Commercial Property and Building owners Expecting High Performance-as-a-service from the FM teams

Do you remember, what was the first subscription-based software you purchased to manage operations at your facility? It might be a CAFM or CMMS application, and how was your experience with it? I bet it must be great! After all, there was a tectonic shift from traditional license-based desktop software to a subscription-based cloud application. 

It gave you accessibility to manage assets from anywhere, reduced the burden of in-house IT teams, and also, there was low CAPEX-m involved. Well, That’s the revolution Software-as-a-service has brought to the facility management sector in CRE. Now there are multiple SaaS applications available, starting from space management, logistics to workflow.

If we look at the healthcare, retail, or E-Commerce sector SaaS (anything-as-a-service) has already penetrated and explored various service delivery mechanisms, and more importantly, customers are driving the growth of such offerings.

For example, retail clients who have used efficiency-as-a-service have paid for the performance, a financial service mechanism that allows customers to implement energy and water efficiency projects with no upfront capital expenditure. In fact, it has been used in many utility companies that are working closely with industrial consumers.         

XaaS finding ways in CRE

Then there are other offerings too such as space as a service (SaaS) and lighting as service (LaaS) which have sneaked into the commercial real estate sector and received a warm welcome.   

It’s not a surprise that most of the facility management companies are running on paper-thin margins today. They are looking for ways to cut down their operating expenses and find ways to cross-sell or upsell their services to clients - property owners who have already faced the wrath of lockdown and subsequent low occupancy rates.  

In this situation, neither the property owner nor facility management teams can afford to spend a handsome amount on revamping technology or digitalization drive even if it’s needed now but, there is a way out. 

Performance-as-a-service

In a typical facility management contract, there has to be the precise scope for facilities management services to be performed by the service provider along with the relevant Key Performance Indicators (or KPIs) which the service provider is required to achieve.

As most of the contracts are either unit pricing or lump-sum contracts, winning facility management companies bid on the low prices and commit to delivering certain services. A major drawback in such contracts is the saving potential of the facility or assets often remain underutilized as there is no incentive on it. While performance-based contracts are more focused on creating value with limited resources. They are meant to monitor the operation of the facilities against set targets and identifying opportunities for improvement. If a service provider is able to save on energy or resource consumption then he can enjoy the shared profit.  

Now imagine an offering where a service provider signs a contract for managing Operations and maintenance of the facility and utilize existing infrastructure and their own analytics solution to leverage existing data to deliver insights on energy management, maintenance, or asset life cycle?

Please note that the FM team needs to showcase the tangible savings or predefined clarity on operations and as they gain the confidence of the client, they move on with a broader plan covering the remaining data infrastructure and investment from the client.

This way facility management teams can get to work on their digital and technical capabilities while earning brownie points on savings. It would be a win-win situation for both parties.  

Despite technology being the driver of the new service model, it’s a strategic decision and not a technical one property owners may not explicitly come with such a plan but the facility management companies need to take the first step. They need to identify the opportunity to collaborate with technical service providers and build on their digital application portfolio backing their hard services. 

So as a facility management team, how soon would you introduce your performance as a service model? Can building analytics software provide a solution?