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Outsourcing: Managing Service Providers in the Data Center

When FM services are outsourced, a facility executive’s contract management and communication skills become mission critical

By Michel Theriault   Data Centers

Failure isn’t an option when managing a critical facility. That’s why organizations invest in robust designs with plenty of backup systems. But designing a bulletproof facility isn’t enough to ensure reliability. Effective facility management in this environment is also essential to maximizing uptime.

When facility management functions are outsourced in critical facilities, facility executives need to take special care that potential sources of trouble are minimized. Simply put, unplanned outages in a critical facility that disrupt a company’s core business operations will be the facility executive’s burden, whether facility management functions are outsourced or not.

Fortunately, there are a variety of established measures facility executives can take to manage the relationship with their outsourcing providers to reduce the potential for problems. These include proactive performance management and reporting, quality management, effective interfaces with the managers of the critical operations, and strict processes for maintenance and repair activity, with well-defined interfaces. For best results, these principles should also be applied to individual subcontracted services and to services provided by in-house staff.

More Than Performance Measurements

Managing performance goes beyond introducing key performance indicators (KPIs), tracking results periodically and penalizing failure. KPIs are only part of the overall approach to getting results and eliminating failure. Rather than looking in the rearview mirror, facility executives need to be looking forward. They should start with an integrated contract management approach with service providers to achieve joint success. An integrated contract includes performance measurements that address current performance and provides forward-looking trends and measurements that are analyzed and acted upon proactively.

Integrated contract management also includes some form of service-level definitions. The purpose is to clarify the responsibilities and document expectations and performance. This is key with both contracted and internal staff. A quality assurance approach should govern the processes and service delivery. A quality program provides consistency and monitors adherence to effective procedures and practices.

Finally, facility executives should draft policies to limit the possibility of failure. These include traditional ticketing and change notification processes used in IT, only applied to facility management, whether in-house or outsourced.

Contract Management

For outsourced facility management services, the contract document is an important tool for ensuring success. But the facility executive’s approach to managing the contract is just as important.

The outsourcing provider has a vested interest in success, just as the organization does. Facility executives who want flexibility will have to manage the contract relationship accordingly. A constructive approach to managing the contract can help establish a relationship where the service provider understands and addresses client needs without always checking the contract.

The contract language itself should be flexible and enable the facility executive to adjust priorities, and make necessary changes through the full term in a constructive, planned manner. While the procurement department will likely be responsible for the contract documentation, make sure it has flexibility in addition to having the standard contractual, legal and risk clauses. This will make it possible to manage the contract effectively beyond start-up.

The contract should include provisions for performance management, including the ability to adjust or change the measures and targets to adapt to changing priorities. Effective communication, reporting and processes should be spelled out in the contract, with structured meetings that support the contract management approach and forward-looking management.

Given the transitory nature of using service providers, the contract and related specifications, as well as the procurement process, should define the responsibilities and processes for transition-in at the start of the contract as well as transition-out at the end of the term. These are among the most risky periods in a contract cycle, particularly for management of critical facilities. Transfer of personnel, training and knowledge during a transition are especially important.

Proactive Performance Management

Effective management calls for a proactive approach, not just the typical static measurements. Rather than simply tracking items such as call-response time, maintenance backlog, temperatures, and similar key measures, reporting them against targets, and penalizing the supplier, facility executives should use that information to manage future performance, with trending and analysis by the service provider. This provides advance warning when services, systems or processes are trending towards a failure. Doing so also enables the service provider to correct them before they fail. Managing performance this way is more effective than the carrot-and-stick approach. Remember, if there is a failure, facility executives will ultimately be held accountable, no matter who was responsible.

For critical facilities, measurements extend to key aspects of the system where trends and other management information are used to prevent failure. Frequently, equipment performance, such as current draw, is recorded during preventive maintenance tasks. But such data are seldom compared to historical readings to see trends and initiate action. In a critical facility, it should be part of the overall management approach.

