceptualisationofhowFMprovisioncanbedevelopedtotargetthe attainmentofvalue,forthistoreachitsfullpotentialclientorganisationhavetoalsohave courageintheirprocurementmethodsandoutsourcingstrategy.Itisthewriterviewthatmost relationshipswithintheindustryneverconsistentlygetbeyondlevel2,butwithshortburstsof timeinisolatedareasatlevel3,thisissupportedbytheresearch.Mostmissionstatements andFMprovidersobjectivesnowfocusonthelevel4requirementsbutthisisfelttobenew territoryformostFMproviders.ThechallengeisthereforeontheFMindustrytotakethe initiativeandencourageclientstoadoptenlightenedworkingpracticesthatenablerealvalue andstrategicoperationtotakeplace. Level1 Thefoundationofthismodelishavinginplacestrong,effectiveandmeasuredcapabilityand excellenceinthecoreservicelinesofFM,thisistheLevel1relationship.WithoutthistheFM providerwillneverriseabovetothefollowingsixlevels.Forclientstheirbuyingdecisionsand marketresponsesarebasedessentiallyaroundwinningorloosingonwhatmarginthe providersarewillingtoacceptforthework,sincethistypeofapproachthereislittleroomto bringalternativepracticesorinnovationoutsideofwhatisalreadyknowandimplemented withintheindustry. Level2 Thislevelistoprovideindicationforclientthatsingleservicelinehavelimitedvalueadding capabilitybycomparisonwithothers,ifthestrategyisoneofgradualmovementupthevalue curvethenthisisthenextlogicalstep.Thiswouldthenbethetotalfacilitiesmanagementtype contractrelationshipwithorwithoutaclientinhouseteam.Withthistypeofapproachthe successfortheproviderwillrestwiththeirabilitytobuysubcontractedservicessmarterand morecosteffectivethantheclientandcompetitors.AstrongprocurementsolutionfortheFM providerwillgainfromthisarrangement.Forserviceinnovationandcustomerfocusthiswill beevidenttoasmallextentwithinthebuildingspecificteambutthiswillbelowerlevel operationalandsitespecific. Level3 Thislevelidentifiesthatgreatercollaborationandengagementneedstohappenifannual savingsandinnovationaretohappen.Thislevelisnotseentobeoperatingatastrategic

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levelwiththeclientorganisation,asitisstillfocusedonoperationalmattersofperformance andefficiency.Theprocessoflearninghoweverwillcommencethroughincreasedlevelsof collaboration,thislearningwillbeaboutwhatisactuallyrequiredinanoperationalcontext andthenstartingtocustomiselocallytheserviceprovisionwithintheconstraintsofthe contractsandempowermentoftheoperationalteam.ThisiswheremostFMorganisations aspiretobeatpresentbuttheresearchindicatestheyarenotconsistentlyachievingthis throughcapabilityandclientconstraints. Level4 Throughtheearlierlevelsthereshouldbeformedamuchgreaterunderstandingoftheclient andtheoperationalneedsateachlocationandforeachofthemainstakeholdersofthe servicewithintheclientorganisation.Theoperationalservicedeliveryshouldremainreliable anddependableforthisleveltobereached,breachesinthesewillcausealossoffaithinby thestakeholders.Workingonthebasisthatthisisinplace,theserviceculturecanstartto developthiswillbethefocusofboththeclientrepresentativeandFMprovider,asitneedsto beajointsolution.Thisshouldbeaboutdevelopmentofsmarterproactiveservicelead metricsanddeliverycustomisation.Thisthenshouldstartthealignmentfoundationsbetween thebuyersoutsourceexpectationsandaspirationsoftheservicedeliverytothatofthe performancemetricsandincentivesoftheFMprovider. Level5 Thislevelbuildsuponafocusedandalignedoperationaldeliveryofservicewhichshouldbe workingtowardsattaininganddemonstratingvalue,basedontheinitialoutsource expectationsofbothproviderandbuyer.Howevertogetbeyondthisarea,thereneedstoa communicationforumatamorestrategiclevelbetweenthebuyerandprovider.This communicationshouldbeatleastquarterlyorattimesmonthlyifchangesaresignificant. Againtheresearchshowsthatthisisnothappeningbeyondsettingtheexpectationat contractcommencementorannuallybetweentheparties,thisisafailingonthepartsofboth theproviderandthebuyer.Theprocessshouldallowthedevelopmentofgreaterintelligence aroundtherespectiveorganisations,theirobjectiveslongandshorttermandenable opportunitiesforsupportanddevelopmenttobeidentifiedandimplementedoutsideofthe daytodayoperationalpressures.Itwaspointedoutintheresearchthatevensatisfied customersswitchprovidersandsuchanapproachatthislevelshouldatleastenableearly communicationonthereasonsforthistypeofactionandwherepossiblebuildalternative solutionstoavoidsuchvaluedepletingactivities. Level6 Atthislevelthereshouldbeestablishedasoundunderstandingoftherespective organisationsstrategicaimsandobjectivesandhowtheytranslateintodaytodayoperations. Thisincreasedlevelofunderstandingandcollaborationcoupledwithaforumforstrategic

