Vested outsourcing, the hybrid business model in which the client and the service provider focus on shared values and goals to create a mutually beneficial arrangement, is relatively unknown in the FM industry and was the subject of a popular debate at the recent Facilities Management 2016 in Birmingham. Supporters of the vested model argued that traditional outsourcing and business relationships focus on the contractual relationship, creating win-lose arrangements where one party benefits at the other’s expense. In contrast, a vested agreement creates a win-win relationship where both parties are equally invested in each other’s business success.
The expert panel joining the debate on what is vested outsourcing, and what potential does it have in the FM sector, were OCS head of re-engineering Julie Jackson, Scott Newland COO of European Customer Synergy (ECS), James Wood, director of Orchard Consulting, Julie Kortens, senior business executive for Channel 4 and Bellrock sales and marketing director Jerry Kane.
Under a vested arrangement, all parties must agree upon a “desired outcome”, which can include cost reductions, revenue increases, schedule improvements, increased market share and better levels of customer service, that can be measured objectively to determine if the relationship is successful. By sharing their expertise and aligning their goals, client and service provider are able to drive innovation, adapt to changing needs and mitigate risk. This strengthens the sense of partnership and trust and encourages a lasting relationship.
The panel felt that vested outsourcing may be a “posh term” for a concept that already exists in FM, such as Gainshare contracts, but that honesty, transparency, loyalty and commitment are needed on both sides to implement it. Julie Jackson highlighted that you must have the right contractual framework to allow the move from buying transactions or services from suppliers to truly working as one team with equal risk and reward to drive optimised deliver in ever sense. Julie Kortens said that the partner and client working together to make each other look good happens at Channel 4 but is rarely found elsewhere.
According to the panel, the current barriers to vested outsourcing in the FM industry are:
• a lack of knowledge about vested outsourcing
• traditional and one dimensional thinking
• reverting to other procurement models as soon as a problem occurs
• the lack of real partnerships
• no ‘good practice’ models.
Despite this, the general consensus of the panel was that vested outsourcing is a model that should be aspired to by FM and procurement professionals.