1. Align EFM with your core business: Specify the goals you want to achieve through outsourcing
Many companies’ initial motivation to outsource is simply to understand what’s in their portfolio and how they can run it more effectively. Effectiveness can relate to sustainability, safety, compliance, uptime, productivity, quality and/or cost – among many other things. Whatever your motivation, it’s important to understand what’s driving it so you can design your outsourcing model and contracts accordingly.
You should be able to articulate the relationship between EFM and the core business. When an outsourced EFM operating model is tied to a company’s goals, it can deliver great value. For example, a retail bank wanting to change its image or do more trade in branch might outsource the upgrade, operation and client services delivered to its network to bring about a new customer experience. A life sciences company on the edge of the patent cliff might outsource lab services to increase speed-to-market with streamlined specialist operations, as well as cut cost quickly.
2. Get stakeholder support: Engage people at all levels of the organisation
Ask yourself: Is the Chief Executive Officer (CEO) on board? What about the local teams and internal customers who will work closely with the outsourcing provider and their suppliers?
Lack of buy-in is one of the most common contributors to failed outsourcing: make sure you've got broad support early in the process. You also need to make sure those charged with delivering and managing the contract are committed to seeing it through and can stay focused, determined in the face of resistance.
3. Gather quality baseline data: Know where you're starting from to measure how far you go
A solid foundation of baseline data will help you clarify scope, cost, service levels and required resources along with the best potential suppliers. Quality data puts you in a position to determine the certainty of the commercial proposition, the simplicity and speed of implementing change, and quantify results.
Having said that, a lack of data is most definitely not a barrier to outsourcing. It simply changes the initial contract focus. Many organisations don’t understand their portfolio when they first outsource and choose providers who can help them achieve a level of clarity – what they’ve got, how much it costs to run, how the space is occupied, and so on.
4. Be flexible: Expect the contract to change
As your business and its priorities evolve, sometimes at speed, so will the scope of your EFM contract - it’s likely the buildings and assets in your portfolio will need to perform different functions or support different goals.
The scope of your contract will also change as your outsourcing journey progresses – for example, year one may be all about cost saving and establishing the EFM organisation, year two more focused on gathering asset data to inform Capital Expenditures (CAPEX) or streamline your (equipment) supplier base, and year three on enhancing facilities to improve customer experience.
You can minimise the disruption of change by putting flexible agreements in place along with a governance structure (see tip eight) that evaluates needs and priorities on a regular basis.
5. Define responsibilities, then let go: Empower your providers to deliver results
A primary advantage of outsourcing is that it allows internal teams’ privilege of focus, shifting their mind set from tactical to strategic. To enable this shift, roles and responsibilities must be clearly defined up front and openly communicated to all stakeholders. Once you’ve established who’s in charge of delivering what, it’s vital to step back and let go – with everyone focused on their job(s).
6. Measure success along the way: Understand the difference between what vs. how
It’s important to measure what you want to achieve against your business goals rather than how the supplier works. Keep performance metrics simple and focused on desired outcomes. Build in quality assurance requirements but don’t burden either party with large numbers of complicated measures. It's easy to get caught up in data, which can cause as much confusion as enable insight.
7. Incentivise the right behaviours: Establish a culture of partnership and achievement
Develop an incentive program that encourages your provider and their suppliers to model behaviours to maintain focus on achieving results, balance rewards and penalties and to motivate people.
8. Establish and maintain clear governance: Give everyone clarity of purpose
The governance process provides a formal structure for clear communication, from frequent operational to annual strategic reviews. It engages stakeholders and defines their roles and responsibilities, and is an essential part of the contract to ensure parties stay connected on the right subjects at all levels of their organisations.
9. Allow for strategic programs: Maximise the benefits of outsourcing
The outsourcing contract between you and your provider is, of course, based on the daily delivery of services to support the people, processes, and plant – meaning everything from the facilities, buildings, assets, critical environments, production spaces and grounds that make up your portfolio - in your business. However, some of the most significant benefits of outsourcing come when the relationship with your provider evolves from supplier to partner. Your EFM provider is in a unique position to support integration activity around acquisitions and dispositions, portfolio changes and major projects.
10. Commit for the journey: You'll be spending a lot of time together
The outsourcing of EFM is not a transactional decision. A single contract typically runs between three and five years, while successful partnerships can run for multiple contract terms spanning 20 years or more. Like any relationship, you'll experience good times and bad. That's why it's important to choose a partner who has skills and experience, and is also a cultural fit for your organisation.
Contributed by Johnson Controls.