"Insights and Strategy, Please" — Overheard in the C-Suite by guest blogger Maureen Ehrenberg

Corporate real estate leaders are taking a cue from IT and turning to insight-driven partnerships over tactical delegation

Keep the lights on in Toledo. Secure 20,000 square feet of space in LA. In the 1990s, corporate real estate (CRE) outsourcing strategy was primarily tactical, giving direction to whichever on-the-ground service provider was most fit for the job. Tactical service delivery just isn’t in demand today. Strategic, data-driven insights, advice and results are replacing tactics, and partnerships are replacing vendor relationships.

Introducing Outsourcing 4.0: We're in this together.

With a trusted CRE supplier serving and acting as strategic partner, corporate leaders are finding they can more readily develop a centralized system to supercharge every corner of the workplace, and real estate portfolio – and their people. They can harness cutting-edge technology, tap actionable predictive analytics, and optimize performance. They can even free up internal teams to focus on higher level work, such as enriching connections with HR, Procurement and IT for a more aligned workforce.

This new model might have a familiar ring to it.

These fresh CRE strategic outsourcing strategies are similar to progressive IT outsourcing that has transformed the role and impact of technology services across a corporation’s operations.

Likewise, new CRE outsourcing brings together quantitative and qualitative approaches, and incorporates close dialogue with other business units. CRE partners serve as managing consultants that impact much more than the physical space of corporate operations; they make the entire workforce stronger. By acting globally and integrating locally, portfolio strategy and facilities management are streamlined with central decision-making, while shaped for the specific needs of each location.  

Three signs C-suites are poised for outsourcing strategy revolution

"But that's the way we've always done it," is no longer effective in terms of outsourcing strategy and business results. Following are a few key indicators that corporate leaders are ready for change:

1.       Making companies “thin.” Corporations are increasingly adopting a “thin client” model in which one or two supplier partners serve all CRE needs, including infrastructure, personnel and the supporting software services. Centralized CRE outsourcing means more streamlined operations, focused inter-company decision-making and user-friendly client interfaces. Companies increasingly expect supplier partners to integrate across corporate sectors and innovate by using advanced data and analytics to pose creative ideas, solutions and innovate

2.       Expanding the definition of “real estate” to “workplace.” Corporations expect today’s outsourced partners to be holistic workplace experts, helping to create the employee experience and transforming the built environment this is much broader than traditional property matters. In top companies, the expanded purview of the CRE outsourced provider includes the delivery of the workplace environment and how the worker is enabled to operate within it. Collaborating with HR, IT and other shared services business teams, real estate professionals are now directly influencing worker productivity, employee well-being, recruitment and retention. In addition to physical space, CRE partners are involved in supporting “relationship management” at every level of a company’s operations.

3.       Prioritizing outcomes over metrics. While key performance indicators (KPIs) and service-level agreements (SLAs) continue to matter, the expansion of outsourced CRE roles has emphasized the importance of overall outcomes and standards. Employee satisfaction and productivity are, for example, a strategic imperative. And CRE suppliers are being engaged to a greater extent in support of corporate goals through new types of contracts. These contracts align them with the risks and rewards of company business outcomes related to the transformation of the portfolio and the delivery and management of the built environment together with their CRE partners within the corporation.

The desire to improve global positioning is no passing interest, either. An overwhelming 73 percent of CRE leaders say their mandate to centralize real estate functions on a global basis is stronger than it was just three years ago, according to JLL’s 2015 Global Corporate Real Estate Survey. Deep alignment is more necessary than ever.

Today's leading companies are seeking the kind of collaborative synergy that leads to improved innovation, productivity, profitability and employee engagement across even the most far-flung locations. Is it time for a new model? The answer is a resounding yes, and doing so will enhance every corner of the workplace: physical, psychological and digital. 

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By Maureen Ehrenberg, International Director, JLL Integrated Facility Management

Supply Risk Maturity: Everyone thinks they are good at their jobs, right?

Supplier risk managers are in an interesting spot – they’re their own worst enemies. If they’re bad at their jobs, then the company is exposed to unnecessary risk. BUT if they’re good at their jobs, then risk becomes so well managed that stakeholders begin to take their efforts for granted, turning on them with “what do we need you for? Everything is going fine.”

Neither position is particularly good for job security. In both cases, however, having a disciplined way to account for your efforts and effectiveness will help you prove the value of your job. Documenting your efforts through a supplier risk management maturity assessment is one way to achieve this. This type of assessment will help you gain more clarity around how good you are at your job and enable you to have more productive conversations with stakeholders and explain your value beyond just “we lowered the company’s supplier risk.”

So, how do you demonstrate this maturity to your organization? Think about whether you have all the right pieces in place, then think about how well you execute all of those pieces.

Key Pieces To A Comprehensive Supplier Risk Management Effort: What To Do

The first part of justifying value to your organization is to explain the depth of what you’re doing. Effective supplier risk management involves a lot of moving parts, and listing all of the activities you do on an ongoing basis can go a long way in reminding stakeholders about the complexity of your role and the value it brings to your organization. 

The key activities include:

• Risk identification, categorization and assessment. Do you know what risks you’re looking for and do you have a model for integrating those risks into the broader corporate risk program?
• Supplier data. Do you have an ongoing process in place for capturing supplier data and the impact on your overall risk?
• Risk treatment. What would you actually DO based on your supplier risk identification and monitoring?
• Organization/team skills. Do you have the right people to manage supplier risk?
• Metrics. How do you measure the effectiveness of your program, what does success look like for your supplier risk management team?
• Collaboration with stakeholders. Do you have productive relationships with key stakeholders like senior executives, risk, compliance, legal, procurement, etc.?
• Reporting. Do you provide useful and actionable information to your stakeholders?

Execution Is The Most Important Part Of Supplier Risk Management: How You Do It 

        

Anyone can pull up a PowerPoint deck with lots of slides that show organizational diagrams and risk identification models. But how well does your company execute on the key pieces above? Maturity is almost always judged not by the existence of a program, but how well the program is executed. 

Critical factors in maturity include:

• Standardization. Does everyone who manages risk use the same approaches, tools, and processes? Transparency across the organization can only come when there is some way to standardize and give everyone the same view.
• Effective use of technology. Any manual process is likely an ineffective one. Using technology to capture, analyze and share data is a key indicator that a company has invested in maturing its efforts for supplier risk management.
• Compliance with the processes. Here’s the real jewel in the crown. Does everyone comply with your risk management program? You can have a beautiful approach, rich and accurate data, and books’ worth of action steps to take, but if no one actually uses any of it (or worse, actively tries to go around it) then you can’t consider your organization mature.

The next time you are asked to justify supplier risk management, consider putting your program to the test with a maturity assessment. You’ll be able to have a more productive and thorough conversation about exactly what you’re doing, and how you’re doing it, and you’ll be able to identify which parts excel and which need improvement. Most importantly, you’ll be able to capture and share the depth of your efforts.

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Written by Christine Ferrusi Ross, SVP, Neo Group & Supply Wisdom. Edited by Atul Vashistha. More details can be found at supplywisdom.com.