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Business models in facilities management value chains
Jensen, Per Anker
Published in:
Journal of Corporate Real Estate
Link to article, DOI:

10.1108/jcre-07-2019-0034
Publication date:
2019
Document Version
Peer reviewed version
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Citation (APA):
Jensen, P. A. (2019). Business models in facilities management value chains. Journal of Corporate Real Estate,
21(4), 307-323. https://doi.org/10.1108/jcre-07-2019-0034
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Journal of Corporate Real Estate
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BUSINESS MODELS IN FACILITIES MANAGEMENT VALUE

CHAINS
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Journal: Journal of Corporate Real Estate

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Manuscript ID JCRE-07-2019-0034.R1
Manuscript Type: Research Paper

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Value chains, Sourcing strategies, Business models, Maturity,

Keywords:
Archetypes, Facilties Management
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Page 1 of 44 Journal of Corporate Real Estate
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2 BUSINESS MODELS IN FACILITIES MANAGEMENT VALUE CHAINS
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Abstract
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8 Purpose: To identify typical sourcing strategies and business models in Facilities Management
9 (FM) and map archetypes of value chains with complementary sourcing strategies and value chains.
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11 Methodology: The paper is based on literature and case studies from previous research.
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Theoretically, the paper takes a generic value chain as a starting point together with the recent ISO
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14 standard on sourcing process and a business model framework. A conceptual framework is
15 developed and typical sourcing strategies and business models for FM are investigated.
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16 Archetypical values chains are established by a combination of sourcing strategies and business
17 models.
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19 Findings: The paper identify 8 archetypes of FM value chains divided in three groups according
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to whether the core business organisation occupy rented facilities, occupy owned facilities or has
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22 facilities operation as a core business like serviced office providers etc.

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24 Implications: The results can be used on a general level by everybody, who need to get an
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25 overview and understanding of the complex structure of the FM sector. Furthermore, the results
26 can help all parties involved in the FM value chain to get a clearer understanding of their position
27 in the chain and help them develop their sourcing strategies and/or business model, depending on
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their type of organisation.
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31 Originality: While there is a huge amount of literature on sourcing in FM, the business models
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32 and value chains have only be limited researched. The paper is original in combining an
33 investigation of sourcing strategies, business models and value chains in FM.
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Keywords: Facilities Management, value chain, sourcing strategies, business models, maturity,
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archetypes
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39 Paper type: Conceptual
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42 1. Introduction
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During the last decades, the interest in business models has become evident in business
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45 management literature and research into business models has also become important. A main
reason for this interest has been the introduction of the internet and other ICT technologies, which
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47 have created the possibility to develop many new types of business models, including new
48 disruptive innovations and related business model.
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50 However, within the field of Facilities Management (FM) there has been very little research on
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business models. One example is a study of business models in connection to university campus
53 management in Finland (Rytkönen and Nenonen, 2014). Another example is a study of business
54 model innovation in a Danish biotech company (Nardelli, 2018). Business models are closely
55 related to value chains, and this is another topic, where there only has been limited research within
56 FM.
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58 1
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Journal of Corporate Real Estate Page 2 of 44
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3 On the other side, sourcing has had much attention in FM research, particularly concerning
4 outsourcing and decisions about what services to provide in-house and what services to provide by
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external companies (i.e. Ikediashi et al, 2014; Lok and Baldry, 2015; Plane and Green, 2011;
7 Redlein and Zobl, 2014). This obviously have to do with FM being a demand driven sector, where
8 the client og in-house FM organisation via their sourcing strategies set the conditions for external
9 providers – even though the external providers by their marketing activities try to influence the
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10 decisions. In that way, sourcing strategies, business models and value chains are closely connected
11 in FM.
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14 The term ‘FM sector’ is used in the paper, as FM is not just an industry branch consisting of a
15 conglomeration of companies within the same field. The FM sector is centred on specific work
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16 activities in companies in combination with markets and service providers and a superstructure
17 with professional bodies and academic institutions (Andersen et al., 2014).
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19 The question in focus of this paper is how sourcing strategies, business models and value chains
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are connected and typical combinations of these three interrelated elements. Thus, the purpose is
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22 to identify typical sourcing strategies and business models and map archetypes of value chains with
23 complementary sourcing strategies and value chains in FM.
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25 The paper is conceptual and draws on literature reviews and a number of case studies from previous
26 research with a combination of the author’s own research from the Nordic countries in Europe and
27 case studies from various European countries presented in literature by other authors (i.e. Coenen
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and Nwanna, 2014; Katchamart, 2013a; Nardelli and Broumels, 2018). Therefore, the paper does
30 not include a separate methods section. The reviewed literature is a combination of sources from
31 the author’s earlier research on FM, including sourcing strategies and business model, as well as
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32 reviews of the general literature on value chains conducted as part of an ongoing research project
33 concerning business models in relation to sustainable building renovation and the construction
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34 value chain (Berg et al., 2019).

