Efficiency Optimization using Predictive Analytics - Property Facility Procurement Operations

Property/Facility/
Procurement
Operations
Efficiency Optimization using
Digital Analytics as a tool
Dr Paul J Luciani
EY Asia-Pacific Real Estate Leader
May 2018

| Property/Facility/Procurement Operations2
Overview of Organisational Efficiency 03
Support Services 04
Operations Delivery Framework 05
Identifying workstyle preferences 06
Workstyles in Frameworks 08
Identifying Optimal Framework 09
Data Analytics 12
Key Drivers 13
Data Mapping 14, 16
Accounting System 15
Data Integration 17
The Future 18
Contents

3Property/Facility/Procurement Operations |
Driving Organisational
Efficiency
This article is designed to harness the digital age in
optimising the efficiency surrounding the management
of indirect costs, and is applicable to most functions that
support an organisations core business. Mostly those
functions that are deemed support and or infrastructure
related. The focus is on the way these functions are
delivered, and in particular focusing on the resource
frameworks such as outsourced or insourced or both.
The goal is to achieve the maximum efficiency (value
versus cost) by utilising the right resourcing strategy at
the right time.
An organisation’s unique “operating Environment”
is defined in general terms as the driver of what
resourcing strategy is required and when. This operating
environment is identified within the financial accounts
of the organisation.
The use of digital analytics is discussed as an intuitive way
of realising a real-time reporting environment that can
indicate if and when the right resources are applied to
the right operating environment at the right time.

Singular
Delivery
Collective
Delivery
Individual
Delivery
AKA insourced delivery,
relies on an organisations
internal management
resources to delivery
the function. Not to be
confused with direct
emploment (although
this could be), but rather
focus is on the extent of
ownership of the end to
end process, whether by
direct means, or by indirect
means (EG sub contracting,
out tasking, etc.)
AKA outsourcing, relies
on external organisations
owning all or part of the end
to end process of a function.
Focus is given to how much
control and ownership this
external separate entity has
on the function on behalf of
the client organisation.
AKA GIG worker/workstyle
preferred, is defined as
any one of the proceeding
delivery methods, but
embodied in an individual
based on his or her workstyle
preference. The individual
delivers either one or the
other or a hybrid, but not
both separately.
Traditional Delivery of Support Services

Operational delivery frameworks
• Vertical Integration
• Internal collective
singular identity
• Horizontal
Integration
• External mutual
interest with
other vertically
integrated entities
• No longer the
predominate way
• Still maintains the core
of Global Organisational
efficiency
• Biggest potential to
harness digital efficiency
• Failed to dominate as
the Globally preferred
method
• Mainly complements
Insourcing through
specialisation
• Specialised Digital
• Platforms
• Talent is now an
Enterprise
• Powers all delivery
models but mostly
suitable only to one
method (preference)
• Highest recipient of
Digital Enhancement
• Individual Enterprise
• GIG Economy,
Flexible Contract
Working,
Transportable Skills,
Fluid Employment
and deployment
Insourcing Outsourcing Individual
History teaches that insourcing, outsourcing, and
sometimes individuals have all delivered operations for
organisations. Initially it was thought insourcing was to
dominate, but as infrastructure matured, outsourcing
became a viable alternative.
Neither framework has been made redundant, but neither
framework is dominating.
Also, It became evident that these two frameworks could
be further broken down to even the individual level,
which has led to the emergence of the Gig Worker, or
contract freelance worker; with each having a workstyle
preference embodying either of the frameworks.
So accepting that it is the individuals, ultimately, that
make up both frameworks and their unique workstyles,
then analysing organisational operating environments
specifically to look for which workstyle will bring the
most efficiency, becomes central.

Insource Hybrid Outsource
• Workplaces that are
established and centralised.
• Fully associated in the
workplace and are in it for the
long term.
• Teaming is essential.
• Skills are very adaptable
and flexible.
• Do many things at once with
variety in a familiar workplace.
• Quality of work essential and
identifiable.
• Controls both internal and
external resources.
• Complexity that require many
decisions to be made.
• Both strategic and operational
environments, with work
autonomy
• Medium to large workplaces
involves risk situations.
• Workplaces that are established and
centralised.
• Associated as long term commitment.
• Teaming is used to get tasks done.
• Skills are adaptable and flexible.
Variety of tasks with multitasking
• QUALITY is focus predominately
using internal resources.
• Complex tasks that require multiple
decisions to be made.
• Strategic and operational
environments, autonomously. small to
large workplaces involves a medium
level of risk analysis.
• Projects to complete. specialised
person. project teams.
• Variety and moving onto other
projects after completion.
• Being a contracted worker or a Full
Time Employee (FTE) is fine.
• Networked locally and globally,
accountable for work outcomes.
Supporting the client and their goals.
• Simplify working environment to
make it more achievable.
• Involved in as much of the
organisation as possible.
• Workplaces that are projects
orientated.
• Specialised Skills forming
project teams.
• Deployed onto other projects
after completion.
• Other projects for different
organisations typical
• Directing and harnessing
resources to achieve the
specified outcomes.
• Uses outside providers.
• A contracted worker with a
portable skill set.
• Well networked locally and
globally, accountable for
work outcomes.
• Supporting the client and
their and simplifies working
environment to make it
achievable, and apply that to
others around you.
Identifying workstyle preferences

