Nigeria’s telecoms sector is mature for facilities management outsourcing – Akintunde

The Telecommunications Industry is one of the major contributors to Nigeria’s economy. A recent report however stated that the industry spent about N540 billion on power related issues in 2014. In this interview with Femi Akintunde, MD/CEO of Nigeria’s leading Facilities Management Company, Alpha Mead Facilities & Management Services Ltd, Jumoke Akiyode highlights a broad range of Facilities Management and maintenance issues that can help the industry get more value from its outsourcing investments and deliver services more efficiently to its customers. Excerpt

As the CEO of a Facilities Management company Nigeria, what is your assessment of the Facilities Management industry in Nigeria

The Facilities Management sector in Nigeria is just coming of age. There are still very few companies in the country today that have the manpower, financial and skill-base capacity that can respond to the FM needs of the Nigerian market. This has tremendously affected the decision of most businesses in Nigeria to outsource their FM; and it is one of the reasons most of them still house a Facilities Management or maintenance department.

Having said that, we have seen a lot of FM outsourcing activities in industries such as: Oil & Gas, Real Estate and Financial Services, and it is also worthy of note that the first integrated Facilities Management outsourcing was also recently commissioned in the telecommunications industry about four months ago.

So, in our assessment, the only industry where integrated Facility Management outsourcing has matured in Nigeria is the Oil and Gas sector, which has been outsourcing for more than 10 years. They are the first industry in Nigeria to outsource FM in an integrated form as it is done internationally. Before now, what most organizations did was to have an in-house department that looked after various contractors who do different things for them.

Your company is currently the only Facilities Management Company in Nigeria delivering integrated services in the Telecoms sector, how would you assess the current level of market maturity for FM outsourcing in the sector

First, I think we should put some things in perspective. The assets in the telecoms industry include both operational and non-operational assets. While the operational assets are the towers, masts, and telecommunication equipments, the non-operational assets include the cooling systems, generators, elevators and indeed the entire building or structure in which those operational assets reside.

What is currently obtainable is that most of the companies pay attention to the operational assets. In fact, they outsource the operation of these assets to tower operating companies to enable them deliver services to their customers. However, not much attention is given to the facilities where these assets are housed, which is where FM comes in. Besides the recent integrated outsourcing in the sector, most of the telcos still house FM or maintenance departments. In other climes, FM outsourcing is very popular in the telecoms sector as with other industries. If you look at international telecoms companies like BT in the UK for example, they do not spend their resources doing in-house Facilities Management because it is not core to them, so it is considered a distraction.

Before now, all we had in the industry was NITEL, which was an institution on its own. They had everything under the umbrella of government. But telecoms companies operate in Nigeria today        as an enterprise, so they have to be cost efficient. NITEL had no competition. It was a monopoly. But today’s telecoms industry has to deal with growing socio-economic, political and organizational pressures that demand that they look more closely at what will make them more competitive relative to the others.

When they understand this, they will begin to focus on their areas of core operations. When they identify operations like FM, which are not core to them, they will follow the international model to outsource them.

So my assessment is that the telecoms sector has come of age to begin to think of focusing on their core business of providing quality services to Nigerians, and outsource their FM to reputable companies with capacity and proven track records of success that can help minimize such huge spend. Also, the FM sector needs to develop and invest in capacity to be able to support this industry.

What are the specific business value propositions for the Telcos to outsource FM services

From my analysis above, one thing that should have come out very strong is the fact that as an enterprise, the telecoms companies want to be cost competitive. This is because when they are cost competitive, they have headroom to improve their margins. So in terms of value proposition, the first thing is access to best-in-class standards and industry best practices. Telecoms is a specialized area for FM, so it is going to be very expensive for a single telecoms company to invest in all the procedures, systems, standards and people required to deliver efficient operation, when a single FM company can invest in these standards and deploy it for a number of telecoms companies. In other words, it’s cost efficient to outsource.

In addition, as a telecoms company, you will know where you will get the best-in-class telecommunications facilities and systems, but not how to ensure your elevator work best, your premises, air conditioners, electricals or plumbing services deliver optimally. These things, when provided with the right standards, help your employee deliver at their best. But if they are not working well, it can reduce productivity. Take a typical office of a telecoms company, if there is power outage due to poor maintenance, that’s loss of productivity. If the cooling systems are not working well, people are not comfortable and it could lead to irritation. If they can’t power systems or the server is down, a lot of things will happen to disturb their operations. While these things are non-core to their operations, they are critical to the success and continuous functioning of their business.

