11 March 2014
The phrase 'intelligent client' has always been contentious. What does it mean?
A client that understands the 'true cost' of a service? One that shows genuine engagement with its service provider? One that won't jump ship to another provider just for the sake of change? None of the above? All of the above?
Whatever the definition, perhaps less is spoken about the concept of the 'intelligent supplier'. That seems odd, because if we're asking clients to appreciate what an FM provider is all about, doesn't that understanding have to work both ways? Surely what's really being sought is the 'intelligent alliance' - both parties working towards a natural fit based on a mutual understanding of each other's aspirations. And if that's to be the case, the supplier's client selection process needs to be as rigorous as that conducted by the client, perhaps more so.
The idea that service providers should select the clients with whom they do business as diligently as clients choose them is hardly new, and you'd expect the companies themselves to say they do exactly that already.
However, when you look at the ebb and flow of contracts from similar FM provider to similar FM provider - particularly the larger deals - it's easy to marvel at how such complex service provision relationships, procured and mobilised so diligently, can so readily fail not that long after.
Noel Clancy of Shepherd FM is quoted this issue on how companies that grow organically can provide a better and more consistent service, and when you see his firm's 97 per cent client retention rate you suspect he could be on to something. Shepherd focuses its client search on organisations that need its mission-critical hard FM specialism, so clearly things can be different when the client is, say, a public sector client with cleaning as its priority. So the real issue is in how to have supplier and client treat both these forms of service provision with the same rigour.
In the big news of the past fortnight, Interserve announced its intention to acquire Initial Facilities, subject to approval from shareholders. Does this mark a significant shift in the outsourced supplier landscape? Difficult to see otherwise, with Interserve certainly expecting to gain from the combined group's economies of scale and a better balanced client / prospect portfolio.
But for every voice saying that big providers will be beautiful for larger clients, there's another pointing to what they see as an opportunity for smaller FM providers to do better deals with smaller clients (again, see feature this issue).
That's interesting, because not too long ago - following a flurry of international deals for banking clients - the thoughts of many were that globalisation of FM service provision would inevitably lead to fewer, larger companies playing the 'economies of scale' card. In this scenario, the mid-market would be hollowed out and only niche vertical players would survive this significant evolution of the market.
As for today, it will be interesting to keep an eye on service breadth and contract term lengths to see whether the smaller players can indeed manage to find more profitable, long-term ground as a result of a tighter cultural fit.
Martin Read is managing editor at FM World