It is an emerging trend in understanding that individuals
have a workstyle preference, and that these workstyle
preferences sit into one of three frameworks, with a third
being a hybrid of both.
As frameworks are in essence made of individuals, then
understating individual workstyle preference is important.
Further, by understanding individual workstyles, it
becomes easier to identify the extent of insourcing
or outsourcing by the number of compatible workers
delivering the function.
It is uncommon for individuals to have multiple preferences
at once. Usually people lean towards a workstyle preference
and are happy and efficient in that working style.
Yes, it is true that outsource frameworks may be made
up of individuals who suit that framework, and the same
can be said for insourced frameworks, so therefore Job
compatibility drives efficiency.
This focus on understanding the individual workstyle
preference as a driver for efficiency has led to greater
flexibility both for individuals and for organizations. The
“one size (or contract) fits all” is no longer a mantra in
today’s digital age. With the emergence of big data,
artificial intelligence, and sophisticated database
technologies, information is allowing organizations to
more quickly change out their resource strategy to suit
their operating needs — especially down to the
individual level.

Aligning Operations and Frameworks
Analyzing Operating Environments
Relatively new is the approach of aligning workstyles to an
organisations functional operating environment.
Many of the cost drivers associated with delivering functional
operations (indirects) can be attributed to a misalignment
of frameworks.
Delivering with insourced workstyles to a function that, at that
particular point in time, suits a more outsourced approach,
will drive up costs.
The reverse is also true, and true for all frameworks.
Workstyles in Frameworks

• High strategy
• Centralised
operations
• Large Scale
• Operational
Uncertainty
• Owned IP
• Unique Specific
Service or Asset
• Mixed
• Somewhere in the
middle
• Halfway between the
two
• Not many outliers
• Reduced reporting
requirements
• Higher teaming
resource output
• Stable contract costs
• Consistent Quality
• All benefits but at a
reduced level
• Reduced cost of delivery
• Lower unit costs
• Higher Quality
Faster Delivery
• Reduced Complexity
• High Flexibility
• Increased Technology
• Not Strategic
• Decentralised
operations
• Highly globalised
• Low internal
expertise
• Highly competitive
market
Limited effectiveness —
Time diminished
Identifying Optimal Framework

In various studies conducted it was found that singular,
Insourced workstyle delivery is best used when the
function is strategic, has centralised operations, is of
a large scale, has some operational uncertainty or risk,
has some inherent IP to protect, and consists of unique
specific service or asset.
Under these operating environments in-source workstyle
achieves the best results and can reduce reporting
requirements, create higher teaming resource output,
maintain stable contract costs, and achieve consistent
quality outcomes.
Conversely, the same studies have shown that collective,
outsourced workstyle delivery is best delivered when the
function is not strategic, has a decentralised operations,
is highly globalised in its distribution, has low internal
expertise, and supports a function which operates in
highly competitive markets.
Under these operating environments outsource workstyle
achieves the best results and can reduced the cost of
delivery, achieve lower unit costs, bring initial higher
quality with Faster Delivery, help in reducing complexity,
allow for Higher resource flexibility, and introduce
Increased Technology solutions.
A hybrid of these can be applied to most operating
environments but at a reduce benefit.
Centralised Large
Scale
IP to
protect
Specific Globalised
Highly
competitive
markets
So what happens when all or some of your workstyle
strategies are not fully or partially aligned with your
operating environment?
It depends on which workstyle framework is being applied.
For example, singular insourced workstyles that operate
mainly in an operating environment that is more aligned
to outsource workstyles will have an increase in resources
levels (staff, staff costs) for the same output. They will
have a decrease in quality outcomes for the customer
(stakeholder). That is, overly complex organisational
chart and operations requiring ever increasing
resource costs.
For outsource workstyles that operate in an environment
more suited to insourced workstyles, there will be
Increased contract costs, overall quality reduced to Client
or stakeholder, a loss of control of the function by the
organisation, and an eventual adverse impact on core
business, with a reduced speed of delivery of the support.
That is Vendor Monopoly, Skills shortages, Duplication of
management (multiple Vendors), Price hiking/litigation/
general stressed relationships.
To complicate things further, the same research has
found that an organisations operating environment is
constantly changing. More precisely, it is cycling at about
every 2.5 years when considering which framework to
deploy (or every 3.5 years for hybrid frameworks).
This means that your operational management strategy
must follow this cycle to keep your costs as low as
possible and maintain an acceptable level of value.

