IB seeks IS 4 m.l-t.r.

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IB seeks IS ~ lh

IB seeks IS 4 m.l-t.r.

Laura Hill May 2004

The information contained herein is based on the experience and opinions of Laura Hill it has no association to any organisation within the Nokia Corporation

Cross-national outsourcing.

How to scope and describe service content, how to make supplier/partner evaluation.

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IB seeks IS ~ lh

Consistent Process

• Proposing a different approach to procuring and managing suppliers

• One-size-fits-all will not work, but consistent tools, methodology and practice for all levels of service globally is essential

• Evaluate what is delivered where, by whom and the rationale?

• Investigate which services in each region could, and should be considered for re-engineering?

• Organisational change is essential so that all parties focus on their core-competency

• Sharing ‘good practice’ with partners

• Partners need to re-organise too; be open, honest, inventive, embrace change

ALWAYS ACCOUNTING FOR THE LOCAL CULTURE, PRACTICES, POLICIES, PRACTICALITIES AND LEGAL RESTRICTIONS

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IB seeks IS ~ lh

Intelligent Buildings

Intelligent Building?

Built 500 years ago

Structurally sound, perfect acoustics

Cool in summer, warm (enough) in winter

Has been slightly modified during its life time

And continues to meet the needs…

but the catch is that the needs have never changed

It’s not only the design & construction that makes it intelligent, but the lifetime usefulness, adaptability and operational costs

Intelligent Building?

Built 20 years ago

Possibly sound - but looks outdated

Cool (enough) in summer, warm in winter, but systems have been

routinely altered

Has had many ‘owners’ – all of whom have had differing needs Will it continue to meet the needs?

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IB seeks IS ~ lh

Intelligent Buildings

Innovative Design

Construction materials from renewable natural sources Utilities, HVAC provision

installed to allow flexibility Today's technology

BAS for critical systems Environmentally friendly Efficient use of space

Adequate facilities for occupants Sustainable value

Intelligent Services

Sustain the concept

Maintain the fabric to optimise longevity

Maintain the equipment to maximise performance Tomorrows technology

Data monitoring/act on information Environmental policies

Agility & flexibility of space

Adequate services for occupants Retain & enhance value

MIND THE GAP

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IB seeks IS ~ lh

Considerations for Sourcing

Providers of service need to be more report/knowledge centric

rather than just ‘the fixer’

If we don’t act on information, and align incentives the services can

stagnate

Contracts and SLA’s have to be well defined, but flexible enough to meet changing business needs Correct sourcing enables the

customer to focus on the what, where and who whilst the how is provided by

external experts

The customer should specify

reporting requirements, own all data, and analyse this to ensure proactivity

Generic Global Contracts can be delivered but only with essential

regional ‘tailoring’

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IB seeks IS ~ lh

Outsourcing Process

Understand…. what are the objectives

Reduce operational costs (do we have a sum in mind, is it realistic/proven) Savings in the cost of doing business

Process improvements

Productivity gains, including technology & tools Reduce or eliminate unproductive tasks

Optimise resources across a wide scope of activities Eliminate managers managing managers

Focus (maintenance in particular) on higher priority issues

Assess…. the options

What is our current state (contracts, SLA’s, spend) How mature is the supplier market

What ways could we procure What method shall we employ

Which services are in the scope, which locations Who should be on the team (use your experts)

Soft costs

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IB seeks IS ~ lh

Rationalise, Consolidate and….

Germany

Proposal

Proposal ITT/RFQ

M & E maintenance - All similar locations require similar service

$

$ Paid

Administrator Personnel Evaluate Response

$ $

$

Agree Contract

Invoice acceptable Ongoing Management

Supplier Invoice Supplier Invoice Supplier Invoice

Does Proposal

meet needs

Supervisor

Mail from Accounts

Suppliers Accounts

Hungary

ITT/RFQ

$$ $

Agree Contract

Supplier Invoice Supplier Invoice Supplier Invoice

Does Proposal

meet needs

Mail from Accounts

Suppliers Accounts

Denmark

ITT/RFQ

$$

$

Agree Contract

Supplier Invoice Supplier Invoice Supplier

Invoice

Does Proposal

meet needs

Supervisor

Mail from accounts

Suppliers Accounts ITT/RFQ

ITT/RFQ

Supervisor Yes

No

Yes

Proposal Proposal

Proposal No

Yes

No Yes

No

Yes

No Yes

Accounts Payable Security IT Purchasing

Legal

Legal Security

Purchasing

IT

Legal Security

Purchasing

Supplier A Supplier B Supplier C

HR HR

HR

Imagine the magnitude when this time and effort is repeated for all

services to facilities

Each country manager has differing levels of skill

Every contract has differing specifications, differing price levels

100’s of relationships to manage

1000’s of invoices to process

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IB seeks IS ~ lh

…..share good practice

Europe

M & E maintenance - All similar locations require similar service

$

$ Paid

Administrato r Personnel

Invoice acceptable Superviso

r

Suppliers Accounts APAC

Personnel Evaluate prospective

partners

Management

Superviso r

Accounts payable

U S A

All production facilities

Personnel Superviso r SLA's /

Criteria

Service Frame Agreement Statement

of Work Familiarisatio n/Mobilisation ITT/RFQ/RFP

Non Disclosure Agreement

Fixed monthly sum € CC / m2 / per person

Special Works / exceptions Securit

y

Legal IT

Purchasin g

$$$

Select a partner

Invoice

Y e s

No HR

Supplier

Operational performance Local

Agreemenmt Local

Schedule

P o s s i b l e expansion to other countries

Strategy, specification and same process for all services to facilities

Each country manager has same ‘toolkit’

Each contract has best fit specifications, similar,

market proven price levels 10’s of relationships to

manage

10’s of invoices to process

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IB seeks IS ~ lh

Outsourcing Process

Scope…. include as much as possible

Reduces the risk of pricing variables

Enables the service provider to quantify workload Bundle the services where there are synergies

Specify a solution to ensure ‘apples/apples’ comparison Don’t be too prescriptive

Provide as much detail as possible

Be honest …there are data/information gaps!