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The paper reviews theory on value chains, sourcing strategies and business models in section 2,
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38 which results in a conceptual model used in the further analysis. Section 3 presents the method of
39 analysis together with analysis and findings. The paper finishes with discussion in section 4 and
40 conclusion in section 5.
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2. Theory and conceptual framework

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2.1 Value chains
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47 The concept of value chain has been important in business management since Michael Porter
48 introduced a generic value chain in his seminal book on Competitive Advantage (Porter, 1985).
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49 Porter’s value chain focused on the activities inside a company, but the concept has later been used
50 also for chains of different companies, where output from one part of the chain functions as input
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to the next part with the customer as the final part.
53 Porter’s generic value chain does not specifically address FM, but it does distinguish between
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primary activities and support activities, where the primary activities are directly involved in
56 creating value for the external customers, while the secondary activities create value internally.
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58 2
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2 Thus, both primary and support activities are necessary elements in creating value. FM usually is
3 seen as a support activity.
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5 Jensen (2011) made an analysis of the relation between FM and core business in a Danish
6 broadcasting corporation, which had applied Porter’s generic model to define their value chain.
7 The analysis found that besides the horizontal value chain of the core business, a separate related
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vertical FM value chain could be identified, which supported all the other internal parts in the value
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10 chain.
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Scupola (2019) analysed the FM value chain in a study of the use of IT in FM. This resulted in the
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13 value chain model shown in Figure 1, which distinguish between the basic horizontal FM value
14 chain with external providers, that deliver facilities service to in-house FM, who supports core
15 business at the top and ICT-suppliers and consultant at the bottom. Suppliers and consultants can
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16 deliver IT-solution and consultancy services to all parts in the basic FM value chain. Different
17 suppliers and consulting companies may deliver to each part in the basic value chain, so they are
18 shown for each part as a vertical value chain. The basic horizontal FM value chain at the top in
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Figure 1 is the basis for the analysis in this paper.
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Figure 1. The FM Value Chain (Scupola, 2019)
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25 Facilities Internal Core

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27 service FM function business
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29 provider (customer) (client)
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32 ICT suppliers/ ICT suppliers/ ICT suppliers/

