Does size really matter that much anymore? by Chris Payne
Wednesday, February 25th, 2015
It used to be size that matters. The bigger you were, the more advantages you could deliver. I am of course talking about organisational size, (if you were thinking of anything else, put your copy of 50 Shades aside for a moment and take a minute to read on). Size and scale in the context of an FM or facilities management contract supports better resource utilisation, more purchasing power and theoretically, better value for money. It is why the industry has typically seen high levels of mergers and acquisitions as FM providers sought to acquire market advantage and share, keeping shareholders content through cost reductions while adding capacity and capability for their customers.
But we’re now entering an era where agility is becoming the essential delivery capability area for facilities management. Size, it seems, isn’t everything. It’s what you do with what you have that Counts.
Where we used to talk about multiskilling and continuous improvement, our focus is now on agility. Agility determines how fast we can adapt to external changes, deploying our resources (people, technology and process) to target new areas of improvement and innovative service delivery. It recognises that imposed change and disruption can come from multiple sources and that being in a continual state of readiness facilitates a positive response to whatever conditions the market dictates.
This agility is supported by a combination of factors, such as:
- Analytics and embedded Business Intelligence (BI) platforms.
- Improved workforce Management.
- Enhanced workflow monitoring.
- Flatter organisational structures.
- Devolved authority and empowerment.
- Improved communications.
- Collaboration and integration approaches.
- A continual focus on innovation and improvement.
For larger publically listed organisations, these factors can be difficult to deliver on, having accumulated an organisational hierarchy over years, as well as established protocols and governance gateways. Similarly, where technology platforms are required, the cost of implementation can be prohibitively expensive requiring significant investment in infrastructure and change costs. Resultantly, smaller and privately owned organisations are raising the stakes within the FM marketplace and are often seen as being more innovative and ready to change. From the ability to differentiate their core service offering, through to the early and rapid adoption of new business models, smaller and less controlled organisations are taking advantage in a marketplace that is fixated on newer, faster and better. Scale, in many ways, is now becoming less important, being overtaken by agility and innovation.
This is supported by industry insight on mergers and acquisitions from Grant Thornton, who note that some of the largest listed FM providers within the UK have suffered from falling share prices and adverse news headlines over the latter part of 2014. This, according to Grant Thornton, is leading the way for larger private organisations to create a stronger foothold in the marketplace.
It is early days for any significant change in fortune for the larger listed FM organisations, whose employment base, market activities and ability to absorb risk on larger projects means that there will continue to be a demand for their expertise. Yet the pressure from customers for more value, coupled with the influence of smaller and more agile competitors is placing an expectation on the entire industry to be more innovative and, most importantly, to reduce cost.
For the last few years our collective focus within the FM world has been on innovation to deliver cost advantages to customers, but the reality is that coming up with ideas isn’t that hard. The industry is blessed with some very bright people who are continually coming up with new ways of doing things, more effectively and with greater benefits to end-users and occupants. It is putting these ideas into place that really causes problems.
Embracing agility aids in the implementation of innovation and facilitates change, which in turn reduces cost and provides a continually adaptive approach to service delivery. And best of all, it is something that can be done by all organisations, large or small and rolled out to meet the needs of a single service delivery contract or all of them.
Now where did I put my copy of 50 Shades?
 Wall Street Journal; How Can Small Businesses Compete With Big Competitors?; Dec 25, 2013. http://www.wsj.com/articles/SB10001424052702303562904579228501899410702
 Grant Thornton UK LLP, Insights into FM – Issue 12, M&A update, Q3 2014 (http://www.grant-thornton.co.uk/Global/Final_FM_Quarterly_Update_Issue_12.pdf)
 Cost remains the largest factor that drives provider selection in FM. A 2013 Sheffield Hallam University (SHU) report commissioned by support services organisation Interserve, highlighted that 94% of bids and tenders for FM contracts are appraised on cost. Second to cost, innovation is the next biggest consideration (86%) for the selection of an FM Provider.
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Chris works in a consulting capacity to help facilities management providers embed more efficient ways of working within their delivery contracts. With a strong focus on innovation, he contributes to improvement activities through the development of frameworks, software systems and technology to capture and incorporate new ways of working that saves cost and enhances operations.
With over 25 years of experience working on the built environment, Chris has comprehensive insight into the construction and maintenance of facilities within a number of industry sectors, including: social housing, critical environments, defence estates, food processing and commercial office space. In recent years, through the successful delivery of consultancy projects, he has helped clients secure more profitable work by moving beyond standard delivery approaches to find new ways of adding value to facility end-users and occupants.
Based near Glasgow in Scotland, he travels extensively to support an international client base.
Chris Payne is a founding partner in the multi-disciplinary Global Facility Management Alliance. This consortium of FM consultants facilitates broader strategic support for larger clients and projects of greater complexity.
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