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discussionshouldthenbringaneedfordevelopmentofajointinnovationnetworkbetween theorganisations.Thisshouldbeapproachedwithbothpartiescontributingequallyand leadingandsupportinginasharedmanner,theparticipantsneedtobeatasufficientlevel withintheorganisationtoovercomeinternalboundariesandpushthroughchangeas required.Thisinnovationnetworkatthislevelismorelikelytorealisegreatervaluebut againstmoresignificantchangesinapproach,bothorganisationsthereforeneedthecourage tocommittothechangesastheyareidentified. Withoutthislevelofcommitmentfurthervalue willnotberealised,typicallythesechangescouldbeofamorestrategicnatureinvolving furtheroutsourcingorinvestmentforlongtermgains. Level7 Onthebasisthatthepreviouslevelshaveallowedtherelationshiptodeveloptothisstage andhavebeensustainedduringthisperiod.Thenthereshouldexistthesituationwhereboth organisationandmanagementteamsbecomesdependantuponeachotherinpursuitoftheir otherbusinessinterest.Examplesdoexist,inotheroutsourceareas,wherereciprocaltrading cementstherelationshipfurther,evidenceofthisinFMislimited,duetowhatisbelievedto bearesultoftheshorttermnatureofcontractsandrelationshipsbetweentheparties.Level 7isaboutthelongertermbenefitsandcommitmenttocontinuallyrefreshandrevisethe serviceprovisiontomeettheneedsofbothpartiesintermsofservicesconsumedandprice paid. Figure6.6.3ScenarioPlanningProcessModel Thismodelproposedsetsoutalogicalpatternfortheestablishmentofthescenarioplanning methodologies.ThismodelshouldbereadinconjunctionwithappendixE1thatprovidesafull breakdownofeachitemintermsofscope,actionsandoutcomes.Themodeldepictstheflow throughthemanagementteam,scenarioplans,optionsevaluations,signoffandstrategy adjustment.Thisistoformaniterativeprocessthatneedstobeintegratedintothestrategy planningprocessoftheorganisation.Keytothisisstrategicthinkingofthemanagersand operationalstaffthatneedtobeinvolvedthroughout.Thisneedstobeimplementedifthe organisationistodeveloptheagilityneededinanincreasinglycompetitiveenvironment, whilstFMdoeshavesomesafeguardsaroundpeoplebeingneededatthepointofservice provision,i.e.cleanersandvendingneedstobeundertakenatspecificclientlocations,itmay notbecompletesciencefictiontoconsiderthatmachinesmayreplacesomeofthelowskills activitiesneededinFMtoday.AtpresentcleaningisabigpartofthecostsforFMattypical officelocationsandthebiggestsourceofcomplaintinthewritersexperience.Perhapsallthe factorsneededtodriveoutaninnovativealternative.Whilstthisisatheorytheessenceofthe scenarioplanningistonotbecaughtoutatsomefuturepointbyeithertheunexpected paradigmshiftinFMtechnologyorapoordecisionsomeyearsbefore.