33 consultants consultants consultants
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39 2.2 Sourcing strategies
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Sourcing is an essential part of FM and much have been written about outsourcing versus in-house
41 provision and different types of outsourcing (i.e. Ikediashi et al, 2014; Lok and Baldry, 2015; Plane
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and Green, 2011; Redlein and Zobl, 2014). There has even been an international standard
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44 published, which includes guidelines for strategic sourcing (ISO, 2016). The standard is structured
45 according to a sequential sourcing model with the following 10 main phases:
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47 1. Sourcing strategy and core business context
48 2. Identify current and future needs
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3. Translate needs into requirements
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51 4. Describe the Service Levels
52 5. Identify service delivery options
53 6. Business case development
54 7. Select preferred sourcing/service delivery option
55 8. Facilities service provision
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 Internal service provision
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58 3
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2  External service provision
3 9. FM service procurement & FM Agreement
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10. Measure service provision performance
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Jensen (2017) studied the strategic sourcing process in a Danish case organisation and compared it
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8 with the process in the ISO standard. It showed that the process in the case organisation had less
9 phases and more parallel activities in developing the sourcing and procurement strategy. The main
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10 problem with the standard is that it is based on the sequential model starting with detailing the
11 demand and needs before investigating sourcing option. The case showed that the ways, needs are
12 specified in tender material depends on the chosen sourcing models. However, the standard has a
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13 sound approach to strategic sourcing being open to combining internal and external service
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provisions.
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17 Sourcing is theoretically related to the classical corporate management question of making or
18 buying and related to this, coordination based on corporate organisation (hierarchy) or market
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19 (Williamson, 2008). The question can be seen as a narrow and short-term economical question of
20 finding the cheapest solution, but it can also be regarded as a strategic issue, where long-term
21 benefits and risks are more in focus. As many organisations have achieved increased experience
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with outsourcing of FM, the strategic view seems to become more important. Vitasek (2016)
24 investigated ‘strategic sourcing business models’, but not particularly in relation to FM.
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26 2.3 Business models
27 A business model describes, what value a business provides to its customers, how it create the
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28 value, and how it generate income. There are many definitions of business models. Fielt (2013)
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analysed such definitions and concluded, “We define a business model as a representation of the
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31 value logic of an organization in terms of how it creates value and captures customer value”. Teece
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32 (2010) claims that a business model is more generic than a business strategy. However, it is
33 necessary to couple strategy and business model analysis to protect competitive advantage resulting
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34 from new business model design. Patenting products and processes can be an effective way to
35 protect business models, but Teece (2010) also points to co-specialisation as a way to create
36 competitive advantages by having key resources and processes developed together over time to
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create a unique and valuable combination.
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40 One of the most widely used frameworks for analysing and developing business models is the
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41 Business Model Canvas (Osterwalder and Pigneur, 2010), which also was used in the earlier
42 mentioned study by Rytkönen and Nenonen (2014). However, the Business Model Canvas includes
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many different elements and can be complicated to use in research across organisations as
44 experienced by Berg et al. (2017). Therefore, this paper applies the simpler four-block framework
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by Christensen et al. (2016). The framework includes Priorities divided in Value proposition and
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47 Profit formula and Capabilities divided in Resources and Processes as shown in Table 1. The
48 authors stress that the interrelationships and balance between the four blocks are essential. The
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49 value proposition is the first among equals and is the central dimension of a business model as
50 stated by Fielt (2013).
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58 4
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2 Table 1: The Four-Block Business Model Framework (based on Christensen et al., 2016)
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Priorities Capabilities
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6 Value proposition Resources
7 A product that helps customers to more People, technology, products, facilities,
8 effectively, conveniently, and affordably do a equipment, brands, and cash that are required
9 job they’ve been trying to do to deliver this value proposition to the
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10 targeted customers
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Profit formula Processes
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Assets and fixed cost structure, and the Ways of working together to address recurrent
14 margins and velocity required to cover them tasks in a consistent way: training,
15 development, manufacturing, budgeting,
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16 planning etc.
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18 2.4. Conceptual framework
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In this paper, sourcing strategies and business models are seen as complementary, where sourcing
21 strategies are related to the demand side and business models are related to the supply side. Thus,
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22 between each part of the value chain there is a connection to neighbouring parts consisting of a
23 sourcing strategy and one or more business models depending on the sourcing strategy. This is
24 shown in Figure 2, which includes an elaboration of the basic horizontal FM value chain in Figure
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25 1. Core business on the right is the ultimate customer, while the chain can be continued to the left
26 with different levels of sub-providers. In this paper, sub-providers will only be addressed as part
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of the analysis of the other parts.
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31 Figure 2: The FM Value Chain with complementary sourcing strategies and business models
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SOURCING SOURCING SOURCING
36 PROVIDERS
SUB- STRATEGY STRATEGY FACILITIES STRATEGY CORE
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PROVIDERS MANAGEMENT BUSINESS
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39 BUSINESS BUSINESS BUSINESS
40 MODEL MODEL MODEL
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45 3. Analysis and findings
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48 There are a number of different options for sourcing in relation to FM both for the core business
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49 and for an in-house FM organisation.

