Why sell your assets?

What is outsourcing? Just as 'IT' stands embraces anything from the electronic display system on a Boeing 737 to a Blackberry, so the general term 'outsourcing' is a suitcase ever-expanding options and opportunities. It is a term that has moved in nomenclature normal activities without any definition very distinct. The Penguin English struggle 'to get parts etc, services from external suppliers.' To the extent that there is a consensus among experts, there is agreement that the key to successful outsourcing is to differentiate the operations of a company 'fundamental' than those who could easily be outsourced to third parties and will be managed elsewhere, with little or no strategic impact.

Back in the mists of time, this meant punch cards and Payroll. Later, it was the public sector has taken the initiative to outsource catering services and saluting the lovely ladies in their white uniforms and used the wheel of the black tea trolley through the corridors of power Whitehall.

From there, we went to the contracting out IT maintenance and management. When you do not know HTML from JavaScript, it makes sense to deliver the absolute responsibility to a company that does. Outsourcing could mean anything from contract to run a bar in Costa to sell all properties owned collectively - as the Department for Work and Pensions and the Abbey have done - and creating an agreement where you pay rent for lease back the premises you need to run your business while the owner has the responsibility for maintenance and infrastructure.

From landscape to energy supply, waste management, transport services, painting hydraulic engineering for electronics, there is probably not the function of business support that can not be successfully packaged outside.

The decision to outsource non-core functions can be very liberating for a company. Passing on responsibility for the problems previously perceived as irritating distractions that pulled people away from the main business of a company is deeply attractive. If there is a broken pipe or offices are all in need of repainting, telephone your Account Executive or Helpdesk, rather than a plumber or decorator. Someone else must do it quickly selected and ranked.

Make it work is much more subtle. The success or failure or failure of the outsourcing provider, and mistakes could also cause irreparable damage to the client company. A few major crises like the one and the concept of outsourcing may fall more quickly than the bursting of the tech bubble. Mutual trust is essential.

Bill Locke is Director of Strategy and Communications Group of Alfred McAlpine plc: "If there is a failure, it will probably be the result of an error in the approach outsourcing must be flexible and prevent stiffness change in the needs of What is appropriate .. in a phase of the contract can not be so later, after the initial period of set-up. values ​​and culture of games between the client company and the outsourcing contract is crucial. We must be able to understand what is important for the customer and be able to adapt and adapt these applications in our approach. 's almost like a chameleon. "

McAlpine acknowledged that it is well positioned to develop its offering in the growing outsourcing market. In the past established key players in providing a variety of functions other than roads to power, high-pressure pipelines in domestic water meters, traffic management, the company began to expand in providing an integrated, one-stop-shop service for customers.

In early 1980, the city began responding warmly to this new business model. With limited capital investment, the relatively low risk and the promise of regular income to long-term contracts, outsourcing to be attractive to shareholders.

"We were already the market leader in the services sector utilities," said Bill Locke, "and we had an enviable reputation for the health and care of the security, integrity, honesty and customer. We could see that provide day to day that our Service could count on customers has been fundamental, but we wanted to do more. We wanted to excel. "

The ability to install the infrastructure, to lay pipes and build roads, to pump water and maintain power systems, it was okay. What was to be developed was the centralized management of everything to every customer. Everything would have qualified for distinct and separate, not only in practical terms, but in terms of culture and business ethos.

"Companies want more than the cost savings when considering outsourcing," says Noel Clancy, who runs McAlpine contract with Nationwide Building Society. "Outsourcing should be seen as an enabler, allowing the company to focus internal resources on business and management functional areas of fundamental rights."

Achieving this combination of level of service and customer care is essential. "It's about understanding the client's business," says Gordon Duffy, who manages the account with Electronic Data Services (EDS), an interesting example of an IT outsourcing company for the purchase of self-management services in outsourcing! "We must of course comply with key performance indicators, on service, but it is much more that this is what is important to the culture of its client. Their goals, objectives, values ​​is necessary to understand their priorities ..

"It 's very clear, when we talk to potential new customers, there should be an array of cultures, a mutual understanding that is right open and honest in both measurable elements and the more elusive."

