During the meeting with a CEO of a global IFM company, he suddenly asked me a question – “Is your company selling savings?”.
I replied him “Yes” directly and after a while I thought it was a very sophisticated definition of IFM (Integrated Facility Management) service.
In order to understand IFM business, people usually ask whether our company is providing single or multi service, or if we are realizing IFM service in the right way. In other words, people wonder if we are only maintaining clients’ facility or providing extra services such as cleaning and security. Their questions are detailed and sequential as they want to understand the IFM service first.
However, that pioneering global company’s definition was precise and applaudable. Of course, it was a startling question to a local IFM company in Korea where IFM industry is not developed yet. These days, companies try to focus on their main work and leave subsidiary work to outsourcing companies. The core value of IFM service is also “cost-saving” based on the service quality.
Outsourcing service of IT or HR department now branches out to FM services such as real estate, managing property, maintenance, general administration and purchasing. Therefore, the CEO’s question was very unusual for us who live in a country where IFM service is not a specialized service to be outsourced and done internally.
At the pricing stage, IFM service are usually based on PA (Principal Agent) model with GMP (Guaranteed Maximum Price) and proceeded with 5 years of cost saving plan, cutting the promised amount of cost every year. When the cost is saved more than the targeted amount, the profit is shared between the IFM company and client. PA model gives responsibility and authority to all service procurement within the guaranteed fixed budget.
It is also a very new concept to local companies where contract terms are usually 1 year and deliver services through their internal staff to cut the cost. Many global companies in Korea such as ABB, Honeywell and Huawei have introduced IFM service and seeing improved efficiency. IFM contracts can be done regionally – HP, citi bank, British Embassy are receiving service from ISS. The French company Sodexo is also providing service to global pharmaceutical company in Korea through regional IFM contract.
Cutting cost through regional or global IFM contract is a strong strategy of global companies to maximize competitive power. It is pity that many local companies are not realizing it yet.
However, many local companies are trying to expand its business to overseas and they will realize that global competitiveness through IFM service can be achieved in the near future. Local companies will get this question soon – “Are you buying savings?”.
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