Look for innovation, off-the-wall suggestions

Evaluate…. at different levels

Use measurement criteria Involve the team

Weight the elements of operational content

Appraise the pricing separately and from different angles Risk Analysis

Re-evaluate throughout the selection process

How will on-going success be measured and rewarded

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IB seeks IS ~ lh

Operational Criteria

No. Selection Items Wt. Score Total Score Total Score Total Score Total

1Management experience involving major corporate headquarters office and distribution/warehouse properties of the same or similar types and locations.

13% 6.60 8.58 8.00 10.40 8.00 10.40 5.00 6.50

2Sites and facilities currently being operated and managed by the Contractor.

8% 5.80 4.64 7.70 6.16 7.75 6.20 5.00 4.00

3Thoroughness and demonstrated insight as reflected in the "Staffing", "Subcontracting" and

"Implementation" plans required by this RFP.

8% 5.20 4.16 6.80 5.44 5.75 4.60 4.75 3.80

4Operations and Maintenance self performance experience

10% 6.00 6.00 7.00 7.00 6.25 6.25 4.25 4.25

5Prior experience in providing services for

Owner/Occupiers of sites and multiple facilities on a site.

7% 6.60 4.62 7.40 5.18 7.50 5.25 4.50 3.15

6Experience of off-site and on-site personnel responsible for supervising the operations and management of the sites and facilities.

10% 6.40 6.40 6.80 6.80 7.00 7.00 4.00 4.00

7Accreditation by or membership in professional and/or industry trade groups.

4% 4.80 1.92 6.00 2.40 8.25 3.30 2.75 1.10

8Ability to provide administrative support services, accounting reports and payroll services for on-site personnel in accordance with Nokia requirements.

6% 6.40 3.84 7.20 4.32 7.75 4.65 4.25 2.55

9Ability to provide services with in-house personnel,

with specific facilities and technical experience. 4% 5.20 2.08 6.00 2.40 6.75 2.70 4.00 1.60

10Written policies, procedures and systems for control and reporting.

4% 4.80 1.92 7.20 2.88 4.75 1.90 2.75 1.10

11Procedures for procurement of services and supplies. 3% 6.00 1.80 7.40 2.22 5.50 1.65 2.75 0.83

12Country coverage relevant to EMEA 8% 6.60 5.28 7.20 5.76 8.25 6.60 2.00 1.60

85% 70.40 51% 84.70 61% 83.50 61% 46.00 34%

SELECTION CRITERIA SP 1 SP 2 SP 1 SP 2

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IB seeks IS ~ lh

Shifting Responsibilities

FOCUS OF FM!

CORE NON-CORE

CUSTOMER LIAISON

PARTNER MANAGEMENT

SERVICE DELIVERY STRATEGIC

MANAGEMENT

&

R&D

OPERATIONS MANAGEMENT

DIRECT MANAGE DELIVER

Customer SUPPLIER Responsibility

distribution today!

Target!

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IB seeks IS ~ lh

Business Risk Analysis

• The business activities, the facilities infrastructure and associated risks should be understood by the facilities team

• What is required

– Level, complexity and criticality of ‘maintenance’ service

• Where is it required

– Similar facilities, business usage, locations, geography, climate

• Who is best placed

– Specialists for technical, utilities, general etc., in-house or externally sourced

– Avoid responsibility-ping-pong

• Two main methods of managing

– Output based ~ a performance standard

(temperature in our production facilities must be between 20^o - 22^o)

– Input based ~ prescriptive ~ H&S/insurance/regulatory

(replace air filters every x months, inspect & test lift cables every x months)

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IB seeks IS ~ lh

Continual Performance Measurement

Varying levels of detail required for Site (building), Regional (country), and Global analysis

Terminology, criteria, description and reporting systems must be consistent and compatible

Findings must be shared, lessons learnt, and corrective solutions / good practices cascaded where appropriate

Data in-put / helpdesk / selected partners / FM analysts must all be trained in the use of reporting tools

Categorisation (eg. Warranty, PPM, Technical failure, Damage, Cleaning, ‘Wish- list’) must be clearly explained

There’s no point if you don’t use the data!

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IB seeks IS ~ lh

Partner Incentive Alignment Concept

? The “current spend” established on a project basis for selected services that could be bundled

? Partner assumes management of related services, assets and staff

? Partner then helps drive down the cost of delivering services throughout the term of the agreement

? The partner will share in the savings made

Gain to be Shared

Current service spend

(Customer) Current service spend

(Customer)

Proposed partner Cost Proposed partner Cost

Aligns Customer and partner objectives - both benefit by driving down costs.

1 3 5 7 9 11 13 15 17

0 100000 200000 300000 400000 500000

Share to partner

Direct bonus to partner Staff Savings for Company

80%

Y

90% 110% 125%

Z

X

Profit Axis

Performance Axis

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IB seeks IS ~ lh

IB & IS l.h.e.a

Build

Systems

1 2 3

Maintain Retain

value

Monitor Design

NTS

Site Plan-017-3\ * 03/07/01 S i t e P l a n SOUTHWOODSite Plan NOKIA UK LTD

Space agility

& flexibility Global

services

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IB seeks IS ~ lh

Questions/discussion

if time permits