QUANTOS SaRL - Survey Uncovers Significant Weaknesses in I-FM Solution Provider/Customer Relationship

Survey Uncovers Significant Weaknesses in I-FM Solution Provider/Customer Relationship

A new survey conducted by Frost & Sullivan, taking the pulse of the European integrated facilities management (I-FM) market, pegs revenues already at more than $10 billion per annum.

The results released indicate that corporate endeavours to optimise flexibility and profitability through the externalisation of non-core activities, and enhancing efficiency in such contracts will be vigorously sustaining the enormous double-digit growth rates in this market.

Following nearly 200 interviews about outsourcing strategies and opinions with key FM decision-makers in the UK, Germany, France, Italy, Scandinavia and Benelux, Frost & Sullivan's end-user survey cites poor service satisfaction levels as one of the most alarming failings of current I-FM service providers.

Players in the European I-FM market must provide a broader base of understanding about the advantages derived from outsourcing. In addition to exposing a high level of customer ignorance over who offers I-FM services, Frost & Sullivan's findings emphasise the general lack of end-user awareness of the potential of outsourcing for their operations, such as improved efficiencies and cost reduction.

The study's most poignant observation underlines the fact that countless opportunities remain unexploited and key expansion strategies are not being implemented by FM providers.

Most notably, difficulties have arisen from over-ambitious contracts being signed, and subsequent problems arising in areas such as service range, reliability, reactivity, communication and geographic coverage, especially relating to local presence.

Still, the general mood in the I-FM industry is ebullient. The market is showing hopeful signs of beginning to overcome many of these problems, and sentiments are steadily improving in the battle for end-user satisfaction. Furthermore, Frost & Sullivan is confident that improvements, both in terms of perception and actual service performance, will become apparent over the coming years.

The survey notes: "I-FM offers successful suppliers a chance to grow revenues through the provision of long term-contracts, often at high margins. Moreover, the penetration of I-FM services is low (the great majority of outsourced work takes the form of single-service contracts) which provides plenty of room for further growth. By bridging the gap between supplier and customer, the I-FM market can accelerate its progression."

Although numerous I-FM providers can claim to be pan-European in their service coverage, they each have particular strength in just one region. Possibly the only exceptions to this rule are Siemens and ABB, whose strong brand identity and loyalty is being acknowledged in at least four of the six key regions under analysis.

Dalkia scores top marks amongst end-users in terms of overall market presence, with 12.9 per cent of respondents identifying the company as a prominent force in the I-FM market. In France, a substantially higher proportion of parties surveyed, 35 per cent, highlight Dalkia as a leading player. Falling into a similar category, 9.4 per cent of respondents across Europe stress Elyo's significance, marginally ahead of Dalkia in France, with 37.5 per cent of votes.

End-users rank Johnson Controls in third position in terms of market penetration, scoring 8.2 per cent in Europe, and 21.2 per cent in their strongest market, the UK. Johnson Controls currently stands as the most esteemed European specialist in I-FM, which is unsurprising considering their relatively strong and geographically diverse presence.

In the UK, innovation is being perceived as a less critical aspect, although this may be related to the fact that providers in the region have performed well in this respect. The importance of brand strength is above the European average, probably because the marketplace is in a more advanced stage of development, with more providers and greater supplier differentiation. External expertise is a less decisive purchasing criterion.

Brand reputation, the survey states, is of little importance in Germany, which initially seems astounding. "However, the main explanation for this is that German outsourcing, even to integrated suppliers, evolves mainly around support services that lie far from core client activities. For this reason, end-users are generally just looking for the best deal (hence the critical importance of price)," Frost & Sullivan explains.

In France, external expertise is the most crucial motivation to outsource, and suppliers in the region are in general coping well with this demand. However, the trade-off is that price performance is not well regarded by French end-users. Brand name and reputation in the I-FM industry is relatively strong, particularly for Dalkia and Elyo, and increasingly from players such as Faceo, Spie Trindel and Penauille.

External expertise is of paramount importance in Italy, with brand reputation having a large bearing on which supplier is chosen. Meanwhile in Scandinavia, service range and brand reputation factors are relatively eminent, and in general, providers of FM in the region have performed at an above-average level in both respects. Geographic coverage for end-users in Benelux is on the whole of little significance, while brand reputation is being attributed a relatively high degree of importance.

"Geographical expansion of service offerings is one of the most obvious ways for an integrated facilities management (I-FM) provider to improve their turnover, the survey concludes. However, there are difficulties that need to be overcome first, primarily finding a suitable route to market and also the adoption of existing service provision techniques to new cultural methodologies," the survey notes.

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