Transformational outsourcing: Delivering on the promise

Abstract

When the subject of outsourcing originally surfaced in the corporate real estate community, the process was promoted as both a tactical resource and a strategic opportunity. Tactical objectives included the obvious: increasing the efficiency and reducing the cost of traditional real estate activities. Strategic prospects focused on broader goals. Real estate would be managed dynamically to serve the corporation’s comprehensive business and financial objectives. The corporate real estate function would be elevated in the organisational hierarchy as a result. What happened to this vision? That which was promoted as a strategic partnership has, in many cases, turned out to look far more like a traditional customer/vendor relationship. Strategic advances have been limited. Financial performance may have been boosted initially and incrementally as real estate headcount was moved off one balance sheet and onto another. But, in general, outsourcing has not helped the corporate real estate function emerge as a strategic business force. It is entirely possible to revive and redefine an outsourcing relationship, so that it delivers on the strategic promise that both clients and service partners have found so attractive and yet so elusive. The challenge lies in creating and maintaining a real partnership between the corporate real estate team and the service provider. The key is to determine what needs to be done on both sides of the relationship to make it work effectively.