ISS: Put Two and Two Together – Jeff Gravenhorst
Managing numerous subcontractors for facility services can be a challenge. ISS group CEO Jeff Gravenhorst explains how integrated facility management offers a new approach.
Taken individually, property, security, cleaning, catering and support services might seem simple enough. But dealing with a separate contractor for each can sometimes be a hassle. For a global businesses with locations scattered across the world, co-ordinating these services can suddenly become a real quagmire. As a result, a market has opened up for bundled services with one contractor providing two or more functions.
Now, a number of larger providers are going further and offering 'one-stop-shopping', promising not only a single point of contact for property, security, cleaning, catering and support services but also to supply them on a global scale. The aim is to tidy up the tangled mess of sub-contractors and offer businesses new ways of finding financial savings. It's a tall order.
Based in Denmark, ISS is helping to drive this revolution. Like many of its competitors, the company started out focusing on a single aspect of facility management, in their case cleaning. Since the millennium the company has been growing steadily, expanding its presence around the world and increasing the number of services it can offer. Having acquired a number of smaller contractors, ISS now has a presence in over 50 countries and is one of the world's biggest employers with 485,000 staff.
This transformation means the company has the ability to provide a wide range of facility management services wherever its clients operate and in November 2009 analysts Frost and Sullivan presented ISS with their Market Strategy Leadership Award. The award recognised the success of ISS in developing a new approach to the facility management industry.
As CEO Jeff Gravenhorst is largely responsible for ensuring that the new strategy is workable. Prior to his current role, he previously served as the company's CFO, allowing him to understand that finance directors do not just want high quality services but are always on the look out for ways to make financial savings. "As a CFO you often have responsibility for facility services of the premises. So the reality is that over the years I worked in finance I also had the responsibility for the company's facility services so I've actually been a customer," Gravenhorst explains.
Integrated facility management is fast emerging as the favoured approach to facility management for many companies. The theory is that by bundling a number of services together they can be provided more efficiently, more effectively and at a lower cost. ISS, for example, provides 'soft' services like cleaning, security and catering as well as 'hard' services like property management.
Gravenhorst argues that this kind of integration offers clients a more straightforward experience. "If you keep outsourcing in pieces, then you need to maintain a fairly substantial in house organisation to manage it. If you outsource everything to one supplier, you can actually go higher into the value chain and outsource the management part," he says. "Then you have one stop shopping, and you should be able to, as a customer, deal with only one point of contact."
Many other facility management companies are also active on a global scale and manage integrated contracts but whereas they rely on local suppliers to achieve their reach, ISS undertakes all of its operations in house. It is this commitment to self-provision that differentiates the company in a crowded market. "It is an instrumental part of our strategy. If you hire ISS then obviously it's ISS people who will deliver, so they will work according to the ISS values and culture," Gravenhorst says.
From that departure point it is then possible for ISS to find ways of offering its clients additional value. The company only employs a single manager to direct the services at a given facility. At the service delivery level it is possible for ISS to train staff to perform functions in more than one area without sacrificing quality. For example, a common practice is enabling security personnel to provide reception services.
"The key point is you get somebody who is focused on making the facility work as opposed to only working on the cleaning," Gravenhorst says. "For example, if our security guards walk across the lobby and it looks dirty then it's their job to call the cleaning staff and get them to clean the lobby."
In addition, working with ISS offers the security of working with a major partner looking to build a long-term relationship with its clients. "As professional companies, the client and ISS have brands to protect. So if issues arise in the service delivery we would address these together and find ways to solve them. We will always do our best to protect the customers' integrity and reputation. Also, our global footprint provides access to international best practices and industry development," he says.
The second step in building a truly integrated platform was for ISS to spread its operation around the world. The company's expansion has primarily been achieved by buying up smaller scale providers. Without following this model, Gravenhorst thinks it would have been very difficult for the company to have grown as quickly as it has.
The advantages of expanding in this way are two fold. "Acquisition helps us by entering into, for example, security services where we don't necessarily have the knowledge. Then you get the security expertise but you also get the local expertise in that segment. If you want to grow all of those organically everywhere in the world, that's going to take some time," he explains. "By acquiring the right companies we get the local knowledge and the excellence of their service."
HP specifically sought out ISS not only to simplify its facility management but also for its ability to implement a programme across its Europe, Middle East and Africa divisions. By working with a single provider across these regions HP achieved a delivery concept that provided the best cost structure and transparency. ISS made a careful assessment of HP needs and through a country-bycountry transition process took over outsourced employees, service provisions and associated risks.
As a result of the financial crisis, many companies have seen facility management as a troublesome cost to be cut. Gravenhorst's view is that this is a risky strategy and many ISS clients have approached the situation differently.
"A lot of clients also looked for the longer term partnership where you reduce costs together in a more controlled way – possibly by increased outsourcing. That's where our model comes into play. Through our self-delivery model outsourced employees are transferred to ISS. That way they become part of the ISS staff and are trained and managed according to our standards. This provides an efficient setup as we're then able to integrate between services and functions," he says. "As opposed to just taking ten different sub-suppliers and then saving 10%. In this industry nobody makes 10% so you know something wrong is going on."
Just as large corporations have struggled through the financial crisis, many small suppliers and contractors have folded. Gravenhorst believes that the sheer size of ISS makes it a dependable partner and means it can minimise risk to its clients.
The future for ISS will see a concentration on providing a greater range of services and finding new ways to combine those services. "The opportunity is to keep working on the integrated model as an alternative to traditional cost cutting in facilities services. That is clearly the opportunity and that's a huge opportunity: it's barely touched on a worldwide scale," Gravenhorst says. With his experience as CFO, COO and now CEO, Gravenhorst is well placed to drive the company forward and balance his customers' expectations of getting a high-quality service while saving money.