Maureen Ehrenberg: Why Let the IT Team Corner Outsourcing Innovation? It’s CRE’s Turn.

There’s a new opportunity for innovation knocking on the C-suite door, but this time, it’s not from IT. Forward-looking corporate real estate (CRE) teams are looking to breathe new life into the way they manage their business globally, and their tech team counterparts have set an intriguing example. With small but mighty in-house teams, paired with one or two integrated vendor partnerships, big firms are fortified by their outsourced partners’ sweeping presence and cutting-edge infrastructure tools and market insight.

We call this new approach Outsourcing 4.0.

This revolution in CRE outsourcing has come none too soon. The motivation for C-level executives seeking new, global solutions for CRE management is clear. A whopping 73 percent of respondents to JLL’s 2015 Global Corporate Real Estate Survey (GCRES) stated that their mandate to centralize real estate functions on a global basis is stronger than it was just three years ago.

Consider, for example, a global banking giant that recently concluded a Request for Proposal process for a single strategic partner for its international portfolio. It sought not only the physical facility management, but also strategic productivity enhancement and profitability support. Unlike the regional or multi service partner approach traditionally used in CRE outsourcing, the bank believed a more globally positioned strategy would uncover value in real estate and workforce, as opposed to simply focusing on driving efficiency.

The lure of next-level CRE management

The potential benefits of enlisting a strategic real estate partner to provide holistic core CRE services—aka Outsourcing 4.0—extend further than globalizing and standardizing process, compliance, service delivery and reducing time spent monitoring multiple property service vendors (though it does that, too).

A more progressive management model can enable a global business to extract deeper value from real estate infrastructure and talent. It can ensure aggressively updated technology, and fuel analytics-driven decisions. Facilities can be optimized, workplace productivity boosted and profitability enhanced.

JLL’s new report, The Converging Priorities of CRE Outsourcing, provides examples from global corporations on how this new paradigm is playing out in the real world. In one instance, one global technology firm outsourced facility management to a partner that understood not only near-term operational challenges, but also aligned innovative techniques with larger real estate strategy, improving safety, performance and productivity in one well-coordinated BPO type initiative.

Five ways the Outsourcing 4.0 revolution has already begun

Though it’s new, businesses are already embracing a more progressive model, with many major companies already:

1. Thinking “thin:” Instead of outsourcing to several service providers, major companies are adopting a ‘thin client’ model that bundles workload rather than engaging several disparate suppliers. By streamlining support personnel, administration and software applications, clients expect better risk management, compliance, controls and results. Already, 61 percent of CRE executives expect greater control in the next three years, according to the 2015 GCRES survey.
2. Prioritizing business intelligence: C-suites increasingly recognize CRE data value—in a 2014 Forrester Consulting survey, 75 percent of respondents said real estate data analytics are core to larger corporate strategy. CRE strategy is more than a smart array of buildings, it’s a source for advanced analytics techniques that better workplace and portfolio planning and decision-making.
3. Emphasizing outcomes: Key performance indicators and service-level agreements matter, but big-picture outcomes that advance the business are now more essential measurements. Shared risks and rewards are more frequently being negotiated into contracts.
4. Supporting both people and place: Physical real estate assets are only the beginning of modern CRE strategy. Many successful real estate teams define the new workplace and workforce objectives. These leaders also work more collaboratively with other corporate functions such as HR and IT, realizing both the singular and shared impact on employee well-being and enablement, recruitment and retention.
5. Achieving C-level influence: Internal CRE executive roles are evolving too, shifting from a CRE centric focus to focusing on a more comprehensive strategy for the core business. Working closely with, advising and enabling the business. When partnered with dependable service providers that shoulder daily workplace delivery, they’re finding new opportunity in high-level work, managing overall performance, supplier performance and internal relationships.

Global needs demand global prowess

The trend toward Outsourcing 4.0 is moving fast. As strategic real estate management partnerships deepen productivity, profitability and employee experience, the question for CRE teams is no longer focused solely on cost reduction. Rather, how will we provide a consistent, excellent employee experience in our locations, with defined standards and clear analytics that measure productivity gains and guide the business forward?

By Maureen Ehrenberg, International Director, JLL Integrated Facilities Management