Deal or no deal

 

THE IMPORTANCE OF INNOVATION
Whether the FM service provider is offering a single specialism or TFM package, the IWFM Market Outlook report(3) notes that innovation is crucial.

“Innovation is definitely a requirement of a single service agreement,” says Zoe Watts, Commercial Director, Vacherin (catering specialist). “The core benefit of a single service contract for a client is the specialist expertise the provider brings to the table. As a catering specialist, Vacherin’s role is to think outside the box and continuously improve our offering. Single service suppliers should never rest on their laurels. Innovation is a central part of remaining competitive. Once an organisation becomes stagnant, clients will go in search of something new. Providers should continue to strive for a best-in-class benchmark.

“How innovation should be measured depends heavily on what is being offered. If it is a creative new menu, for example, results can be measured by sales in a restaurant, customer uptake and feedback. Benchmarking against other suppliers on the high street is also a good measure for how well the innovation is working for the client. Key performance indicators linked to innovation are often integrated into the contract with the client from the outset. Clients want to know there’s futureproofing in place for the services being delivered to their business.

“Continuous innovation really is the only way to compete in a crowded market. With so much competition, the focus has to be on continuous development to stay ahead of the curve. With technology constantly evolving and client expectations rising, every service provider needs to spearhead development and innovation. Those that stand out will be the ones that are proactive in their approach and not reactive. It is creativity mixed with expertise that makes a business shine.”

James Dunnett, IT Director, EMCOR UK, argues that the benefits of innovation in a TFM service must be tangible and measurable. “Innovation should be included as one of the key performance criteria in any industry contract where the relationship between the client and provider is more collaborative and less transactional,” he says. “Having said that, it’s important to look beyond the semantics of innovation and continual improvement – they are one and the same. Both culminate in a single organisation, or group of organisations, seeking to add value to their existing services or products.

“This means it’s important not to view innovation solely as a cost-saving tool that a supplier must generate over the life of a contract, but rather to look holistically at what this investment will bring in terms of benefits to all stakeholders. Innovation in this sense requires collaboration between the client and the provider to achieve better results, whether that is in customer engagement and relationship management, or processes, systems, logistics and so on. This, in turn, requires all parties in the TFM value chain to work together to create shared values in order to ensure that the innovations are both relevant, impactful and successful.

“In summary, quantitative measurement should track the benefits that the innovation will bring. These should be quantified in a range of ways, including financial and non-financial quantitative measures as well as qualitative improvements.

“Innovation benefits should, where possible, always focus on driving from qualitative to quantitative non-financial and on towards quantitative financial (cost savings or cost avoidance). In other words, focusing on agile solutions to deliver value and advantage across the entire value chain, sustainably and economically to the benefit of all stakeholders.”

THE FUTURE OF TFM
Jeremy Campbell, Director of Business Development, EMCOR UK, summarises how he sees TFM contracts developing over the next few years.

“We expect TFM will continue to be seen as a sound outsourcing principle and service option for UK business. However, if current trends are anything to go by there will be key differences in the quality and flexibility of these contracts. This trend should also see a growth in the split between long-term collaborative partnering agreements on the one hand, and short-term TFM lowest-cost service bundles on the other.

“Long-term collaborative TFM would include things like:

• Stronger support from centralised centres of excellence, which will also be key to ensuring that best practice, innovation and shared learnings can be delivered to clients.
• Use of technology to ensure delivery of services is efficient, performance is transparent and that information is available for clients to make good data-led decisions.
• A drive towards collaborative business relationships to allow for a flexible delivery model that can adapt to the needs of an ever-changing world while still creating value.
• An increasing focus on workplace and wellbeing, with the understanding that a happy workforce leads to productivity improvements for the best possible delivery.

“Lowest-cost efficiency TFM, on the other hand, will see companies:

• Treating TFM as a homogeneous commodity, and as such they will seek to bundle multi-service channels together.
• Seeking lowest price through the TFM strategy.
• Have a go-to-market mentality every two to three years. This also means that contracts of this type will be transactional in nature.

“Whichever strategy, it is clear that contracts will have value for money as a key component but will not compromise workplace productivity and wellbeing, as these elements will undoubtedly enhance performance and delivery effectiveness.”