Research PREVIEW forThe Future of Facility Management

A New Era of Service Integration, Energy Management, Business Productivity, Smart

Technology, and Internationalisation

2Future skill requirements mean that partnerships, collaboration, and M&A will become more commonplace. Acquisitions and consolidation will accelerate.

3In the more developed markets of Europe and North America, FM services are commoditising rapidly; suppliers need to innovate to maintain margins and growth.

4A value proposition shift to business productivity will move the focus from cost management to value creation. Successful suppliers will become client advisors on business productivity.

5The use of technology and new business models means that FM companies will need to build or acquire data analytics capabilities to complement excellence in service delivery.

1

The convergence of FM services, property management, and energy management (EM) is the key driver of the acceleration of service integration and growth in integrated facility management (IFM).

Key Findings and CEO 360 Degree PerspectivePartnership, collaboration, and mergers and acquisitions (M&As) will accelerate, as the market moves towards service integration and sophisticated client advisory services focussed on business productivity.

Source: Frost & Sullivan

1The next 5 years will be the defining years for next-generation solutions in the FM market, offering opportunities for first-movers to own and re-define customer relationship. Retention and growth of existing customers is critical in a market where new customers are thin on the ground.

3A value proposition based on business productivity and outcomes will be key in appealing to customers at the C-level. The FM of the future is about improving customers’ business performance rather than the performance of assets and buildings.

2 The future of FM is technology enabled. The Internet of Things (IoT), Big Data, and advanced connectivity will drive efficiency for both service suppliers and clients.

4 IFM will be the fastest growing segment in the overall FM market. IFM will increase its share of the total addressable FM market from 9.7% in 2016 to 13.9% by 2025.

5The rapid global growth of EM services, especially performance contracting (PC) and guranteed savings contracts, will attract new market participants and drive the convergence of FM with technical services and EM.

Top Predictions for the FM MarketTechnology deployment, future working habits, and business model innovation will lead to a major transformation of the global FM market within the next 5 years.

6 Changes to both the workplace and the workforce of the future will lead to a boom in opportunities for integrated workplace change management solutions.

Source: Frost & Sullivan

Service Integration

Workplace Change

Management

Leverage of IoT

Big Data Analytics

Market Consolidation

Future of FM—Top 5 ConclusionsThe convergence of FM with technology and workplace optimisation will present opportunities for service innovation in an otherwise mature and commoditising FM market.

• IFM services account for 9.7% of the total global outsourced FM market in 2016.

• North America is the largest established IFM market globally, with potential for further growth.

• IFM will have reached 13.9% penetration of the global FM market.

• The Middle East region will have seen the fastest IFM growth in the world by 2025.

• There is growing importance for workplace design and optimisation, driven by changing work practices.

• FM’s converging with workplace solutions will provide business productivity enhancement for clients.

• Diverse suppliers have converged with integrated workplace change management services.

• Business improvement outcomes are being sold directly to the C-suite in client organisation.

• Networked sensors are being increasingly used for remote real-time asset monitoring.

• IoT solutions are enabling asset tracking across facilities from mobile devices.

• Every asset/device has a unique identity and is fully integrated into a networked smart building.

• Internet of Buildings (IoB) solutions enable smart remote management of complex property portfolios.

• Big Data pilot projects demonstrate energy savings and optimisation/reduction of floor space.

• Applications of Big Data are largely focussed on resource optimisation and process improvement.

• Data analytics is a critical element for addressing customer concerns with regard to energy savings, intelligent buildings, reduction of total lifecycle costs, business efficiency, and sustainability.

• Top 5 global FM participants account for a combined market share of 9.5%.

• The top tier of supply is dominated by firms from Europe and North America.

• Top 5 global firms account for 13% of the FM market revenues.

• Chinese and other Asian firms are breaking into the global top-tier level.

2016 2025

Source: Frost & Sullivan

1. Business Productivity

2. Anything as a Service (XaaS)

3. Sustainability

4. Energy Management

5. Performance Contracting

6. Partnerships & Collaboration

7. Cloud Services

8. Selling to the CXO

012345

Key: *CAPEX—Capital Expenditure; OPEX—Operational Expenditure; Source: Frost & Sullivan

FM Market: Top Transformational Trends, Global, 2016–2025 1. Business productivity value propositions will be the key area of service innovation, as suppliers seek to maximise client value.

2. XaaS business models, enabled by technology, will accelerate growth in remote real-time services and attract new firms.

3. Sustainability continues to grow as an area of competitive advantage for corporate clients and outsourcing will accelerate.

4. EM services will represent one of the fastest growing service sectors, as EM converges with FM.

5. PC models will proliferate, as propositions move to guaranteed outcomes and more functions shift from CAPEX to OPEX*.

6. Partnership across the value chain will be needed to address the opportunities emerging at key points of convergence.

7. Cloud services for real-time asset management will be driven by connectivity, IoT, and data analytics.

8. Suppliers will increasingly target the C-suite to stay relevant in an increasingly competitive marketplace.

Transformational Trends in the FM MarketBusiness productivity services, EM convergence, and technology deployment will be the key transformational trends in the FM market.

