Outsourced Integrated Facilities Management (IFM) is reportedly the fastest growing industry in Europe, Asia, America and Australasia and this international trend is echoed in the sub-Saharan market.
IFM is an enabling solution that frees client resources from the non-core activities of an organisation, promoting more efficient management and resulting in improved quality of service delivery and reduced operating costs. A growing number of companies are looking for an on-demand, one-stop-shop approach to facilities management with one provider for multiple services.
Understanding the competitive landscape
The concept of IFM was first established in South Africa in the mid-90s with a number of international players taking the lead with local clients like IBM, British American Tobacco, Old Mutual Properties, Standard Bank and Telkom among the first to outsource their facilities. It wasn’t long before a number of local Property Management organisations diversified into Facilities Management, with some strengthening their value proposition with global associations. Despite the
proliferation of service providers, the South African market has been dominated by three main players, collectively contributing 47.6%* to South African market revenues.
What’s been happening in 2016?
There has been much movement in the industry of late with a range of new business models offering different approaches. Some suppliers have adopted the TFM (Total Facilities Management) approach which combines strategic management with operational delivery to create an all-encompassing value proposition operating from a single integrated platform. Others have elected to operate at the top-end of the model; only providing strategic IFM services with all soft and business support services outsourced.
The outcome of the best approach is yet to be determined. There are both pros and cons to the TFM model, but it does create – to some extent – internal competition. The theoretical exercise makes for an exciting sales pitch, but the practicality of being both an operational service provider and strategic manager is challenging to integrate and deliver, while clients are questioning the risk of using only one supplier for their complete supply chain.
Evolution of IFM in Africa
South Africa is still the launch pad into East and West Africa, so there is a natural move for South African based multi-nationals to position themselves to penetrate the emerging markets in East and West Africa. The current self-performance model has attracted a number of mergers and acquisitions, but has yet to prove successful and demonstrate any real benefits. There is no single IFM company dominating Sub-Saharan Africa, when also including South Africa. A number of smaller successful players in South Africa and Sub-Saharan Africa are operating in-country, but under the radar.
Only one company has seen real success in East and West Africa and this is as a result of an IFM arm developed on the back of Property Management strength. However, service delivery is erratic in many areas due to lack of specialised FM in-country support. Other companies only provide soft-service delivery while others, having made the necessary acquisitions to position themselves for a strong commercial breakthrough, still lack the necessary IFM international expertise and best practice.
A gap in the market for a thought leader
What all this market intelligence clearly indicates is a gap in the Sub-Sahara African industry for an IFM company that can offer an integrated real estate solution. A successful IFM provider must be able to operate at a strategic level, understand the importance of technology, provide global best practice along with an objective and exclusive service. The market will also weigh its decision-making against positioning, approach to RFPs and relevant associations. A thorough understanding of suppliers, strategic partners and potential competitors in-country is paramount. A sound supplier relationship management process and framework agreement is critical. The MBA theory of ‘Trojan Horse’ suppliers becoming competitors is a potential threat and reality in the local market.
For more information on niche service capabilities in this highly sought after sector of the market, contact JLL SSA IFM.
*South African Facilities Management Association research 2010