Outsourced facilities management saves precious financial resources

Life sciences companies - including mid-market ones - are finding value in an outsourced service


Outsourcing facilities management is a time-tested strategy in industries like banking, consumer products, technology—and the multinational life sciences companies have long recognized the benefits of outsourced facilities management. Yet, it is commonly held that only the global companies truly benefit from this strategy’s economies of scale. Middle-market life science companies can actually benefit enormously by outsourcing facilities management and related services. Service providers can ensure that best practices drawn from life sciences and other industries are infused into every program regardless of company size.

A qualified facilities management provider can generate millions of dollars in savings through operational efficiency improvements, create workplace environments that promote sustainability and productivity, and ensure safety and regulatory compliance across a life science company’s facilities.
Aside from the very largest companies, the life sciences sector has been relatively slow to entrust facilities to outside providers. Historically, the perceived risks to sensitive R&D operations and highly specialized production environments were considered too high to justify the advantages of outsourcing.

However, the sector is now one of the top three in terms of demand for facilities management outsourcing, according to KPMG’s 2012 Real Estate and Facilities Management Outsourcing Pulse survey. Companies have learned that the risks of facilities management outsourcing can be mitigated by working with a real estate services provider that has a proven track record in working with the unique requirements of life sciences companies.

What does professional facilities management include?
Real estate and facilities comprise one of the largest line items on the balance sheets of life sciences firms of all sizes, so facilities operations is arguably one of the best places to look for cost containment without negative impact on the business. Real estate offers many opportunities that not only save money, but also enhance the business overall.

Consider energy usage: about one-third of the energy used by buildings is typically wasted through inefficient equipment or machinery working improperly. An expert in facilities energy management can gather useful data on building systems performance, and continually implement improvements that save millions of dollars and reduce its carbon footprint.

Energy management is just one aspect of an integrated facility management program. The benefits are clear in virtually every area of outsourced services:
  • Best practices for corporate real estate management. An outsourced real estate services provider with a global client base that includes life sciences organizations will bring diverse best practices to bear on a life sciences company’s portfolio. For example, an outsourced real estate service provider can apply best practices to shorten the considerable—and costly—lag time between the completion of a merger and execution of the follow-on real estate strategy.
  • Critical environment management and regulatory compliance. Outsourcing can help a company improve its compliance procedures and prevent manufacturing plant shut-downs. A facilities management provider with expertise in life sciences operations can offer expertise in regulatory compliance, hazardous waste management, safety and security, and more.
  • Improved safety and security. With life sciences expertise, an outsourced real estate services provider can help a company manage risks associated with handling extremely valuable or hazardous materials. The provider also can manage sophisticated security systems required to reduce the risks of intellectual property theft or threats to employees working with highly valuable ingredients or on controversial projects.
  • Sustainability. The better real estate service companies train their engineers and facility managers in energy efficiency and environmental sustainable practices and materials.
  • “Smart” systems and engineering expertise. Advanced facilities management companies have the engineering expertise to install and manage computerized “smart” systems that remotely monitor all aspects of building performance.
  • Sourcing efficiency. An outsourcing partner will reduce procurement costs through bulk buying and experience in evaluating, engaging and managing suppliers, while supporting corporate social responsibility objectives relating to diversity and sustainability.
  • Career path for facilities staff. Every outsourcing service provider wants to keep its facilities staff in place for the sake of continuity, and wants any in-house to outsourcing transitions to be as smooth as possible. Long-term, it can be good for the careers of facilities professionals to work for a real estate services company that offers advancement opportunities in their area of expertise.

Competitive advantage beyond cost savings
Outsourcing corporate real estate and facilities management can lead not only to cost savings from centralized purchasing, energy management and so forth, but also to increasing the strategic use of facilities. Life sciences companies that outsource R&D facilities management can even reduce the cost of R&D as a percentage of revenue—a key financial benchmark that is particularly critical for companies considering a merger, acquisition or initial public offering.

Having survived the recent patent cliffs, the life sciences industry has emerged as a leaner, more focused sector. The new challenge is to control costs without sacrificing research timelines or safety. Outsourcing facilities management can play a pivotal role in transforming the corporate facilities portfolio into a strategic investment, rather than simply a cost center, in support of the mission to enrich and save lives.
 
Richard McBlaineABOUT THE AUTHOR
Richard McBlaine (312 228 2793 or richard.mcblaine@am.jll.com), is an international director and chairman, strategic consulting, at global real estate firm Jones Lang LaSalle, where he leads a team of consultants providing leading-edge real estate solutions for life sciences companies.