This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.
Traditional outsourced facilities management business is being disrupted through the emerging on-demand services model, reflecting the fact that the way people search for and buy services and communicate with suppliers is changing.
The new model is typified by online service platforms for digital convenience with instant access to a network of suppliers who deliver specialist services to commercial and industrial building owners and operators. The more advanced services also leverage their data-driven solutions with analytics on service providers and insights on building operations and expenditure.
Whereas many larger organisations opt to outsource, the subscription fees can deter smaller businesses, writes Anindya Biswas, Digital Transformation Lead at JLL, in a recent article on how facilities management is moving into the on-demand era. With on-demand platforms, companies can pay per service without a subscription fee, or subscribe for premium amenities. “For many companies, making the costs of facilities management more flexible and more accessible is a welcome change,” he says.
This new generation of digital marketplaces is enabling in-house facilities managers to procure maintenance and repair services and other workplace support such as cleaning, IT support and building security from pre-vetted specialist providers.
Customers can benefit from standardized, lower pricing, and quick, convenient service. By managing all workplace tasks and facilities vendors through a single platform, FM teams are able to save several hours a week sourcing new vendors, scheduling services, and processing payments, saving businesses up to 30% on their facilities services. Service providers benefit from a centralized source of work with no marketing costs.
Established players offering on-demand facilities management services in the United States include ServiceChannel and FacilitySource. ServiceChannel, a cloud-based service automation platform for multi-site facility management, was established in 1999 and was backed by a $54 million growth financing round in May 2017 led by Accel, helping the company accelerate the transformation of an $85 billion facilities and contractor management market to a more modern, data-driven and automated approach.
ServiceChannel is a digital marketplace of 50,000 service provider companies with analytics and intelligence into the multi-billion annual repair and maintenance spend of their clients in the retail, restaurant, health and fitness, entertainment and grocery sectors.
The most significant deal in the space was the acquisition of FacilitySource by CBRE in June 2018 for $290 million. FacilitySource offers a proprietary SaaS technology platform, a staff of approximately 550 professionals, 25,000+ qualified service providers, the FS Elite vendor development program and a dedicated 24/7 operations support centre. With estimated revenues of $150 million, FacilitySource provides services to multi-site businesses, including some of the largest US retailers, such as Target, Macy’s, Starbucks and The Home Depot.
Startups focused on the on-demand commercial office space include Managed by Q founded in 2014 and Eden. The We Company, formerly WeWork, acquired Managed by Q in April 2019 as part of its quest to take over the office. Eden is available in 20 major US metro areas, with more than 1,500 service partners providing all facilities and workplace experience services required to run an office. Top requested services on Eden include janitorial, handymen, IT support, electricians, plumbers, cabling, snacks, coffee, food delivery, and more. Using Eden’s platform, its office manager clients receive bids for any requested service, consolidated billing, service partner communication tools, and access to Eden’s ticketing / work-order software.
Other leading real estate service firms have also been augmenting their Occupier Services business through acquisitions of on-demand service companies. JLL was an early mover in digital platforms with its acquisition in December 2015 of Corrigo, a Computerized Maintenance Management System (CMMS), which enabled a transformational shift in the way JLL’s clients used automation to streamline everything from initiating and tracking work orders, managing bids and monitoring completed work to paying invoices. JLL have since introduced FacilitiesFlex - built and hosted on the Corrigo platform, a fully automated, end-to-end FM service for businesses to raise and track maintenance work orders and delivered by one of JLL’s approved service providers.
Cushman & Wakefield expanded its North American coverage through the acquisition of QSI Facilities in November 2018. The US firm specializes in on-demand facility maintenance and project management services through a national network of facilities contractors.
New entrants addressing on-demand services in the US residential real estate sector include Super subscription service, Homee and Hello Alfred. While Homee provides homeowners with instant access to thousands of skilled service providers throughout the United States, its on-demand service is available for any type of property, from homes and condos to offices and restaurants, and the company counts some of the largest national single-family and multi-family portfolio companies as its clients.
According to Anindya Biswas of JLL, “For now, these on-demand platforms are in their infancy, but they could take over traditional management models as the sharing economy moves from being a disruptor to being the norm within real estate.”