Last year, Planon partnered with Panorama, a consultancy firm dedicated to the facility management ecosystem, to better understand the trends disrupting the facility management service provider industry. Over coffees and across board rooms, Panorama discussed with CEOs, CIOs and COOs the issues most relevant to business leaders at multinational, integrated facility management service providers.
As this research was consolidated into a report, a few key findings emerged. This blog takes a look at two of these findings. And it’s interesting, because at first they seem contradictory to each other.
Key Finding #1: Investment in technologies helps to differentiate from competition
The average profit margin from providing hard services is between 5% and 6%, while the margin on soft services is even lower at 2% to 3%. To stay in business, Integrated Facility Management (IFM) service providers need to compete on something other than price.
Mobile field services, Internet of Things (IoT), and other emerging technologies including Artificial Intelligence (AI), drones, robots, big data and blockchain can dramatically change not only the way service providers operate, but also how customers perceive and expect innovation from service providers.
Being able to adopt these technologies, incorporate different data sources, turn them into integrated FM solutions, and include them in core business processes is a key success factor to drive additional value and develop an offering that differentiates you from other competitors in the market.
Key Finding #2: Efficiency and productivity improvement is generated through standardization and automation
Interestingly, all service providers included in this research noted the importance of a core software platform. These CEOs acknowledged their need of a single platform to manage all operational processes and data related to contracts, service management, and the internal organization to enable them to stay in control.
Such a software platform should include rich functionality and the ability to support core business processes by interpreting operational data from various sources into useful and strategic information. This platform needs to seamlessly integrate with legacy systems, IoT platforms, data lakes, business intelligence tools, mobility, customer portals and much more. It also needs to support industrialization and digitalization in both heterogeneous and dynamic environments.
As one of the service providers interviewed said, “Ensuring that everything rests on a central database increases operational efficiency.”
Contradiction? Not really
It might seem like the concepts of differentiation to stay competitive – doing something different, being the first to use specific technologies – and standardization are complete opposites. However, standardizing your differentiators can result in even greater returns.
Professional service providers can use standardized tools without losing their competitive edge, because the true differentiator will be how the tools are used. A platform like Planon’s will interpret operational data – for example, that an asset is projected to break down within three months – into actionable information based on different business processes.
If a service provider is evaluated based on avoiding down-time, it makes sense to alert the customer and fix the asset quickly. If the current contract is only based on billing hours, it makes more sense to allow the asset to fail before repair. This will change per contract and per company. Each service provider can benefit from an operations platform that standardizes and automates their unique business processes and offerings.
To read all the findings from the research, download the joint research report with Panorama.