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52 For core business, the basic question is, whether FM should be provided centrally by a special FM
53 organisation or de-centrally by each department or business unit. Except for very small businesses,
54 it is has increasingly become common to establish a special FM organisation. The FM organisation
55 can be in-house with different positions in the corporate structure. It can be an internal staff
56 function, which typically is managed as a cost centre, or it can be a line organisation in which case
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2 it possibly can be a profit centre with internal rent and debiting (Kaiser, 1989; Jensen, 2008a). FM
3 can also be part of a shared service centre together with other support function, which is shown in
4 a case study concerning public organisations in the Netherlands (Katchamart, 2013a). A solution
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mainly used by large corporations with subsidiary companies is to establish a sub-subsidiary FM
7 company operating on more or less commercial conditions. Two case studies of this are included
8 in Jensen et al. (2008) – one from Denmark and one from Sweden.
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10 Furthermore, there are solutions with integrated space and service provision like serviced offices,
11 incubators and co-working spaces. Jensen et al. (2008) present two case studies of this – an
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international case of an office hotel company and a case of an incubator at a university in Denmark
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14 and Van Meel (2015) presents three case studies of co-work offices from Amsterdam, Copenhagen
15 and Paris. A special option for public organisations is provision of space and services in new
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16 buildings via Public-Private Partnership (Kristiansen, 2019).
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18 For in-house FM organisations, the basic question is to which degree services should be provided
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19 in-house or by external providers. In most cases the solution will be a combination. The external
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provision can take place as out-tasking of single services, outsourcing of bundled services or an
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22 integrated delivery of most services. The latter solution is sometimes called I-FM (Integrated FM)
23 or T-FM (Total FM), but in this paper it is called I-FS (Integrated Facilities Services). Text and
24 reference books on FM like Jensen (2008a) and Wiggins (2010) generally cover the mentioned
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25 sourcing solutions.
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There is a number of typical business models (BM’s) both for in-house FM organisations and for
30 providers.
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32 BM’s for in-house FM (BM-IH)

33 For in-house FM, a possible solution is to establish a contract management organisation, which do
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34 not provide any operational service, but on the core business (CB) is in charge of managing
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contracts with one or more external providers - often an I-FS contract with one provider company.
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Such a contract management organisation is sometimes called ‘the intelligent client’ (Williams,
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38 1989; Wiggins, 2010) or the ‘informed client’ (Atkins and Brooks, 2009).
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40 To identify other solutions based on developing an in-house FM organisation with some internal
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41 service provision, maturity models for FM have been studied as part of this research. Several such
42 maturity models have been developed. In the related field of CREM (Corporate Real Estate
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Management), Joroff et al. (1993) early on developed a very influential model. For this paper, the
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45 author has used a combination of two models developed for public FM organisations in Denmark.
One was developed in connection to establishing a property centre in Copenhagen Municipality
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47 and it is described in a case study (Jensen et al., 2008). The other was developed as part of
48 consultancy report from a management consulting company about generally improving FM in
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49 Danish municipalities (EY, 2017). Both maturity models include five levels. Table 2 presents the
50 results of an analysis of the five maturity levels and the contract management solution based on the
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four block BM framework by Christensen et al. (2016).
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58 6
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2 Business model Value proposition Profit formula Resources Processes
3 BM-IH1: Basic offering: Basic offering:  Service staff  Service operations
4 Caretaker/  Basic facilities  Budget allocation from several and craft based
5 Limiting cost services (cost centre) service lines operations according
6 Additional: Additional:  Skilled staff to norms and
7  Minor building  Refund of external from one or management
8 works cost of building more trades instructions
9 work  Single service  Input and transaction
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10 providers oriented contracts
11  Building work with providers
12 providers  Cost focus and no
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13  Materials defined policies
14  Equipment
15  Decentral
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16 management
17 BM-IH2: Basic offering: Basic offering: As above plus As above plus
18 Building  Basic facilities  Budget allocation central  Minor planning
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19 owner/ services (cost centre) or management activities and
20 Operational  Basic space income from plus dialogue with client
21 efficiency management internal rent and  Technicians  Standardisation of
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22 Additional: debiting (profit service levels and

23  Building works centre) contracts
24  Additional:  Cost and possibly
 Refund of external also income focus
or
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26 cost of building
work
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 Service operations
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BM-IH3: Basic offering: Basic offering: As above plus

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Active building  Facilities services  Budget allocation  Bundling of and craft based
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owner/  Technical (cost centre) or some services operations based on
30
Flexibility monitoring income from  Monitoring SLAs with some
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 Space management internal rent and systems output based

32 debiting (profit contracts
Additional:  Consultants
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 Building works centre)  Building work based
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34 Additional: on project
 Internal consulting
35  Refund of external specifications
36 cost of building  Technical analyses,
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37 work planning, monitoring

38 with a focus on
39 optimisation
40
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 Dialogue with client

41 and customers
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Preferred  Facilities services  Income from  Helpdesk  Focus on portfolio

44 partner/  Technical internal rent and development and
45 Proactivity monitoring debiting (profit added value
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46  Space management centre)  Dialogue with client,

47  User feedback Additional: customers and end-
48 Additional:  Refund of external users as wells as
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49  Building works cost of building collaboration with