Other examples where trends should be identified include temperature in equipment cabinets for a data center facility, humidity in a printing facility or biomedical refrigerators in a hospital. Such sensors may be alarmed and even measured for supplier performance if they go outside a specified range. But they also should be trended and analyzed. If temperatures frequently rise to just below a critical threshold but don’t exceed them, this indicates a performance problem that is likely to create a failure in the future. Facility executives should assess the root cause and fix it now rather than waiting for the high temperature alarm.

Action Plan

Facility executives should require the supplier to investigate, report on causes and initiate corrective action for measures that are within a certain tolerance but don’t exceed the targets. This should be done even if measurements are used to penalize a supplier. Instead of penalizing for non-performance on non-critical items, the supplier should be given a chance to fix the problem first. This creates a better relationship and achieves better results. If their action plan is not successfully implemented or the issues are recurring, a penalty could then be applied.

For management purposes, measures that predict reliability or potential performance issues should be included. By requiring analysis and a corrective action plan as described above, facility executives improve the likelihood of success rather than simply penalizing failure.

Facility executives should be careful about penalizing the service provider in existing facilities if the problem relates directly to the reliability of existing equipment and lack of redundancy. In these cases, assessing the service provider’s activities against expectations, such as adhering to process, response to issues and failures, preventive maintenance completion rates and identifying risk, is a better choice. Proactive performance management puts facility executives in a better position to mitigate risks.

A key responsibility of the facility management service is to prevent failure in a critical facility and ensure the company’s core business isn’t negatively impacted.

Quality management provides an additional measure of protection against failure when implemented and used effectively. Even if ISO certification isn’t required, facility executives should implement a quality management system that follows the same principles.

Quality Management System

Quality management systems themselves don’t ensure quality. Rather, they ensure that quality processes are put in place and used consistently. Effective processes and procedures are the keys to achieving quality. A quality management system uses checks and balances, including auditing and testing, to ensure that the processes and procedures in place are used consistently. A good quality management system also enables flexibility by including a process to identify changes that should be made to processes and procedures.

Good intentions will fail if appropriate procedures are not in place to reduce potential failure. These procedures should be built into the contract by focusing on potential failure points and addressing them upfront. If these procedures and processes are not in place already, they should be developed in conjunction with the service provider or the in-house staff.

Facility management processes should be integrated with the core business operations at the facility. The best examples are the processes used by IT professionals to deal with change and issues management within their own systems and infrastructure. Whether facility executives use the IT processes or a parallel system, integration is critical to ensure communication, planning and approval so activities such as preventive maintenance and repair don’t impair the core business. For example, if an activity introduces risk, such as taking a backup system off-line, an alternative backup or a process should be identified to quickly rectify failure during the work.

This planning and approval process is critical. In a hospital, for instance, maintenance activities can have a serious impact if not planned properly. Typically, hospital representatives are given advance schedules of activities, along with an assessment of potential risks and plans to mitigate the risk. The hospital representative can then request changes to the schedule or modify work activities to suit hospital needs and schedules. That approach reduces the chance that a seemingly minor activity will compromise the hospital’s critical clinical and patient related activities.

Effective communications and a good contract management relationship are the main themes of the performance management approach. Because human error is responsible for the majority of failures, implementing this performance management approach in a critical facility can improve the chances of success and minimize risk.

Service-Level Definitions

Service-level definitions spell out expectations, technical service specifications and performance requirements. They are similar to contract specifications, but instead of providing highly prescriptive, task-based requirements, they use a results-based specification. This gives service providers latitude to use their own skills, technology and knowledge to adjust services and achieve results rather than having to adhere to prescriptive specifications.

Sometimes detailed technical specifications are necessary. These also help the service provider properly staff and price the service — for instance, specifying predictive maintenance activities above and beyond traditional preventive maintenance tasks.


Michel Theriault is the principal of Strategic Advisor, an independent consulting firm providing strategic solutions for facility and property management companies. He has extensive experience providing in-house facility management services, outsourced services with the largest outsource provider in Canada and as a service provider to the facility and property management industry.

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  posted on 5/1/2008   Article Use Policy

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