Top IWMS Benefits

There are many benefits to Integrated Workplace Management Systems (IWMS). Here are my top picks:

 

  1. Streamline Processes and Optimize Resources

In every organization there are a lot of processes that help individuals to optimize their contribution to the primary process of the organizations, usually to make sales profitability. While Real Estate & Facilities Management (REFM) professionals rarely are tasked with sales primary processes, their processes can have a large impact on profitability, usually by controlling costs.  Integrated Workplace Management Systems can easily help you to streamline those processes to save time, reduce cycle times for work requests and eliminate waste, thereby lowering operating expenses.

 

  1. Optimize Space Utilization & Occupancy

Real Estate costs account for 10%-25% of an organization’s cost base. As cost reduction programs have made it to C-level, organizations need to have an accurate and timely view of their real estate portfolio to ensure that both current and future  organizational space demands are aligned with their supply. Facility maintenance and operations costs are largely derived from the amount and type of space in its portfolio. Therefore organizations need to optimize space utilization and not serve extra space or under-used spaces. IWMS helps you to quickly identify space vacancies or under-utilized areas of your portfolio, which can be used to improve your REFM metrics and the organization’s bottom line.

 

  1. Monitor Performance to Optimize Resources and Organizational Flexibility

Matching service demand and delivery is extremely important for every organization. You need to be able to monitor both in-house and service provider performance to ensure that you have appropriate resources to support the organization’s goals. In addition, you need accurate, timely data to ensure that the Service Level Agreements (SLA’s) negotiated with your outsourced partners are aligned with performance. Through  custom, easy to generate Dashboards and advanced reporting functionality, today’s IWMS empowers your organization to effectively manage service delivery quickly and accurately.

 

Organizations that haven’t outsourced their service delivery will benefit from the resource planning and allocation functionality that most IWMS systems provide. Team leaders can easily schedule tasks to available resources and effectively plan their workload.  What’s more, resource allocation in IWMS can enable allocating tasks only to appropriate resources and help identify gaps to justify additional resources and training development plans for staff.

 

Lastly, some REFM tasks can be automated by an IWMS. The system reduces the required human interaction and thus, reduces the staffing requirements. REFM organizations can do more with less. This is especially helpful during ramp-up and expansion where a 25% increase in productivity could be achieved via IWMN instead of hiring another staff member. Indeed, expected productivity gains should be a key part of any justification or ROI analysis for IWMS implementation.

 

  1. Minimize Human Errors

Humans make a lot of mistakes. About 80% of all Facility Management and Real Estate processes can be standardized and automated. Standardization and automation of processes in an IWMS ensures a reduction in human errors. Fewer errors also mean faster cycle times, higher customer satisfaction, reduction of redundant work and fewer costs involved with error recovery which has a direct impact on the bottom line.

 

  1. Enforce Organizational Policy

Every IWMS can enforce organizational policies. By enforcing policy adherence,  you ensure that people actually comply with your business goals and regulations instead of only considering them as guidelines.

 

  1. Never Lose Your Data or Waste Time Finding It

IWMS is a central location for all you REFM data. Better yet, the best IWMS systems are SaaS, Software as a Service, meaning that it’s in The Cloud, available whenever and wherever you have internet access. It gets better: because the software and data reside off-site at professional Cloud Providers, you never need to get I.T. approval for hardware, software, updates or changes. You control your destiny, not I.T.

 

With IWMS costs and implementation timelines at a fraction of where they were just a few years ago, there is no reason why any REFM organization is not using a SaaS based system today.IMG_20151111_152326

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Mutually Beneficial Contracts – Fact or Fantasy?

Have you ever completed a Request for Proposal (RFP) for a complex service agreement only to realize that you are not satisfied with your best choice? You’re either not sure about the pricing (worried that you are overpaying or underpaying and will get hit with change orders later on) or whether the service provider can truly deliver the quality of service that you expect. I know that I have many times felt this way.

Now what? It may be time for you to pursue a “Mutually Beneficial Contract” with your service provider.

“Mutually Beneficial Contract”(MBC) is a term that I coined when I could not find the type of contract that I describe here after using several search engines.  So you heard it here first.

“Mutually Beneficial Contracts” definition by Ed Novak:

“A Mutually Beneficial Contracts is a contract or agreement between two parties, usually for complex services where a detailed scope may be difficult to define, based on shared values, Key Performance indicators and common goals that usually result positively for both the Service Procurer (buyer) and the Service Provider (seller).”

