Continued outsourcing entails much evaluation

The road to outsourcing still looks like the Autobahn, with organizations accelerating to move ahead of escalating facilities costs and demands for better service, despite continued downsizing. But I'm finding more and more financial and facilities executives listening to the message that they need some fine tuning and advice on road conditions before pulling onto that high-speed roadway.

Both the advice and the fine tuning are coming by way of consulting services that we are being asked to provide to assist facilities and financial executives in understanding everything that's involved in the outsourcing decision. And even what their options may be.

This looks to me like the second phase of the facilities outsourcing movement and in my opinion -- based on the hundreds of telephone calls I have responded to and meetings I have attended with organizations considering facilities outsourcing -- it is a sign of a maturing process that will serve both buyer and seller well.

I have begun insisting that there are two things every real estate and facilities executive do before making any final management recommendation and certainly prior to entering into the selection process.

First, draw up a clear statement of objectives in three areas -- human resources, business and service. Overlay on that the organization's core competencies -- the characteristics that make a business unique, distinguish it from competitors and provide a distinct selling proposition. Exploiting these competencies drives an organization's competitiveness, according to most analysts and students of the business scene, and a "focus on core" has become the mantra of most executives we talk to in America today.

Comparing the organization's core competencies against its facilities' objectives tells the executive just how quickly -- or indeed if at all -- the outsourcing option should be pursued. The answer to the question, "Is there something about our facilities services that they have to be provided by an employee of this organization?" drives the next step.

If there is no dependency on employees providing facilities services, clearly the goal to outsourcing should be pursued or considered. If, just as clearly, there is a dependency on employees providing the services and a potential adverse impact on core competence, a second look at the wisdom of outsourcing is warranted. Dependency here is the operative word, not impact, since that may be just what you are trying to achieve.

Second, make a clear and thorough assessment or evaluation of the work processes in the facilities management organization. How is the work accomplished, who does it, is there duplication, can it be consolidated, what are the discrete steps in each phase of the process, how is work really performed here? In my experience it is rare for an organization to be able to perform this necessarily critical oversight of itself and we find ourselves being called on increasingly to perform facility assessments or audits.

If there isn't a defined process, initiate one. This is the key to benchmarking, which will measure your facilities operations against others -- preferably the competition's.

It also provides a way to evaluate an organization's structure, practices and policies, resources and systems against its own stated objectives in areas like industrial hygiene, facilities engineering, maintenance and operations, security, construction and administrative services.

Our counsel to companies has been -- and continues to be -- to get an independent evaluation, or audit, of the work processes by a facilities management company with a wide range of internal skills, which in turn, can be used to assess your operation. Similar to a financial audit, it compares what you are doing to your own standards and to industry standards and paves the way for a reengineering where that is called for.

These are all important steps for a facilities director or financial executive who is under pressure to maintain service levels while cutting costs. The work may reveal that outsourcing is not an answer at this time and that the company's processes and capabilities just don't lend themselves to the outsourcing model. If so, you've made that decision from an informed position.

On the other hand, it may turn out that outsourcing is an option. In that case the accumulated information turns out to be the basis for selecting a business partner, chosen under the same criteria as a legal or financial adviser, who is focused on reality and geared toward exploring the state of the practical with the financial executive and the facilities department.

We have seen several factors become key to the decision by executives to proceed with the outsourcing process. Assuring quality of service and the sensitive handling of the client's human resources have emerged as keys to assuring companies and institutions that their decision to outsource will benefit all parties.

A positive response to both issues is behind a sound business case for the outsourcing of services. We know that the two -- quality service and human resource sensitivity -- are more tightly tied to each other than any other elements in the outsourcing algorithm.

Companies that provide outsourcing services reduce expenses for clients by helping to reengineer processes, staffing correctly, providing market-driven compensation and benefits, providing just-in-time specialized skills, taking advantage of bulk buying and using the expertise of staffs across many different disciplines. These staffs are made up of professionals who have joined the outsourcing services company from other companies who have become clients.

There is a relatively simple, but profound, truth driving the productivity enhancements which service providers such as ourselves can legitimately claim -- that simply by going to work in an environment where they become part of the core competency of the service provider rather than the overhead of the former employer, the employees' imagination and inventiveness skyrocket and the results get passed back to the client organization.

At the heart of real estate and facilities management's drive to outsource is the need to match the efficiencies of functional management across the rest of the company. The carrot, related to me in countless conversations, is the promise of the 10% to 30% cost reductions the financial executive sees at the end of the outsourcing tunnel.

In my opinion, the move by institutions and corporations to step back, test multiple solutions and call for a professional level of support for their fact-finding process from management services companies marks a maturing in how facilities and real estate functions are managed. I believe it is the second phase of the outsourcing movement and that it will drive even higher levels of satisfaction for both buyer and seller in the years ahead.

Ira L. Williams II is senior vice president of the corporate facilities management group for Axiom Real Estate Management Inc., Stamford, Conn.

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