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Thescenarioplanningmodelproposedbringsintheneedforexternalenvironmental scanninganddecisionsupporttechniquesaswellasrequiringmanagerstoconceptualise aroundthefuturelongtermbusinesscontextthattheorganisationmayface.Thisiskeyfor makingsurethattheoutcomesareofvalueandnotsimplyaremodelofexistingconditionsor makingthescenariosupportapredefinedagenda/decision.Thescenariosneedtochallenge andindoingsoprovokedebatewhichhelpsformulatebetterqualitydecisions. Figure6.6.4IntegratedStrategicDevelopmentModel Thepreviousmodelshavebeenincorporatedintotheproposedmodel,showninFigure7.5.4. Thisisanintegratedmodelforthedevelopmentoftheorganisationalstrategy.Thislinkingof keyconceptsintoonemodellookstodrivetheorganisationintomorecustomercentric strategies,throughprocessesthatrequireclientparticipationandoperationalstaffinput. Throughthisandtheuseofthedevelopmentandassessmentofhowtheorganisations managersvaluethelongterm,willdrivemanagementbehaviourstoincreasethevalue placedonthefuturebygeneratingmorestrategicthinking,withtheuseofscenarioplanning, documentedlongtermplansandlookingforregularmeasurementofstrategiceffectiveness. Thismodelwouldworkonthebasisofwhatcouldbeconsideredanemergentplanning approachbuttemperedwiththelongtermforesightneededforthescenarioplanninginputs. Thevalueidentificationprocedurewouldenlistthesupportofclientsthroughthevalueadded servicemodel,specificallywithclientsstrategicinputandconsideration. Themodelproposesacombinationofanalyticalmethodsfordecisionsupport,thesecentres ontheassessmentoftheexternalenvironment,internalcapabilityandhistoricalmarketand organisationalperformance. Intuitiveandinnovativeapproachesshouldbeadoptedforestablishmentofscenario planning,followingthemodelshowninfigure7.5.3,customerinsightfromtheoperational teamfeedbackandunderstandingofclientvaluedrivers. Theinputsfromthecustomerhavebeenidentifiedseparatelyastheyneedtobe representativeofpotentiallyanumberoforganisationsorcustomersegments.Thiswould focusonthemainstrategicissuesandchallengesthatwillbefacedintheprovisionofpresent andfutureservicesfromaclientperspective.Thiswillallowadirectmeasureofwhatthe operationalandinternalteamseeastheclientsrequirementsandwhattheclientsadvise theirrequirementstobe,thisisthenacheckforanygapsinunderstanding. Therealisedbenefitsshouldbethatthemanagementandultimatelytheoperationalteams starttothinkandactwithgreatervalueonthefuture,whichisofamorestrategic,and

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customerfocusedmanner.Itshouldencouragegreaterparticipationandbuyinthrough havingopportunitytocontributetothestrategicdevelopmentoftheorganisation. Theplansthemselvesshouldbemorerobustduetotheuseofavailablescanningand scenarioplanningtechniques.Thisshouldminimisetheimpactsofunanticipatedchangesin marketorinternalconditionsallowingtheorganisationtokeeponcoursewithitsstated objectivesandaims.Throughthisprocessandbyincorporatingtechniques,whichproactively seekcustomerinsightandinputthereshouldbegreatercustomerloyaltyandjointworking, astherelationshipsatlevel5andaboveshouldbeactivelyinplace,suchthatclient satisfactionisachievedbutwithastrongdesireandneedtoretaintheFMorganisation. Theimportantaspectofthemodelisthattheinputsandmanagementtimeneedstoproduce documentedoutputs,whilsttherewillbeaneedforoperationalmanagerstoinput,clearlyitis unrealistictohavealargegroupinvolved.Thereforeatangibleoutputfromworkshops,data collectionandanalysisneedstobeavailabletothewiderorganisationinaformwhichis readilytranslatedsuchthatitscanbelinkedtothewiderteamsdaytodayoperational outputs. Foreffectivenessandtoreinforcetheemphasisonthevalueofthelongterm,thereneedsto beacommunicatedanddocumentedlongtermplanwhichisusedtoguideallshorttomid termdecisionsandchanges.Thisshouldbecoupledwithadocumentedinyearplanwhich providesfocusoftheimmediateneedsofthebusinessinsupportofthelongerterm. Alltheseinputsandoutputsneedthentobeeffectiveandalignedwiththechangingnaturein whichtheFMserviceorganisationoperates.Todothiskeymetricsfortheorganisationneed tobeestablishedaroundthemainissuessothatearlyindicationofchangeornon performancecanbepickedupandinputbackintotheprocess.Thisisessentiallywill providedthedistinctionbetweenaplannedstrategydevelopmentcycleandanemergentone. Manyoftheprocessesinthemodelcanbeplannedaroundthenaturalbusinesscycle/year butmeasurementanditerationsneedtobeatleastquarterlyofbimonthlytocheckand validatethatthedecisionsmadearestillappropriatefortheconditionsfoundatafuturepoint. ThisthenallowstheFMorganisationtobecomeagile,adaptingandemergentinitsapproach tostrategydevelopment.

