IFM vs single service
Any savings made in the purchase of single services from several suppliers can eventually be cancelled out by a large ordering organisation and sub-optimisation between services. Moreover, it leaves the customer with responsibility for the operational outcome. It is also often harder to adapt the service operation to changes in the external environment. Perhaps this is why integrated total solutions are gaining ground.
Facility Management (FM) is a relatively young industry, originating in the provision of individual services such as cleaning and security. An IFM provider (Integrated Facility Management) on the other hand takes total responsibility for a large number of services – and not only for performing them but also developing and continuously adapting them to the customer’s changing needs.
“The customer has a distinct role as an ordering client and makes the strategic decisions, while as an IFM supplier we provide a cohesive service delivery, deal with administration, operational management and give strategic support,” says Jens Rasmussen, SVP Business Development at Coor.
However, Jens does also stress that different solutions suit different companies. Generally speaking, the greater the need for change, flexible solutions and development of the service, the more there is to be gained from an integrated total solution.
“For companies with relatively static organisations, outsourcing of individual services may be ideal because it does not require so much change in the customer’s organisation. At the same time though, the customer has to bear in mind that as the number of suppliers increases, they will be spending more time on negotiations, administration and operational management than they might have thought.
Companies that buy individual services from a range of suppliers also often have a broad ordering organisation, with each department being responsible for its own supply chain, and purchasing for and dealing with its own specific area. No one is responsible for the big picture and services are delivered and followed up area by area. There is a great risk of sub-optimisation.”
What are the benefits of integrated total solutions?
“There are serious savings to be made for customers who buy IFM. Above all we can take advantage of interdisciplinary competence from different services and allocate personnel where the need is greatest. We also have shared management for all services rather than one manager for each. Also, the customer needs fewer ordering parties and they spend fewer resources,” says Jens.
It is simpler to negotiate one contract rather than 20 different ones, to have a single contact rather than several in the day-to-day running and to reach strategic decisions after reading a compiled delivery summary. The customer saves time and resources that can be spent on developing their core business instead. Another advantage is that an IFM provider can often offer its staff better career opportunities and the chance of job rotation.
“Because we have control of the big picture in an IFM delivery, we can quickly and flexibly adapt the assignment to the altered needs that arise. No one wants to lock themselves into a large, complicated contract over a long period and then be left powerless when their operation or even their industry changes. As an IFM provider we’re supplier independent, and we’re accustomed to finding the right production mix which can vary over time. All our agreements have a flexible price model. Locking our agreements is not profitable for us or our customers,” Jens explains.
Apart from the ability to choose single services or integrated total solutions, a third option is also available – buying a number of combined services from the same service provider. This tends to work well for companies that are unable to take an integrated approach. Those kinds of contracts are often optimised in the purchasing stage, but lack the co-ordination and flexibility of IFM.
“The more responsibility we are given, the more ideas for development we can put back into the assignment. With single services you focus entirely on the delivery itself. We focus on and are responsible for the overall results. There’s a big the difference.”
Developments in the Nordic region?
In the UK, the trend towards broader service procurement began back in the 1980s with the breakthrough of PPP (Public Private Partnerships) as an alternative for funding the building of schools, hospitals and certain infrastructure. In Norway too, PPPs have driven development towards more integrated total solutions.
In both Finland and Denmark, procurement has predominantly focused on single services. In Denmark a large provider of single services has steered the industry’s development in that direction, while Finland faced a greater need for cost-cutting when the Soviet Union collapsed. At the time the market was not ready for anything other than single service delivery, and that has set the standard up until now. However, here too interest in IFM solutions is increasing. Reducing the number of suppliers is a clear trend right now in all sectors. In the same way, medium-sized companies that used to buy combined services now increasingly choose IFM.
“I am convinced the IFM model will be increasingly common throughout the Nordic region, both in the public and private sectors and in companies of all sizes. It’s a trend that will continue. As the industry matures, customers will place higher demands on what is delivered, how it is delivered and above all on the result of the deliveries,” Jens Rasmussen concludes.
Do you have any questions or would you like to know more?
Contact Jens Rasmussen.