• Increase resources
(staff) same output
• Decrease quality
for customer
(stakeholder)
• Slower change but
no increase in value
• Status Quo and
eventually non
competitive
• Overly complex
organisational chart
and operations
• Ever increasing
resource costs
• Cost Value at
reduced levels
• Vendor Monopoly
• Skills shortages
• Duplication of
management
(multiple Vendors)
• Price hiking/litigation/
general stressed
relationship
• Increased Contract
costs
• Quality reduced
to Client
• Loss of control of
function
• Adverse impact
on Client
2.5 years until
misalignment
3.5 years before
misalignment
2.5 years before
misalignment

Data Analytics
Leveraging 10 Key Business Data sources using multiple
platforms to align workstyles to shifting operational service
delivery environments
If your organisation’s operating environment cycles every 2.5
years, with 5 years being a full end to end change (or 3.5 and 7
years for Hybrid frameworks), then how do we keep up and apply
the right workstyles framework to maximise efficiency? The answer
is hidden in the financial accounting system. After all, it’s the
eventual and final impact on the chart of accounts that is the
true indicator as to what is happening in your organisation’s
operating environment.

There are ten (10) key drivers of organisations
operations. These are the level of strategy to the
organisation that the operating environment represents.
How centralised the operations are being managed. How
relatively large the scale is of the operations . How much
direct ownership and control the organisation has on the
operating environment. The level of risk and uncertainty
that is inherent in the operational environment.
How much unique IP is inherent in the operating
environment. The level of competition that the
organisation has in the market for its core business. How
globalised the operating environment is geographically.
The level of internal competence on self delivering the
operating environment. And how complex the operating
environment is to deliver. These ten (10) key drivers of
operational environments change over time and require
monitoring so that the correct workstyle framework can
be applied as previously discussed.
Key
Drivers
Direct
Ownership &
Control
Size of
operation
Internal
Competence
Centralised
Globalised
Competition
Unique IP
Level of Risk
Complexity
Strategy
Key Drivers of Organisation’s Operations

Data Mapping
30 months of
optimized services
delivery
30 months of
optimized services
delivery
42 months of
optimized services
delivery
• Reduced reporting requirements
• Higher teaming resource output
• Stable contract costs
• Consistent Quality
• Reduced cost of delivery
• Lower unit costs
• Higher Quality Faster Delivery
• Reduced Complexity
• High Flexibility
• Increased Technology application
• ► All benefits but at a reduced level
10 Key Data Analytic Feeds

Using data analytics to map an organisations operating
environment centres on extracting and manipulating
information in real-time from the firms data warehouse
or cloud environment databases. For example, Identifying
how strategic a function is can be found in the amount
of spend on a service compared to all services within the
organisation, and GL spend mapping ranking from highest
to lowest per vendor. Higher spend and focus can be
attributed to higher strategic value.
Determining centralisation can be found from the amount
of income generation at location level, and P&L mapping
ranked by total Headcount divided by Income generated by
location. Higher concentrations of staff and income derived
from singular locations can represent more centralised
operations. Size and scale can be derived by the number
of employees in the organisation, and P&L mapping by
ranking the total headcount receiving a particular service
divided by Income generated by that group or location. In
general larger organisations have a higher headcount with
higher revenue generation.
Operational ownership can be determined by the amount
of different vendors being used for the same service per
geography or profit centre, and GL mapping by the number
of vendors preforming same or similar service to the
same group or geography. Organisations that use multiple
vendors per function usually have higher ownership of
that function.
Risk and Uncertainty can be the amount of spend
variation on a particular Service through GL spend
mapping, ranking service spend variations at defined
periods. When a function’s cost varies wildly there is
usually more inherent risk in delivering that function.
Specific unique IP can be determined by the amount
of internal support resources assigned to a service per
geography or profit centre, and the head count mapping
divided by the services spend (GL). Organisations usually
have high management hours on functions they consider
uniquely specific to their organisation.
The Level of competition and its impact on operations is
the amount of different vendors being used for the same
service per geography or profit centre, plus total number of
different services used by that geography or profit centre.
And by the total headcount receiving a particular service
divided by Income generated by that group or location and
multiplied by number of unique services used.
The higher the vendors, per service, and the higher
the total number of different services, the higher the
competition assumed. To determine how globalised
the function or service is for the organisation, then the
extent of the different numbers of countries that vendors
are being paid (GL) for the same or similar service can
be measured. The higher the vendor count in different
countries for the function, the higher it can be considered
globalised. Also P&L mapping per profit centre per
geography. The more income generated outside geography
the more globalised the supporting function must be.
Number of unique vendors delivering the same service per
profit centre.
Determining the level of internal expertise can be found
in the GL spend mapping ranking per profit centre from
highest to lowest. That is, a high vendor per service per
profit centre means a high level of internal expertise for
that particular service.
The organisation is confident in managing multiple vendors
as opposed to outsourcing for specialisation. Commodity/
Service complexity can be measured by the amount
of internal support resources assigned to a service per
geography or profit centre combined with number of
different vendors providing the same service.
And Head Count mapping divided by the services spend
(GL) per profit centre multiplied by the number of different
vendors used (GL) for same service. The more support
staff required, combined with higher number of different
vendors (same service) for each profit centre is considered
high complexity function or service delivery requirement.
Accounting System