50  Internal consulting work other support
51 functions
52  Perhaps outcome
53 based contracts.
55 Innovator/  Facilities services  Income from  Strategic  Focus on
56 Strategic value  Technical internal rent and partnerships development of the
57 creating monitoring market
58 7
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2  Space management debiting (profit with external  R&D projects and
3  User feedback centre) providers. innovation
4 Additional: Additional:  R&D partners
5  Building works  Refund of external
6  Internal consulting cost of building
7  Joint development work and
8 projects with CB development
9 projects
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10 BM-IH6: Basic offering: Basic offering:  I-FS provider  Governing,
11 Contract  Procuring and  Budget allocation  Contract managing and
12 management controlling a (cost centre) manager supervising external
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13 contract with an I-  Supervisors provision
14 FS provider, who  Consultants  Dialogue with client
15 delivers all  Legal advisors and customers
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facilities services
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and related
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planning and
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management
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21 Table 2. Analysis of BM’s for in-house FM organisations (BM-IH)
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24 BM-IH1, Caretaker/Limiting cost, is the most basic, where the value proposition is just to sustain
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25 the core business with necessary facilities services with no ambitions of improving the core
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business. Besides the basic facilities services, minor building works can be included in the offering.
27
The profit formula is typically a budget allocation to a cost centre for the basic service and refund
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29 of external cost for additional building works. In-house resources mostly include Service staff from
30 several service lines (soft services) and Skilled staff from one or more trades (hard services) and a
31 decentral management, which may not have a special FM qualifications. Besides, the organisation
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32 procure external single service providers, building work providers, materials and equipment. The
33 processes include service operations and craft based operations according to norms and
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management instructions. Contracts with providers are typical with transaction oriented input
36 based specifications. Decision-making mostly has cost focus without any defined policies.
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38 BM-IH2, Building owner/Operational efficiency, is also rather basic with a similar value
39 proposition, but include a stronger focus on space planning. Thus, basic space management is
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included in the offering. The profit formula can be the same, but it also be based on income from
41
internal rent and debiting (profit centre). Technicians are added to the resources and the processes
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43 further include minor planning activities and dialogue with client, standardisation of service levels
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44 and contracts. Management of FM is centralised and beside the focus on cost in decision-making,
45 an income focus might be included.
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47 BM-IH3, Active building owner/Flexibility, also has a similar value proposition, but with a
48 stronger focus on professional and technical oriented management. Thus, technical monitoring and
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possibly internal consulting, is included in the offering. The profit formula is the same as BM-IH2,
50
51 but to the resources are added bundling of some services, monitoring systems and use of
52 consultants. The processes include service operations and craft based operations based on Service
53 Level Agreements (SLAs) with some output-based contracts, building work based on project
54 specifications, technical analyses, planning, monitoring with a focus on optimisation and dialogue
55 with client and customers.
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58 8
59
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2 BM-IH4, Preferred partner/Proactivity, is characterised by a focus on not just sustaining but also
3 attempts to improve the core business. Thus, responsiveness to user feedback in included in the
4 offering. The basic profit formula is based on income from internal rent and debiting (profit centre).
5
6
A helpdesk is added to resources and to processes are added a focus on portfolio development and
7 added value, dialogue with client, customers and end-users as wells as collaboration with other
8 support functions and perhaps use of outcome based contracts.
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10 BM-IH5, Innovator/Strategic value creating, has an even stronger focus on improving the core
11 business and creating joint innovations and development. Thus, joint development projects are
12
added to the additional offering. The profit formula is the same as BM-IH4 except for adding
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14 possibly refunding of cost of development projects. To resources are added strategic partnerships
15 with external providers and collaboration with R&D partners and to processes are added focus on
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16 development of the market and R&D projects and innovation.
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18 BM-IH6, Contract management, is fundamentally different by a value proposition with the basic
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19 offering to procure and control a contract with an I-FS provider, who delivers all facilities services
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and related planning and management. This can be based on a pure cost focus, but it can also be
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22 based on quality and joint development in a strategic partnership, depending on the priority of the
23 core business. The profit formula for contract management is a budget allocation (cost centre) to
24 cover the in-house cost as well as payments to the I-FS provider and other external cost. The
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25 resources are mainly the contractor manager, supervisors and the I-FS provider, but other external
26 partners like consultants and legal advisors could also be involved for specific assignments. The
27 main processes are governing, managing and supervising external provision as well as dialogue
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28
29
with client and customers.
30 BM’s for providers
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32
For providers it was found appropriate to distinguish between the more general service providers
33 to FM and providers specifically targeting building owners with main focus on building related
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34 services - also called ‘hard FM’.

