Nate Erpestad, discusses next generation Integrated Facilities Management (IFM) programs, what clients are most curious about when embarking on a next generation program and some unique approaches certain companies are taking to solve challenges as programs mature.
When we talk about a next generation IFM program, it is a commonly used term that can often mean a lot of things. I think the way we use it when speaking with clients, and the way they often use it when speaking about their programs, is when your contract is up.
Sometimes renewal can take a couple of forms. It can be a simple extension under the same terms, where nothing really changes. Generally, I wouldn’t call that a next generation program. That is just a simple extension. Versus if you say, I’m happy with my relationship with our partners and they are doing a great job, but there is a lot of things I would like to change. The objectives of your organization have evolved, you have learnings, and the things that you put in place as part of your first gen program, are now working. Now, there are other matters you would like to address, or stakeholder requirements that you need to meet. Many clients will take that to the market, or sometimes they will simply renegotiate with their incumbents. Either way, I would consider this a next generation program.
Clients are curious about several things which are common. Sometimes, it depends on what is going on in the broader macroeconomic or business environment. Oftentimes, this can be industry or even client specific. It is usually some combination of: what does the supplier market look like? What are we seeing from suppliers? What are our peers in the same industry doing? Or what are other programs similar in nature to ours, from other industries doing? And are they doing things which we might be able to learn from?
Then, there is probably a third area – general contracting practices and governance practices. There are things that we are seeing across the industry for many next gen clients. Those types of decisions are ones that they have made long ago, and now they are exploring what offerings exist in higher value, high expertise areas of support. In many instances, these tie directly to corporate objectives that go all the way to the top of client organizations. Sustainability is a common example these days.
Clients always have ongoing commercial targets. They are always looking to control costs, oftentimes to reduce costs, to ensure that commercial models and terms in place that are fair. Fundamentally, the question is: can we have a model that is relatively simple, but also drives the right behavior? A model that gives providers a fair profit while giving the client what they are looking for at a fair price. This includes how to factor KPIs or performance targets into the model, and people think about this on both sides of the client provider relationship when they are working on day-to-day activities and taking decisions.
But it also includes the question, can we simplify? These are highly complex, often decentralized, global or multi-regional relationships that have all kinds of layers of potential complexity. If there is a contract in place that is going to add to rather than diminish that complexity, then, it can quickly become something that is quite challenging. Therefore, ensuring that, wherever possible, we are streamlining and simplifying, making sure that there are opportunities to surface that complexity when we find it, and that there are good governance practices and forums to address these issues when they come up.
