Given a more positive outlook for the economy and the strength of M&A activity in the FM market, you might be forgiven for thinking that things were starting to get easier.
While the sector remains robust as larger players acquire their smaller counterparts in a bid to provide complementary services to clients across an expanding number of sectors, certain issues remain.
Expansion often brings greater business complexity. Facilities management providers are operating in a highly competitive environment; tight margins are coupled with the pressure to provide more value-added services to retain contracts and increase overall profitability. This is a numbers game. And if you don’t have your finger on the pulse you’re likely to suffer.
You can picture the scenario. Operations managers are working hard on sites across the country, delivering great service and keeping clients happy. But underneath they’re over-servicing contracts, re-chargables are not being attributed and procurement is a little loose, to say the least. Over time, those contracts are not as profitable as first thought and, at worst, actually operate at a loss. When margins are tight it’s easy to haemorrhage money. With this in mind, FM providers are turning to business intelligence (BI) tools and integrated systems to help them shape up and get ahead of the competition.
A big problem that still prevails in the sector today is the reliance on multiple disparate software systems across the organisation. This lack of integration creates a real headache for FM firms as invaluable information that can help run the business better cannot always be easily accessed. Days are often spent pulling reports, or a client chases for an update on figures and there is a mad scramble to oblige in a timely fashion, giving an outward appearance of professionalism and control.
But FM companies that really excel as they expand and continue to effectively service their clients have solid processes and integrated systems in place, coupled with business intelligence tools to underpin their successful growth. This means that staff are not rekeying information multiple times, saving time and effort. There are fewer errors and information is available faster, which means it can also be analysed and acted upon faster. Vital if you’re going to win in the FM business; running a highly efficient and tight ship, along with the ability to have instant access to information, is essential to have any chance of making intelligent, timely decisions.
Costs and KPIs
In any industry, FM or otherwise, it’s also how you put the information you have within your business to good use. Today’s mobile technology makes it possible to access BI dashboards on the move, slicing and dicing data, dissecting the profitability of contracts, finding out where profit drains are, drilling down into the detail of problem areas and then looking to resolve them.
FM providers can use BI to get instant feedback on the profitability of a site or contract. They can see the margins it’s making, how resources are being used against contracts, expected hours versus actual hours against revenue, the services received but not invoiced and splitting revenue down by different services — all this information by division, region, site or contract.
Profitability could be hit for all manner of reasons. As mentioned earlier, it could be because of over-servicing clients, not recharging every item accurately — or even worse, the project was not costed properly in the first place. Let’s face it — even in the best-run companies problems occur. The key is to be alerted to the fact as quickly as possible, find a solution and learn from the mistakes. Understanding where the loss-making contracts are occurring as soon as possible means that this can be presented back to the client in a bid to renegotiate the contract. Where this is not possible it may be necessary to terminate a contract that is no longer viable in a bid to improve profitability.
With the systems, reporting and business intelligence in place it means providers can accurately measure exactly what is happening and recognise trends, focus on solutions and reset course if necessary. This knowledge and experience means FM providers can leverage their experience and sharpen their offering when quoting for similar contracts too, strengthening the effectiveness of bid management teams in the process.
There’s no truer saying than “cash is king”. BI dashboards alert providers to cash flow issues and clients who are not paying their bills on time. It can show the cash collected by contract and how fast it’s being collected. Keeping a close watch to make sure recurring invoices are being automatically billed every month and that credit control is getting the cash back in from contracts is paramount. When you have wages that need to be paid each week you don’t want cash flow to be impacted.
The same applies to procurement. A major area of importance, it is critical to leverage buying power by having everyone adhering to a structured workflow and dealing with preferred suppliers. Business intelligence is helping providers know exactly what procurement costs are associated with which contracts, track purchases against budget and understand the percentage of total costs. This means that it can see which contracts are the most expensive and that any rechargeable costs are being invoiced in a timely fashion so that one contract isn’t putting cash flow at risk. With business intelligence being able to look across all systems and highlight any lurking problems, it is possible to address them before they become magnified.
Acquiring new business
In an acquisition-hungry landscape you want to be sure that you have a solid methodology in place to bring a new business on board. Check everyone is using the same systems, being measured and monitored in the same way, and ensure that the acquired company is contributing to the overall business success in the way that due diligence suggested. But, as the acquiring company, the FM provider may not want to move everyone over to one system straight away; it’s often a delicate balancing act. In this situation BI tools can be used to easily import data from disparate systems into dashboards so the FM provider can really start to understand what is going on in the acquired company before making changes.
The more that the use of BI is ingrained within the business the more effective the FM provider becomes because the focus turns to analysing the data and asking the right questions. How can we improve, what areas are the acquired business excelling in and what can we learn from them? How can we better integrate their offering into our whole FM portfolio of services and is there any better way we can deliver these combined services that add value to the client and our own business? Having access to meaningful information means that the FM provider is more inclined to analyse what they’re doing and how they can further differentiate themselves from their competitors.
Building client relationships
When you can access information in an instant, the next step is to become more proactive with clients. This means providing live, graphical data on contract status for each site, from the number of calls being resolved to granular detail on what orders have been placed with suppliers and the quantity and cost per item, so both parties to drill down into the detail.
Pushing information out in this way, through interactive real-time dashboards, is not only professional. The transparency can help to build better business partnerships — essential considering that contract loss is one of the biggest risks. Fostering stronger relationships with clients and letting them see they can totally rely on your service provision means they are less likely to retender the contract. It also means FM providers can spend more time creating innovative propositions that better meet client needs. This can only strengthen their position as they grow their business, especially with increased competition for new contracts.
Business intelligence helps FM providers to take the guesswork out of their decisions and get their business in top shape, making it more effective as a whole. It’s about being agile, having the edge on the competition, responding to strategic trends as they occur and staying ahead of the game. Information is power — when it’s made meaningful. Having the right information at hand helps to drive better decision-making. Better decisions about how to improve contract management, better responses when tendering for new business, and overall better innovation in service provision and delivery. It’s decisions like these that ultimately will take a FM firm from the realms of ordinary to extraordinary in the value they ultimately deliver to the client.
when tendering for new business, and overall better innovation in service provision and delivery. It’s decisions like these that ultimately will take a FM firm from the realms of ordinary to extraordinary in the value they ultimately deliver to the client. – See more at: http://www.fm-world.co.uk/features/feature-articles/fit-for-business/#sthash.HfQhK3R2.dpuf