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Figure6.6.1

StrategyDevelopmentModel

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Figure6.6.2AchievingValueAddedServices

RelationshipLevels Level7 IntegrationatServiceand StrategicLevel Level6 InnovationNetwork Level5 MutualStrategicAwareness Level4 Client&ProviderServiceCulture Level3 Collaboration Level2 MultipleServiceLineProvision Level1 SingleServiceLineProvision ValueAdded

Mutual Dependence

AddingValue

PotentialforIncreasedValue

ServiceCulture& CustomerFocus LearningProcess FMPresent Aspirations FMRealised Value

Procurement Competition MarginCompetition

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Processbeingundertaken

Corporate Intelligence

Figure6.6.3ScenarioPlanningKeySteps

Step1InitialisationSteps
Vision Strategy Team Establish Context

Strategy CorporatePlan

Strategy BusinessUnitPlan

Context Timetable

Step2TeamDevelopmentSteps
Team BrainStorm Decision TeamOrientation Team Roles& Responsibilities Context

MacroScenarios FirstPass

Step3WhereWeAre
Environmental Analysis Past Review Vision Testing Past Limitations

Narrativesand Assumptions

Step4MacroLevelScenarios
MacroScenarios SecondPass Macro FiveScenarios Retestagainst "Whereweare" Agreedfindings, Impacts& Narratives

Variables

A KeyDrivers SignOff

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Step7WhereWeWantToBe
C Timetable Narrativeon expectedoutcomes

OptionsPlanning CorporatePlan Limitations

Macro&Micro ScenarioOptions

StrategicReview

ActionsRequired

Wherewewantto be

Step6Sensitivity,TriggerPoints&Options
KeyDrivers Consistency& Plausibility

CorporatePlan Variables

Sensitivities

MacroMicro Predictability& ScenarioMatrices

DecisionTrigger Points

OptionsPlanning

Step5MicroLevelScenarios
KeyDrivers

SignOff

CorporatePlan Variables

MicroScenarios A

Micro FiveScenarios

Retestagainst "Whereweare"

Agreedfindings, Impacts& Narratives

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Step8WhatWeNeedToDo
KeyImpactson StrategicPath

Corporate Implications

Measurement& Control

Implementation

Operationalise Actions

BusinessUnit Implications

DefineStrategic Decisions

Communicate

Implementation planning

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Figure6.6.4IntegratedStrategicDevelopment

IterativePlanningProcesses
Environmental Scanning Internal Assessments Insight

Scenario Planning

Historical Review

Value

AnalyticalProcedures

IntuitiveandInnovativeProcedures

Customer Insight

IntegratedStrategic Development

DirectCustomer Strategic inputs

DocumentedOutputs
Mission,Vision, Objectives Strategic &Innovative Thinking

RealisedBenefits

LongtermPlan Robustlongterm anticipatoryplans ShorttermPlan

Metric Criteria

Customer Loyaltythrough value&insight

MeasuredVariablesContinuousReview
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CHAPTERSEVEN.CONCLUSIONS

7.1.

Conclusions.

Thelackofreferencetothefutureandthecustomerwithinmanyofthedocumented definitionsoffacilitiesmanagementpromotestheapproachfoundwithintheresearch, thatwhilstbuyersaredrivenpredominatelybycostwhenpurchasing,FMprovidersare morefocusedonpresentinyearresultsthancustomerserviceorlongtermvalue.

Thereisasignificantlevelofdebateandopinionaroundwhatconstitutesbestpractice forthedevelopmentofanorganisationsstrategy.Fromthisitisnotclearifthe organisationshouldfollowaridgedprocessandstickwiththisnomatterwhat,orifit shouldnotimplementanyformalplanningprocessandsimplyrespondtothemarketas changehappens.Thedebateseemstohavegoneonsincethe1960soverapproaches andintodayseconomicandbusinessenvironmentsomeofthechallengesfacedbythe FMorganisationcouldnothavebeenanticipatedordealtwithundertheearlyconcepts andideasassociatedwithstrategicdevelopment.