35
36 The BM’s for service providers (BM-SP) more or less mirrors the sourcing options for in-house
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37 FM organisations. They include provision of single service, bundled service and I-FS. These are
38 models where services typically are procured by tendering with price competitions. An additional
39
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option is management contracting, where a management consultant company takes responsibility
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41 for organising the service provision by external providers based on a management fee, incentive
42 based bonus fees and reimbursement of the cost of the service provision. Nardelli and Broumels
43 (2018) did a case study on FM innovation concerning an energy supply company in the
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44 Netherlands, which involved a managing contractor. Table 3 presents the results of an analysis of
45 those four business models for service providers and management consultants.
ta
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47
48
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50 BM-SP1: Basic offering: Basic offering:  Specialised  Standardised service
51 Single service  Specialised service  Fixed price staff from one operations based on
52 delivered regularly Additional: service line SLA’s, norms
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on the client’s sites  Hourly rates or  Materials and/or management
for a contract agreed price  Equipment instructions
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period  Management
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Additional:
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58 9
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2  Related extra
3 service on order
4 BM-SP2: Basic offering: Basic offering:  Specialised As above plus
5 Bundled  Two or more  Fixed price staff from two  Coordination of
6 services specialised services Additional: or more service service provision
7 delivered regularly  Hourly rates or lines
8 on the client’s sites agreed price  Materials
9 for a contract  Equipment
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10 period  Management
11  One point of
12 contact
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13 Additional:
14  Related extra
15 service on order
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17 I-FS  Several specialised  Fixed price with staff from  Ongoing reporting,
18 services delivered annual adjustment several service governance,
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19 regularly on the  Bonus incentives lines improvements and
20 client’s sites for a and gain sharing  Technicians consulting
contract period Additional:  Sub-providers
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22  One point of  Hourly rates or  Materials

contact agreed price  Equipment
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 Annual cost  Claims from  Management
24
reductions deficiencies in
or
25
 Improvement contract
26
proposals specifications
27
Additional:
po
28
 Related extra
29
service on order
30
BM-SP4: Basic offering: Basic offering:  Management  Management of
31
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Management  Responsibility for  Fixed management consultants standardised service

32 contracting several specialised fee  Supervisors operations based on
33 services delivered  Bonus incentives  Technicians SLA’s
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34 regularly on the  Ongoing reporting,

 Direct cost for  Providers
35 client’s sites for a service provision is governance,
 Management
36 contract period refunded improvements and
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37  One point of Additional: consulting

38 contact  Direct cost for extra
39  Annual cost service is refunded
40
al
reductions  Hourly rates or

41  Improvement agreed price for
42 proposals additional
43
Es
Additional: management tasks

45 service on order
ta
46
47 Table 3. Analysis of BM’s for service providers to in-house FM organisations (BM-PS)
48
te
49
50
51 BM-SP1, Single service, involves a value proposition with a basic offering of specialised service
52 delivered regularly on the client’s sites for a contract period with the additional possibility of
53 related extra service on order. The profit formula is typically based on a fixed price for the basic
54 offering and payment according to hourly rates or agreed price for extra service. Resources are
55
specialised staff from one service line, materials equipment and management. Processes are mostly
56
57 standardised service operations based on SLA’s, norms and /or management instructions.
58 10
59
60
1
2
3 BM-SP2, Bundled services, resembles BM-SP1, but the value proposition is with a basic offering
4 of two or more specialised services - instead of just one - delivered regularly on the client’s sites
5
6
for a contract period and with one point of contact. The profit formula is the same. Resources also
7 include specialised staff from two or more service lines instead of just from one. To processes is
8 added coordination of service provision.
9
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10 BM-SP3, I-FS, is more complex. The value proposition includes several specialised services
11 delivered regularly on the client’s sites for a contract period with one point of contact, annual cost
12
reductions and improvement proposals and as for the former BM-SP’s, additionally extra service
ur
13
14 on order. The profit formula includes fixed price with annual adjustment related to bonus incentives
15 and gain sharing as well as additionally payment of extra service according to hourly rates or agreed
na
16 price and as a new and in some cases important aspect; claims from deficiencies in contract
17 specifications. Resources include specialised staff from several service lines, technicians, sub-
18 providers, materials, equipment and management. The processes include the same as BM-SP2 with
lo
19 addition of ongoing reporting, governance, improvements and consulting.
20
21
fC
22 BM-SP4, Management contracting, is in principle very different in the value proposition and profit
23 formula, but in other ways, it resembles I-FS with an integrated delivery. The basic offering
24 includes responsibility for several specialised services delivered regularly on the client’s sites for
or
25 a contract period, one point of contact, annual cost reductions and improvement proposals and
26 additionally extra service on order. The profit formula includes fixed management fee, bonus
27 incentives and refunding direct cost for service provision and additionally refunding of direct cost
po
28
29
for extra service provision and payment for additional management tasks according to hourly rates
30 or agreed price. Resources include management consultants, supervisors, technicians, providers
31 and management. Processes include management of standardised service operations based on
ra
32 SLA’s and ongoing reporting, governance, improvements and consulting.