What to look for in your accounting system
Strategic
• Amount of spend on a service compared to all services within the organisation
• GL spend mapping ranking from highest to lowest
• High spend equals more strategic
Centralised
• Income generation at location level
• P&L mapping ranked by total Headcount divided by Income generated
• The higher income generated at one geography the more centralised that geography
Size & Scale
• Number of Employees in the organisation
• P&L Mapping ranked by total headcount receiving a particular service divided by Income generated by that group or location
• The higher the HC per Income the larger the size and scale of that service
Service ownership
• Amount of different vendors being used for the same service per geography or profit centre
• GL mapping ranked by number of vendors preforming same or similar service to the same group or geography
• The higher the vendors, the higher the ownership by the organisation (as opposed to vendors)
Uncertainty & Risk
• Amount of spend variation on a particular Service
• GL spend mapping ranking service spend variations at defined periods
• Greater the spend variation then greater the complexity and uncertainty
Specific & Unique IP
• ►Amount of internal support resources assigned to a service per geography or profit centre
• Head Count mapping divided by the services spend (GL)
• The higher Headcount per spend, the greater the IP specific to that service
Competition
• ►Amount of different vendors being used for the same service per geography or profit centre, plus total number of different
services used by that geography or profit centre
• P&L Mapping ranked by total headcount receiving a particular service divided by Income generated by that group or location and
multiplied by number of unique services used
• The higher the vendors, per service, and the higher the total number of different services, the higher the competition
Globalised
• Amount of income generated outside of residing geography per profit centre
• P&L mapping per profit centre per geography
• The more income generated outside geography the more globalised
Internal Expertise
• Number of unique vendors delivering the same service per profit centre
• GL spend mapping ranking per profit centre from highest to lowest
• High vendor per service per profit centre means a higher level of internal expertise for that particular service
Commodity/Service Complexity
• ►Amount of internal support resources assigned to a service per geography or profit centre combined with number of different
vendors providing the same service
• Head Count mapping divided by the services spend (GL) per profit centre multiplied by the number of different vendors used
(GL) for same service
• The more support staff required, combined with higher number of different vendors (same service) for each profit centre is
considered high complexity
Data Mapping

The use of digital analytics now makes it possible to
align Organisational data, with Vendor Framework data,
and even down to Individual data. By aligning these
key data inputs, comparing all, and realigning to match,
organisations operations will run at optimum efficiency.
For example, data warehousing and cloud technologies
store data in such a way as accessibility in cross platform
environments makes it possible to store and retrieve in
real-time. Big data allows information to be managed in
large volumes making it a rich multifaceted data source.
The internet and internet of things (including wearable
technologies) is automatic data capture, enhancing existing
data sets.
The future is an automated, self orientating operating
environment that realigns itself to the organisations
ever evolving operations, delivering the right people
(workstyles) at the right time.
Organisational data
Vendor service data
Individual data
Data warehouse
Data warehouse
Big Data
Data warehouse
Internet
Internet of Things
Cloud
Cloud
Variables
Cloud
Data Integration

The use of digital analytics now makes it possible to align Organisational data, with
Vendor Framework data, and even down to Individual data (and human resource and
recruitment data). By aligning these key data inputs, comparing all, and realigning to match,
organisations operations will run at optimum efficiency. For example, data warehousing and
cloud technologies store data in such a way as accessibility in cross platform environments
makes it possible to store and retrieve in real-time.
Big data allows information to be managed in large volumes making it a rich multifaceted
data source. The internet, and internet of things (including wearable technologies), is
automatic data capture and enhancing existing data sets — even down to the individual level.
The future is an automated, self orientating operating environment that realigns itself
to the organisations ever evolving operations, delivering the right people (workstyles) at
the right time in the right framework.
Understanding individual workstyles, whether the GIG worker, or as a part of outsourcing
organisations, or within the client organisation, and aligning them to the ever changing
operating environments via the ten (10) Key data sets in this article, is becoming the new
competitive advantage and is fast becoming a reality in the new digital age.
The Future

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