Thereisaconvergenceofideasandapplicationinthestrategicdevelopment approaches(emergent,planned,unplanned)andthisappearstobethecorrectformula forbusinesstoday.Howeverifsuchtechniquesasscenarioplanning,externalscanning andlongtermplanningaretobeadopted,thenthereneedstobeasimplificationof languageandtechniques.Thisshouldenablegreaterunderstandinganduseofsuch conceptsbyorganisationsoperatingwithintheFMindustry.Evenifthesearenot implementedinthemosteffectiveordetailedmannerasintended,thereusewillpromote betterdecisionmakingforFMproviders.

AtpresentthereisnoindicationfromtheresearchthatFMorganisationsundertakeany significantlevelofexternalenvironmentalscanningorlongrangeplanninginsupportof theirexistingstrategydevelopmentprocesses.Thisisdespitethemhavingknowledgeof suchtechniques.ThefocusoftheFMproviderisdominatedbycostandcompetitor actions,creatingasituationwherebyprovidersseemtobeleadbyclientsratherthan leadingwithalternativesolutions,whichencourageclientstobuyservicesfromthem.

Therethenneedstobeareestablishmentofthebasicprincipalsthatdrovethe developmentoftheconcepts,theoriesandideasassociatedwithstrategyinthefirst place.Bygoingbacktosomebasicform,perhapstheapplicationandunderstanding withinorganisationswouldimproveandthereforeassistorganisationsinamorepractical

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sense.Thetechniquesavailableforthedevelopmentoftheorganisationalstrategy shouldbeshouldbeconsideredasdecisionsupportmethods,thisshouldhelpremove someofthebarrierstoadoption. 6 Clientprocurementandevaluationtechniquesdonotappearsophisticatedenoughto drawoutvaluefrompotentialFMproviders,clientsoutsourceexpectationsarenot alignedwiththeiroperationalprioritiesandsoitseemsthattheappointmentoftheFM providerismadeononesetofcriteriaandcontractualmeasurementonanother.There isaincreasinglycommoditybasedapproachbeingtakenbyclientswhenbuyingFM servicesduetothelackofdifferentiationbetweenproviders. 7 ThereneedstobearecognitionthatvaluefromFMrelationshipsneedstobecreated, thequickwinsoffirstandsecondgenerationFMoutsourcearrangementshavegone andcurrentlyclientswillchangeFMproviderseveniftheyaresatisfied.Thisisin responsetotheirinternalclientdriversofdemonstratingvalueandleanermoreeffective managementstructures.Thisneedstochangeifclientsandprovidersaretobenefitfrom valueaddingopportunitiesandlongertermrelationships. 8 FMprovidersneedtobeabletodifferentiatethemselvesagainsttheircompetitorsmany placemoreimportanceoncompetitoractionsthantheydothecustomer.Theirefforts wouldbebetterrewarded,throughloyalty,ifthisfocusandtimeisspentevaluatingthe customersrealneedsandvalueaddingopportunities. 9 Whilstclientsadvisethattheypursuevalueaddingandcollaborativeapproacheswith theirFMproviders,theresearchindicatesthatFMprovidersarenotengagedwithata strategiclevel.Thisneedstochangeandwillrequiresomeeducationofbothgroupsif morecollaborativeandvalueaddingrelationshipsaretobeachieved.Valueadditionis necessity,notanoptionalextra,FMprovidersandClientsneedtoworkathowthisis providedtothemthroughthedevelopmentofpractices,whichareakintothoseof serviceorganisationsnotcontractors. 10 TheoperationoftheFMserviceshouldbeundertakenattwolevels,firstlythedelivery andselfmanagementofthecoreservicerequirementsthensecondly,atastrategiclevel withseniormembersoftheclientandFMprovidersorganisation.Howeveratalltimes thecoreservicemustbedeliveredinordertoretaintrustbetweentheparties. 11 Greaterrecognitionandvalueneedstobeplacedonthebenefitsoflongertermmore collaborativeapproachesbetweenthetwoparties.InadditionFMprovi9dersmustadopt smarterdecisionsupporttechniquesinpursuitofcompetitiveadvantagethrough customercentricstrategies,clientsequallyneedtoadoptmoreenlightenedapproaches

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withtheirFMproviderandseethatvaluewillcomefromincreasingstrategicdialogue andreducinghandsonmanagementofoperationalmatters. 12 Themodelsproposedprovidebothaconceptualisationofthewiderissuesandalsoa frameworkinwhichorganisationscanintegratethetechniqueswhichbringintoplay externalscanning,marketinginformationsystem,scenarioplanningandmostofalldraw customerinsightintoaprocesswhichidentifiesapathforFMproviderstocreatevalue fortheircustomersandclients.

