How to Outsource Building Automation

Many manufacturing companies are outsourcing non-core activities including building automation systems management. Whether it is out-tasking specific operation and maintenance activities or forming a strategic alliance with a total facilities management provider, building automation outsourcing is a trend that will impact nearly all companies.

But it may not be the right strategy for every company.

The decision to outsource is not always clear-cut and should not be considered trivial. There are many benefits afforded to companies that make an informed decision to outsource building automation systems management for the right reasons, including reduced operating costs and higher employee productivity, which lead to lower overall costs. There are, however, a number of potential pitfalls waiting for companies that make the decision before fully understanding the impact it will have on their employees and operations, such as lowered employee productivity and reduced effectiveness of core business units, which lead to higher overall costs.

Define clear goals

The obvious goal of outsourcing is to allow increasingly limited resources to focus on the “core competencies” that separate your company from the competition. To truly benefit from building automation systems management outsourcing, however, take a closer look, to quantify and prioritize realistic goals. Defining a clear set of goals at the onset of the project is the only way to measure the future success or failure of the outsourcing project.

Once company goals are defined, a financial analysis of current costs against the anticipated cost of outsourcing must be conducted. Bids should then be requested from a number of potential service providers and evaluated against current management costs. Ask potential service providers to include performance guarantees in their bids and evaluate those guarantees against the in-house facilities’ current performance. This is an extremely important step, because it often turns out that the current in-house facilities management group is actually competitive in terms of cost and performance.

If it is decided that outsourcing is the best way, it is time to choose the most appropriate service provider. It is important to truly get to know each company. The service provider’s financial stability and corporate culture should be of particular concern. The importance of the service provider’s financial stability is obvious—you want to make sure they are going to remain in business for the length of the contract. It is important to choose a service provider that has a corporate culture compatible with your company’s, to ensure that both companies can agree on an appropriate approach to solve the inevitable problems as they arise.

For a building automation systems management outsourcing agreement to succeed, facilities executives must identify clear, measurable performance targets that can be used to actively track the service provider’s performance in reaching these goals. Clear and measurable performance targets are crucial to the long-term success of any outsourcing arrangement, and it is important to agree with the service provider on the performance targets up front.

The outsourcing process does not end once a service provider has been chosen and a contract signed. Outsourcing relationships must be actively managed. Not only do facilities executives have to track the project’s key performance targets, they should also carefully examine the way the service provider plans to subcontract any or all of the work. Ideally, these subcontracts or alliances should be in place and agreed upon before a contract is signed. It is also recommended that the contract include a clause stipulating the right to reject any subcontractor changes the service provider suggests.

Make any outsourcing decision based on the long-term health of the company and not simply to achieve immediate cost savings. When done correctly, outsourcing can create an environment that supports the company’s core business objectives. If rushed into for the wrong reasons, however, building automation outsourcing can negatively impact the ability of the company’s core business units to operate effectively, and it can create rising costs for the company.

David Clayton, dclayton@arcweb.com, is senior analyst at the ARC Advisory Group, www.arcweb.com.

See sidebar to this article: Keys to Outsourcing Building Automation Systems Management

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