Another value proposition is flexibility. When you manage noncore facilities in-house, you are stuck with the resources you have acquired to do it and changing the strategy and looking for other options is limited. But when you outsource, it is more flexible in the sense that you can outsource to an FM company and if they are not delivering, you can decide either to do it yourself or give it to another company. But once you keep your staff in a facility management department in-house, you have to continue to maintain them and if they stay too long there, they get stuck and become less skilled to come back to your core operation. You may also run into the problem of managing the career of these people over time in a business that is not core to them. This creates a lot of lethargy and disincentive for the staff as time goes on and they become less productive, but you still have to pay them salaries and so on.

Next to that is the limitation of in-house staff. An FM company can bring experience from other business terrains to your business. From example, in our company we have people from different disciplines coming together to deliver strategy to you. But how many telecoms companies can set up a specialized technical, operations and commercial department for FM

Also, when you outsource your FM, you are actually transferring a lot of risk to the third party who is better equipped to manage these risks. They can deliver improved value and quality enhancement in terms of your operation and your services to customers. So when you put these together, they deliver something to you – improved value.

Look at the cost of tools and assets; why should they be spending so much money to procure tools and equipment that are not directly linked to their operations? If building maintenance capacity is not your business, why do you have to keep investing in that area? And because they are procuring these tools, processes, and systems for themselves, they are limited. But there are companies out there whose core business is FM and they provide these services to others, so they can leverage on economy of scale. These FM companies also have a larger skill-base because they are not limited, it’s their business.

So in your view, what are the key things to consider as the industry begins to tilt towards FM outsourcing

You see, business process outsourcing is a sophisticated structure in the service industry and this is known worldwide. I think this is the first point of call for the industry. If FM must come to the rescue, the first thing to do is to ensure that the structure and strategies of the outsourcing are very clear and tidied up. The operators must ask themselves: do we have the capacity to outsource? Do we understand this business model? Are the FM companies we are talking to well positioned in the business environment to be able to answer the questions that have been disturbing us? If you outsource wrongly, you will get wrong results.

So to answer these questions, the number one thing the telecoms industry should do is to re-examine the process of outsourcing facilities management. For those who are currently doing it in part, how do they outsource in the first instance? Was the right pricing model applied

Let me give you an instance why these is very important, when we entered into the industry, one of the first things we saw was that the pricing model used for the tower and base station outsourcing was about to be applied for facilities management. We knew that if that model was applied, it was going to lead to a major failure. So we had to come back, re-strategized and went back with the right pricing model that will work for FM. I believe for FM to come to the rescue, the structure of outsourcing and philosophy need to be well understood between the outsourcing customer and the outsourcing vendor.

Telecom companies have outsourced other business models, why do you think it’s taking them time to outsource FM

I think there was an assumption by most of those telecoms companies that the people they will be outsourcing to cannot do a better job; without actually assuring themselves that all the critical factors have been put in place. I believe that at the time they started outsourcing, the capability in the market was limited and they seemed to focus so much on what is in it for them rather than understanding that they also need to invest to build the capability in the FM market place. They did not invest to build capacity: they probably think the FM market is mature enough, and should be able to run.

Don’t forget, a lot of them have telecoms background so how much of the base station maintenance and operation, from the commercial perspective do they understand? Because when you are setting up a contract that only focuses on what you will get out of it irrespective of what the other party is going to get, you’re actually in a way, constraining the capacity of the industry or service providers to serve you sustainably into the future. The company you run aground today will not be there to provide quality service for you tomorrow. That is one of the things the telecoms companies have to imbibe from other industries that have done business process outsourcing in the areas of FM successfully.

Another thing I think is delaying the FM process in the sector is the quality of engagement between the internal organization and the outsourcing vendors before the tendering, during the tendering and after the award of the contract is very important. What we see many times is that when companies are trying to outsource, they take the positions of the judge and the jury. The world has moved on to partnership. You must see the company you want to partner with as a key stakeholder because if they do it well, your objective of outsourcing will be achieved.

In addition, the tenure of the contract is also something that should be given serious attention. When you are outsourcing an important aspect of your support system, worldwide, where these things have worked, the minimum contract tenure is five to ten years. If I know I have a ten year agreement with you, it gives me comfort to invest in resources to serve you. It gives me sufficient incentive to really want to understand your business better. Let me quickly add that having a ten year contract doesn’t mean there will be no exit clauses. There will be, in case anyone defaults.

But they keep structuring FM outsourcing into a one, two or three year contract. In outsourcing FM, it takes the FM Company about nine months to fully settle in to understand the business. So when you have a one year contract, the first six to nine months, I am trying to understand the condition of the facilities and before I open my eyes, the contract is over; and we start tendering again. This doesn’t engender partnership, the other party doesn’t see any reason why he has to understand your business or build capacity to support you.