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7.2.

TestofResearchHypothesis.

Inthewritersviewthefindingsoftheliteraturereview,whichwassupportedinthefield research,showsthatthehypothesisiscorrect.FacilitiesManagementorganisationsare becomingincreasinglymorefocusedontheclientrequirementsandareattemptingtocreate valuefortheirclientsthroughthis.Thereisagoodlevelofknowledgearoundthetechniques thatcanbeusedtosupportthestrategicdevelopmentoftheFMorganisationandgain greatercustomerinsightandfocus.Howeverthesetechniquesarenotbeingreadilyor consistentlyappliedbyFMprovidersandassucharebeingleadbyclientsthroughalackof awarenessinrelationtotheclientsdriversandobjectives. ThesituationiscompoundedbytheapproachesbeingtakenbybuyersandclientsofFM providersinthattheirexpectationsandprioritiesbetweenoutsourceandoperationisnot aligned.CoupledwithlittleopportunitybeinggiventoFMproviderstolearnandunderstand thestrategicdriversoftheclientsorganisation.Therethenexistsagapbetweentheparties thatisnotbeingaddressedduetotheshorttermfocusofbothparticipantsintherelationship, iffurthervaleistobecreatedthengreaterunderstandingandcollaborationisrequiredat seniorlevelbetweenthebuyersandprovidersofFMservices.Theproposedframeworkfor anintegratedstrategicdevelopmentprocessprovidesabasisforformulationof understandingandvaluecreation.

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CHAPTEREIGHT.RECOMMENDATIONSFORFURTHERWORK

8.1.

RecommendationsforFurtherWork.

Whilsttheresearchaimsandobjectiveshavebeenmetinthewriterview,thereexistsa concernthatwhilsttheresultsofthefieldresearchproducedresultsinlinewithprevious academicstudiesandindependentindustryspecificbodies,thesamplesizewassmall. Howeverthetypesofrespondentandlevelofsenioritywithintheirrespectiveorganisation doesprovidefurthercomfortonthevalidityofthefindingsastheywillhaveconsiderable experienceintheFMindustryandalsointheoperationofabusinessandserviceata strategiclevel. Forthepurposesofprovidinggreatercertaintyforthosethatarenotfacilityorexperiencein facilitiesmanagementitwouldberecommendedthatfurtherclientandprovidersample researchbeundertakentovalidatethefindingsfurtherandestablishanytrendswithinclient sectorsthatmayrequirealternativeapproachesorindeedtoseeifamoregenericsolutionfor certaintypesofbuyerispossible. Afurtherareaofrecommendedresearchwouldbesomeasuretheresultsofimplementing theproposedframeworkwithinanexistingclientandproviderrelationshiptoassessits effectivenessatbring/creatingvalue.

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CHAPTERNINE.REFERENCES

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APPENDICES

Page# APPENDIXACHAPTERTWO A1 A2 A3 A4 A5 A6 A7 A8 A9 FMMarketIssues FMStrategy AuditoftheUKFMMarketSector2008(Extracts) Business&MarketingFactors Definitions MarketingPlanComponentsandScope MISMeasuresandIndicators FMPriorities FMSurveyAnalysis 2 7 17 36 49 50 52 54 55

APPENDIXBCHAPTERTHREE B1 B2 B3 B4 B5 StrategyDevelopment DevelopmentModels GenericStrategies Organisational&CustomerDecisionProcesses StrategicManagementTerminology 62 67 75 79 83

APPENDIXCCHAPTERFOUR C1 ResearchQuestionnaire 85

APPENDIXDCHAPTERSIX D1 D2 D3 Buyer&ProviderAnalysis CombinedAnalysisHighLevelVariance Question6.8WrittenResponses 104 110 115

APPENDIXECHAPTERSIX E1 ScenarioPlanningKeyActions 120

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