Since an organization (service procurer) and its suppliers (service providers) should be interdependent with aligned goals in a mutually beneficial relationship, a MBC between them strengthens that relationship and increases the ability of both to add value and ensure success. There are five core shared values in a MBC:

  1. Openness – willing to share information that one may not normally do when negotiating a service contract.
  2. Trust – believing that both parties are working towards a common goal that will be mutually beneficial for both. In typical negotiations, there is not a lot of trust; both parties try to maximize their financial position and believe that the other party is doing likewise.  main driver other is trying to maximize.
  3. Respect – treating each other as equal parties that both bring value to the relationship. One party may understand how the business runs while the other can provide insight on how to improve that type of business. The two parties work as a team to arrive at the best solution.
  4. Honesty – working together to achieve a mutually beneficial goal by sharing information openly, accurately and timely.
  5. Flexibility – willing to change positions and pricing as more information is obtained.

Both parties must practice these five shared values to ensure a successful Mutually Beneficial Contract. In addition, Key Performance Indicators (KPI) must be established prior to final contract execution which will be used as the basis for final financial cost of the service. Sound good? Here is how it works,

Steps for Implementing a Mutually Beneficial Contract

Step 1

The potential service provider and the procurer each submit a Rough Order of Magnitude (ROM) budget on a slip of paper and share the amounts with each other. In most cases, you can split the difference and make that your new baseline budget. Since I already have pricing from the RFP, I have a reasonably good idea what this should cost. Note: if the service provider’s ROM is significantly higher, then further analysis should be performed to determine the reason for the budget disconnect.

 

Step 2

Once you have two budget numbers that are fairly close, the procurer issues a Time and Material (T&M) Not To Exceed (NTE) purchase order or contract for and amount that is the difference between the two ROM budgets. This is not a final budget amount; both parties understand that the final amount will change because the scope requires fine-tuning.

 

Step 3

Part of the T&M expense will be used at this point to help with detailed planning to help get to the next budget, GMP. It’s only fair to pay the service provider for this service, but if planned well, it should more than pay for itself by resulting in a successful move or project.

 

Step 4

As the scope becomes more refined and the service provider has shared his proposed costs for hourly labor, equipment, etc., the service provider should be able to generate a detailed project budget and schedule that will replace the original ROM budget. This will become a Guaranteed Maximum Price (GMP) for the service and will not change unless either the procurer changes the scope or Key Performance Indicators affect the GMP price. OK, under a Mutually Beneficial Contract, the final price is not known until the work is complete because the procurer will place both incentives and penalties in the contract. Work with your service provider early on to establish the KPIs that will go into your MBC. Here are the areas that most project managers would consider when evaluating or being evaluated for a project:

Time & Schedule – Did the work get completed on-time? Were deadlines met? How responsive was the service provider to changes? Were agreed upon down-times met?

Cost – This should not be a factor with a GMP contract, but if your service provider asks for more money that were not caused or initiated by the procurer, then you have a problem

Customer Satisfaction – While I generally like customer satisfaction surveys, I don’t like them as part of the KPI that effects the final payment amount in a MBC because it is too subjective. I can measure time and schedules and waste (see next item) but perceptions are arbitrary.

Waste – In complex projects careful planning is required for flawless execution is required to minimize or avoid waste. If you project has the potential to cause waste to your inventory or product then you should include at least one waste KPI.

I don’t believe in using only sticks – I like to use carrots too. Therefore, if the service provider can exceed the approved KPIs, then it is worth giving the provider some of the money back that we removed from the budget in Step 2.

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Mutually Beneficial Contracts are not for every situation, but they are worth pursuing in the right situation as long as the five core values are shared and meaningful Key Performance Indicators are deployed.

6 Key Business Metrics (that every REFM professional should know)

After the U.S. federal government bailed General Motors (GM), then GM CEO and Chairman Ed Whitacre, Jr. told a reporter that he reviews only six metrics to determine the performance of a company or organization. Ed Whitacre, Jr. was the CEO of one of the “Baby Bells” (SBC) when the federal government broke up the old AT&T in the 1980s. He later merged SBC with several other Baby Bells, including Pacific Bell, and eventually acquired AT&T to form the current communications giant that exists today, at&t.[1] After he retired, President Obama tapped him to head up the new GM, which he returned to profitability after years of losses and near bankruptcy.

As a real estate and facilities management (REFM) professional, I have been searching for ways to better communicate performance and impact to executives who rarely understand REFM-speak: the jargon and common ways that we talk to each other and our contractors about space, projects and facilities operations. In order to be successful, we need to speak the language of business and learn how our world affects these six key metrics:

  • Market Share
  • Revenue
  • Operating Profit
  • Cash Flow
  • Quality
  • Customer Satisfaction

Let’s examine each of these metrics and see how they tie into the world of a Real Estate and Facilities Management.

Market Share

Anyone who has read any of Jack Walsh’s books knows what a huge proponent Mr. Walsh is of Market Share. Jack Walsh (and I’m sure many other business leaders) believes that if your product or service is not number one or two in market share, then you have a problem with your business. This is one reason why mergers and acquisitions are so popular because they can be a quick way to gain market share and possibly enable your organization to get to or near the top.