$945.11 B Global FM market revenue by 2025

2.2% Global compound annual growth rate (CAGR) for FM revenue

13.9% Global penetration of IFM by 2025

7.6% Global CAGR for energy management services

13.9% Combined global market share of top 5 FM suppliers by 2025

19.2%Penetration of IFM in North America (highest region globally) in 2025

Middle East Fastest growing FM market by 2025

APAC Largest regional FM market in the world by 2025

6.3% Global CAGR for IFM services

$780.04 Billion

$945.11BillionTOTAL

2016 20250.00

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200.00

300.00

400.00

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600.00

700.00

800.00

900.00

1,000.00

Mar

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ize

($ B

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Total FM Market: Revenues by Service Delivery Model, Global, 2016 and 2025

Source: Frost & Sullivan

Global FM Market in NumbersContract globalisation and service integration will lead to high growth in the IFM sector, with the penetration of IFM services increasing throughout the forecast period.

Labour Force

Place of Work

Workplace Technology

• Increased influence from women, millennials, and older workforce will have different service requirements for the employees of today.

• A more mobile and flexible workforce will need to be supported in complex and varied settings.

• There will be a 17% drop in office space by 2020 and 15% fewer desks per worker.

• Choice, flexibility, and collaborative working will become key considerations in workplace design.

• Workplace optimisation will become recognised as a driver of productivity and a tool for attracting and retaining top talent.

• Connectivity will drive a wide range of employment models and be a key enabler of online collaboration.

• Human and robot collaboration in work will be commonplace by 2025.

Global Future of WorkChanges in technology, labour force, and workplace will have a significant impact on FM, in terms of customer base, value proposition, and service needs.

Source: Frost & Sullivan

FM Industry: The Future Trends, Global, 2016–2025

RegionEurope is the largest overall FM market in 2016; it is also the most mature. North America is the biggest opportunity for IFM.

Highest growth will be in APAC and the Middle East. APAC will be the largest overall FM market by 2025.

SegmentOutsourcing models are pioneered by the public sector and critical infrastructure.

Private sector will drive growth; technology and connectivity will mean ‘no customer is too small’.

Business Model

Contract-based outsourced services have strong growth in service bundling, integration, and internationalisation.

Circular business models enabled by technology and based on outcomes, such as Anything as a Service (XaaS), will open new and diverse opportunities.

Technology Technology is predominantly funded by customers‘ capital improvement programmes.

Technology will be increasingly transferred to OPEX via PC and XaaS models.

SupplyLabour and services are sold with a strong focus on cost optimisation.

There will be higher customer intimacy, selling outcomes, and business improvements with a focus on value creation.

CustomerCustomers are principally focussed on process and asset efficiency and problem solving.

Customers will be focussed on human and building/facility assets to drive business productivity and profitability.

CompetitiveEnvironment

The environment is consolidated and dominated by incumbent suppliers with long market history, with increasing focus on international expansion.

There will be further consolidation in the top tiers of supply and collaboration with multiple new entrants, especially technology and XaaS companies.

...FromFrom ...FromTo

Key Conclusions and Vision for the FM MarketThe shift from cost focus to total client advisory services and value creation will underpin the key transformations in the FM market.

Source: Frost & Sullivan

The Full Analysis Features the Following Content

Section Slide Number

Executive Summary 3

Research Scope, Objectives, Methodology, and Background 12

FM—Growth Outlook 2025 20

Global FM Market—Transformational Trends 29

The Future of Competition in FM 49

Mega Trend Impact on FM 63

Impact of Technology on FM Services 74

Growth Opportunities by Region 84

Appendix 98

The Frost & Sullivan Story 101

Key Questions the Analysis Answers

What are the transformational trends in the FM market from 2016 to 2025?

What is the global FM market forecast for 2025?

How will the transformational trends yield new business opportunities in growth markets?

What is the FM market vision for 2025 by region?

What is the FM market outlook in 2016?

What are the top technology and service opportunities in the FM market by 2025?

What are the changes that will occur in the competitive landscape for FM by 2025?

Source: Frost & Sullivan

Interested in Full Access? Connect With Us

Anna Zanchi Senior Corporate Communications and Marketing Executive

+39.02.4851 6133

Anna.zanchi@frost.com

Research Authors

John RaspinPartner

Energy & Environment

https://uk.linkedin.com/in/john-raspin-899a679

Michael MeyerSenior Industry Analyst

Homes & BuildingsEnergy & Environment

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Study Home PageLink: The Future of Facility Management

Associated Multimedia

Research Service: Global IFM Markets

Research Service: European Energy Saving and Performance Contracting Market

Research Service: European Integrated Facility Management (IFM) Market

Research Service: North American IFM Market

Market Insight: Service Business Models and a Changing Competitive Landscape for Energy Management

Analyst Briefing: The Future of Energy Management in Buildings

Market Insight: Big Data as an Enabler for Smart Buildings

Market Insight: Emerging Participants and New Entrants in the Energy Management Market

Market Insight: Transformational Trends in the Global Building Energy Management Solutions Industry

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