Integrated facility management (IFM) in a connected FM market

Integrated facility management (IFM) isn’t a new evolution in facility management. The outsourcing of operational facility management processes and related management activities exists for around two decades.

As anything that has to do with the built environment, technologies are among the factors that change the overall facility management (FM) market, with the Internet of Things (IoT), big data, and advanced analytics capabilities being drivers in an increasingly connected environment. Moreover, expectations and priorities are changing and that has a significant impact on the FM market too, especially for integrated facility management.

The main focus in integrated facility management so far mainly concerned convenience (running the business instead of the facility or facilities), operational efficiency and of course, cost savings; less truly added value.

Integrated facility management concept

Integrated facility management – from cost savings to added value

According to a new report, the focus of facility owners is shifting from cost savings to more interesting aspects, , including business productivity and user experience, for facility owners themselves and for the integrated facility management market.

And how else could it be with the increasing attention for topics such as productivity and user experience in the scope of smart buildings and changing workforce priorities? The evolutions in the workplace and the future of work play a role in this equation too as employee well-being, for instance, becomes increasingly important in the smart workplace and office buildings, still leading commercial real estate developments.

Moreover, new technologies such as the ones mentioned ultimately could enable advanced Industrial IoT types of use cases in integrated facility management, such as proactive and even predictive maintenance once providers embrace these technologies.

One could say that with this shift from cost savings to improvements on various business, user and capability levels, facility management is further maturing and, along with that, come more opportunities for integrated facility management. Compare, for instance, with how many digital transformation activities still are in earlier stages where the key focus is cost savings for many organizations, rather than value creation or added value; less mature.

The commoditization of FM services in the developed markets of Europe and North America is compelling suppliers to innovate to maintain margins and growth says John Raspin Partner at Frost & Sullivan
The commoditization of FM services in the developed markets of Europe and North America is compelling suppliers to innovate to maintain margins and growth, says John Raspin, Partner at Frost & Sullivan

The report, entitled “The Future of Facility Management (FM), Forecast to 2025“, and presented in early February 2020 by Frost & Sullivan, states that the shift in facility owners’ focus from cost savings to service outcomes, user experience, and business productivity is opening up the market for integrated facility management with integrated facility management as a result gaining a larger share of the FM market.

The research firm expects the IFM market to increase that share of the total addressable facility management market from 10.3 percent in 2018 to 13.9 percent by 2025.

During the same period the overall facility management market is forecast to grow from $819.53 billion to $945.11 billion at a compound annual growth rate (CAGR) of 2.1 percent.

Tapping into the power of analytics and new revenue opportunities for the facility management space

Especially facility management vendors who have built or acquired capabilities in analytics will see greater growth opportunities.

Covering the transformational trends and opportunities in the facility management market, the report also explains how the competitive landscape is evolving. John Raspin, Partner at Frost & Sullivan explains: “Partnerships, collaborations, and merger & acquisition activity are rapidly altering the competitive landscape, as converged facility management services, property management, and energy management (EM) are proving vital to stay relevant”.

At the same time, these new business models and the increasing prevalence of the mentioned technologies and advanced connectivity create a need to build or acquire data analytics capabilities to complement service delivery, Raspin adds.

Intelligent facility management is expected to increase its share of the total addressable facility management market to 13.9% by 2025, while the total facility management market is forecast to reach $945.11 billion by 2025

Frost & Sullivan further states that the commoditization of facility management (FM) services in developed markets (Europe and North America) compels suppliers in these markets to innovate if they want to maintain margins and growth. For integrated facility management (IFM), by 2025 the fast-growing market will, however, be the Middle East region. The research firm also expects more Chinese and Asian suppliers in the top tier in the TOTAL facility management market (so, IFM included).

The transformations and opportunities in facility management don’t just concern integrated facility management, of course. Facility management players are looking beyond IFM and deliver sophisticated client advisory services to their customers, Frost & Sullivan says.

To tap into new revenue sources, they’ll look more into, among others:

  • The integration of workplace change management (WCM) into core facility and integrated facility management services as customers want more productivity.
  • The acquisition of technical facility management skills and energy services in high-growth industrial and commercial applications.
  • The development of expertise in specific categories of use cases, including workplace analytics.
  • Targeting the hard services market which will be a faster growing segment than soft services, and whereby success will be determined by technical ability, customer intimacy, and self-delivery per Frost & Sullivan (note: hard services have a technical building maintenance impact while soft services, for instance, include cleaning and other services that don’t).
  • The broadening of their service offering and moving into the higher growth areas, such as energy management and, again, IFM.

As the built environment keeps changing and there are ample new applications in areas such as security and access control and we also see more focus on sustainability with new regulations in many regions, do expect more competition here as well.

Facility management services are changing on multiple levels in times where everything in the built environment, from so-called building automation 2.0 solutions (e.g., cleanliness and hygiene management) to the core of buildings, including building management systems, is evolving with IoT and new technologies, even changing the face of building system integration overall.

Picture: courtesy Frost & Sullivan – more on the report here