Market Pulse: These days facilities management is about a lot more than keeping the lights on.
According to the chair of national industry body Facility Management Association of Australia, Kristiana Greenwood, with human and robot collaboration predicted to be commonplace in the workplace by 2025, technology is one big driver of change in the industry
She says although this “hasn’t really hit the FM industry in a meaningful way as yet,” she expects it will provide both challenge and opportunity for the industry going forwards.
In the shorter term, Greenwood says FM companies need to build or acquire data analytics capabilities to “complement excellence in service delivery.”
“FM will widen its scope to ‘Anything as a Service’ (XaaS) business models, which, enabled by technology, will accelerate growth in remote real-time services.
“This will attract new firms from outside the current FM space and bring in more competition.”
Shifting demographics are shaking up the industry in a big way
Changing demographics of the workforce are forcing further impacts on FM, Greenwood says. The influences are coming women, millennials, and an older workforce. All of this prompts different service requirements than in the past.
“A more mobile and flexible workforce will need to be supported in complex and varied settings,” Greenwood told The Fifth Estate.
“The new generation coming into our industry is a challenge because in todays workforce, the millennials and Gen Z are looking for more freedom at work and flexible working patterns. They want the ability to innovate and they want bright, open co-working spaces with plenty of amenities, quirky extras and innovative buildings.”
Chris Marrable, director of strategic consulting at Cushman & Wakefield, says it’s becoming more difficult to hold the engagement of occupants when there are “so many distractions” in the modern workplace, including personal technology devices.
“The challenge is to create a rich experience that drives employee engagement, and this requires continual innovation. You can’t
just maintain the same level of service anymore.”
Cushman & Wakefield has “some fantastic people in workplace management roles, going the extra mile to make occupants happy and provide a satisfying experience.” But what limits workplace services from reaching its potential may be the way it is procured.
“It’s often a very rigid commercial framework for what should be a much more intuitive and creative process.”
FM providers sign up for a contract for three or five years based on services they plan to provide on day one “but by year five the expectation is significantly higher and there may be no mechanism to reward people for continual improvement.”
He believes this is partly the reason why coworking spaces are so attractive to workers who pay as they go.
“They get that buzz and feel a part of something, and pay for services on tap, whether it be beer or a cool app.”
“That sector is really putting pressure on the traditional office sector to do more about experience and engagement.”
Big tech giants are at the forefront
A more fragmented facilities management and work environment services market is emerging, where a range of models offer different levels of experience; from coworking, to global workplace services teams in larger companies, to the more traditional FM model focused on keeping the lights on and manning the front desk.
He says this isn’t necessarily a bad thing and is a sign of a mature market. The big tech giants are generally at the forefront of this trend with sophisticated inhouse workplace services teams and the capital to support them.
He says employers that continue to push the envelope on workplace experience are keeping occupants happy and retaining clients.
Competitive under pricing driving poor performance
Kristiana Greenwood says that the industry currently faces a culture of competitive under pricing thanks to the spike in mergers and acquisitions in the industry and new market entrants.
“Competition is rife,” she says.
“We see competitors dropping their prices to undercut each other across a range of services both hard and soft, and this can result in poor delivery quality.”
She says there’s currently an opportunity to educate clients so that they understand the lowest price is not necessarily the best option.
“FM service providers have an opportunity to show other value to their proposals rather than a cheap price and service delivery.”
It will soon be harder to get away with poor performance in facilities management though, according to Martin Leitch from FM Scope.
A new series of recently published international standard, the ISO 41001 Facility management – Management systems – Requirements, which is soon to be adopted by Standards Australia.
Leitch says this will mark the first time the industry will have a benchmark against which their performance can be measured – a certifiable standard that businesses can use to demonstrate their capability and quality of service.
“I believe this will raise the quality of service delivery across the whole industry and potentially identify those poor performing service providers,” he told The Fifth Estate.
Consolidation with the winners likely to offer more than just running the building
Greenwood says that the market is consolidating, and it’s likely to accelerate because “future skills requirements” are prompting more partnerships, collaborations and mergers and acquisitions.
“A value proposition shift to business productivity will move the focus from cost management to value creation,” she says.
“Successful suppliers will become client advisors on business productivity.”
It has been predicted that the market for integrated facilities management services will increase from around 10 per cent of total global outsource FM market to around 14 per cent, with APAC overtaking North America as the fastest Integrated Facilities Management growth in the world by 2025, according to Greenwood.