The run-up, or the mobilization period before an outsourcing contract is actually begins when the management of personal relationships is more significant. Gordon Duffy spent two weeks visiting 30 sites from Taunton EDS initially in Aberdeen. Now there are 30 sites in the portfolio. "The contract was recently reset, the addition of more than 30 sites and 90 people. Evaluate each site is critical and is part of dealing with the customer's business. It can be hard, financially and operationally, but you be relentless and be absolutely sure you have considered everything. "

The EDS contract spans a wide range of maintenance functions of the building fabric to manage office functions, including reception, switchboard and reprographics. It includes landscape, catering, project work and all management services. It takes a Helpdesk with seven participants to manage and send out requests to the appropriate department for actioning. The times, as indicated in each contract with the customer, must be strictly observed. Monthly meetings are used to report on the provision of services and ensure customer satisfaction.

Customer expectations can sometimes be unrealistic: "You may need to manage expectations to a certain extent," says Gordon Duffy. "Sometimes the perception is that a client will begin the first day and second day everything will be just great, but it is not real life."

What Alfred McAlpine delivers, and this has occurred repeatedly and independently from its customers, is: "the culture of passion and integrity, openness and collaboration, a willingness to be flexible and change and evolve with customer needs and plans, "says Noel Clancy.

In marriage between customer and supplier outsourcing is a dynamic that has to work, and who needs constant care and attention. This does not mean it is going to be 100 percent without problems ", but it means that addressing the problems immediately. Not only do routine customer satisfaction surveys. Instead, we provide a list of 10 questions every six months and our customers we score against them. We then act to make sure you close any gap between these crucial questions specific to the customer and the service we are offering, "says Duffy. "As the customer's business changes and grows, these criteria will change as well. What was important in the month of January may not be so now, and we must be able to react to these changes with flexibility and adaptability."

A decade ago, nobody had heard in the United Kingdom 'outsourcing.' Nomenclature The term is now normal activities. The global outsourcing market is estimated at about 58 billion euros and the breadth of what can be outsourced has grown from simple, self-contained functions such as payroll, property offers complete outsourcing. The growth potential is vast and the possibilities for expansion are significant.

The first major property outsourcing in the private sector in the UK has caused a stir. The Abbey has decided to sell their properties to Mapeley 1500 in a deal worth 457 million pounds in October 2000. Abbey has delivered its entire property portfolio of 603,900 m2 at the Bermuda-based company with a range of leasing deals structured by a year to 20 years long. Ernst and Young estimated at the time that the deal would save the Abbey of about £ 200 million in its life cycle.

While the deal clearly put profits on the books Abbey, raising cash was not the driving reason for outsourcing. Rather, it was to match the portfolio into business plans. Abbey may require a smaller number of local offices, but most customer-friendly ones. It would become more reliant on e-commerce and web activity. Probably would not need to be saddled with 1,500 properties.

The agreement Abbey quickly led to other companies who are looking at different levels of outsourcing to streamline their core business activities and make for better management structures. If it was not exactly open the gates, there were certainly opportunities for companies able to provide the kind of offering outsourcing services sought.

While companies operating a few could take an entire property portfolio on the scale Mapeley, or as Land Securities Trillium with the BBC White City estate, maintenance and facilities management (FM) arena was wide open.

That Alfred McAlpine was able to identify and take action to meet a potential new market needs is a testament to the Management Intelligence and availability features to meet the targeted opportunities for innovation.

BOX OUT
The Nationwide Building Society
Robert Gallo, Operations Manager

The outsourcing contract with Alfred McAlpine involves all maintenance engineering at the National headquarters in Swindon. Here, Robert Gallo, the National Operations Manager, explains why McAlpine was chosen to fulfill the contract.

"We had a procurement process long enough and well-planned, once he had accepted the decision to go down this road. We are short-listed three companies and chose McAlpine for a number of reasons. In general, companies McAlpine is aligned with our better than any other candidate. not only speak well of what it will do, but actually deliver it well.

"We had the experience of them. We knew it would take appropriate and necessary, as and when necessary.

"During interviews and pre-award stage, when we were doing site visits and looking closely at the management issues such as planning, motivation, innovation, dealing with staff, we found McAlpine showed a right consistency at all levels, from factory to senior management. Their personnel management, interactions with customers, the provision of information, keep us fully informed, it was all very well managed and manipulated. There is a huge level of commitment required to mobilize a contract that allows a reduction from 37 to a single one. McAlpine offers on this.

"The opening under these conditions can be difficult and the fact that we had a relationship with McAlpine helped. Our head office in Swindon has over 3,000 employees and branch offices, another 1500.

"McAlpine has full responsibility for all Maintenance Engineering, reactive and planned, ongoing maintenance and building maintenance and the responsibility to provide quality of service that allows us to focus on our core business and not on the minutiae of facility management . "...