I consulted for a company that had recently consisted of two companies: one was number two in market share and the other was number three. When the number three company announced plans to acquire the number four market share company, the number two company quickly worked out a deal to acquire the number three company (nixing the deal between numbers 3 and 4), which made it the new number one market share company in its industry.

Why is this important? In addition to hopefully gaining some R&D, manufacturing and administrative synergies with the merger, suddenly the company was in the spotlight of the media, Wall Street and its competitors. Instead of being an also-ran company, the expectations for the new number one market share company increased exponentially. This meant that the all organizations, including the REFM group needed to “step it up” a few notches and prove to everyone that it deserved to be number one.

So, look at the market share position of your company’s products and services; are they currently number one or have plans to be? If so, you need to be ready to support them like a top—notch organization or you may become an also-ran.

Revenue

You may think that there’s not much that the REFM organization can do to effect the revenue of the company, but the REFM organization plays a crucial role supporting the organization’s ability to support revenue plans, especially if revenue suddenly increases or decreases. How do you prepare for this? The best way is to know that you have the right amount and the right type of facilities. Are your facility plans in-line with the organization’s revenue plans?

In today’s fast-pace business world, you need tools, such as a CAFM system to be ready for rapid changes. This is your foundation for your strategic facilities plan where you can readily access the data you need to support your plans and how they are aligned with the top goals of the organization.

Operating Profit

Investors look closely at Operating Profit every quarter to evaluate a company’s performance. After deducting the cost of revenue (what did it cost to make or purchase the company’s products), R&D, SG&A and any non-recurring costs, you end up with the operating profit or loss. A small reduction (less than 5%) of the REFM operating budget can have a significant impact on the company’s Income Statement, often improving the EPS by a penny or more. A penny may not sound like much, but it can make a huge impression to investors who can significantly affect your company’s stock price. Therefore, anything that you can do to reduce costs – think sustainability programs – can be quite valuable to your company.

Cash Flow

Cash flow is a financial metric on the company’s balance sheet that indicates the financial health of a company. Obviously, cash is good and if the latest balance sheet shows an increase of “cash and cash equivalents” then generally the company is operating well: revenues may be increasing and / or operations are well-run.

For REFM, continuous improvement in operations, including savings from implementing sustainability initiatives can help improve cash flow. In addition, investing in a CAFM system to better manage space can result in an optimized portfolio and help avoid wasteful investments in excess space. Additionally, managing your vendors well by ensuring that they fully perform their contractual obligations can help you to avoid wasteful spending. While finding ways to improve your company’s cash flow is a worthy objective for every REFM professional, delaying vendor payments beyond the agreed upon terms is not a good or sustainable practice. This is not fair to your vendors, especially small ones that receive a significant amount of their revenue supporting your operations.

Quality

The quality of a product or service can have a significant impact on the success of the company’s offerings. Just as companies can look to 3rd-party unbiased firms to assess and rate products (think Consumer Reports as an example), the REFM organization has its own means to measure the quality of its products (space and facilities) and services.

Benchmarking is a terrific way to measure quality that is an often-used tool in the REFM toolbox. Virtually any part of your facilities, from space to operations can be measured and benchmarked against past performance and comparable operations. There are several ways to benchmark your operations:

  • Start your own benchmark study and invite colleagues to join
  • Hire a company that performs benchmarking studies or participate in one for free. If you participate in IFMA’s benchmarking studies, for example, you will receive the study report for free
  • Use an on-line tool such as the “Energy Star” benchmarking tool to compare the energy performance of your facilities to industry standards to begin understanding opportunities for energy savings

Surveys are another useful way to measure the quality of your operations, which I will cover in the final key metric.

Customer Satisfaction

Just as your company needs to know what its customers think of its products and services, you should know how your customers think of their facilities and associated services. Surveys are the best way to find out. As with benchmarking, you need to establish a baseline of current performance that can be used to set future performance goals and determine where improvement is needed.

Another way to survey your customers is to provide a link to a simple survey after completing every Facility Work Order (FWO). As you gather data regarding your service levels, you will begin to understand your team’s performance better as well as identify problem areas that you can begin to address by discussing performance concerns with your customers. Again, keep the survey simple: I use a scale from 1 to 5 and anytime that I receive a score less than 3, I want to have a conversation with the person who gave us a low score to find out where the problems are, determine how to improve services and ensure that future work is completed in a satisfactory manner.

Communications – Speak the Language

Understanding and incorporating these six core metrics into your vocabulary and reports to your executives will enable you to communicate more effectively with them when you are proposing new projects and changes to your operating expenses. Your executives may prefer a few other business metrics, but start using these six core metrics. Once you begin to speak the language of your executives they will realize that you understand their world which will lead to greater success for you and your organization.


[1]To differentiate between the old AT&T and the new company, the new company is referred to as at&t, all lower case.