33
te
34 The BM’s for providers targeting building owners (BM-BO) are divided in providers of building
35
work like maintenance, real estate administrations and ESCO (Energy Service Companies). Table
36
4 presents the results of an analysis of those three BM’s.
Re
37
38
39
al
41 BM-BO1: Basic offering: Basic offering:  Skilled staff  Craft based

42 Building work  Specialised services  Fixed price from one or operations according
43 delivered on a Additional: more trades to project
Es
44 project basis at the  Hourly rates or  Technicians specifications

45 client’s sites agreed price  Materials
Additional:
ta
46  Claims from  Equipment

47  Related extra deficiencies in  Management
48 service on order project
te
49 specifications
50 BM-BO2: Basic offering: Basic offering:  Economist  Administrative
51 Real estate  Rent out space for  Fee as a fixed  Lawyers processes; possibly
52 administration building owners percentage of rent  Technicians supplemented with:
53 and collect rent income for rent  Caretakers and  Service operations
54 from tenants administration service staff  Craft based
55 Additional: Additional:  Supervisors operations
56  Operation and  Fee as a fixed  Sub-providers  Project management
57 maintenance percentage of rent  Management  Consulting
58 11
59
60
1
2  Rebuilding and income for
3 refurbishment operation and
4  Real estate maintenance
5 development  Hourly rates or
6  Consultancy agreed price for
7 projects and
8 consultancy
9 BM-BO3: Basic offering: Basic offering:  Technicians  Craft based
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10 ESCO  Energy savings in a  Fee based on  Skilled staff operations and
11 portfolio of guaranteed energy from different technical analyses,
12 buildings for the savings trades planning and
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13 building owner Additional:  Monitoring monitoring
14 Additional:  Gain sharing from systems
15  Instruction of in- additional savings  Management
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16 house FM staff  Claims from
17 changes in baseline
18
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19 Table 4. Analysis of BM’s for providers targeting building owners (BM-BO)
20
21
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22 BM-BO1, Building work, is characterised by a value proposition of specialised services delivered

23
24
on a project basis at the client’s sites and additionally extra service on order. The profit formula is
as simple as fixed price often based on competitive tendering and additionally payment for extra
or
25
26 service according to hourly rates or agreed price and as for BM-PS3 (I-IFS); claims from
27 deficiencies in project specifications. Resources include skilled staff from one or more trades,
po
28 technicians, materials, equipment and management and processes include craft based operations
29 according to project specifications.
30
31
ra
BM-BO2, Real estate administration, is characterised by a value proposition of renting out space
32
33
for building owners and collecting rent from tenants and additionally operation and maintenance,
rebuilding and refurbishment, real estate development and consultancy. The profit formula is fee
te
34
35 as a fixed percentage of rent income for rent administration and additionally fee as a fixed
36 percentage of rent income for operation and maintenance payment according to hourly rates or
Re
37 agreed price for projects and consultancy. Resources include economist, lawyers, technicians,
38 caretakers/service staff, supervisors, sub-providers and management. Processes includes
39
administrative processes; possibly supplemented with service operations, craft based operations,
40
al
41 project management and consulting.

42
43 BM-BO3, ESCO, represents a rather unique BM. The value proposition is energy savings in a
Es
44 portfolio of buildings for the building owner and additionally instruction of in-house FM staff,
45 while the profit formula is fee based on guaranteed energy savings and additionally gain sharing
ta
46 from additional savings and claims from changes in baseline. The resources include technicians,
47
skilled staff from different trades, monitoring systems and management and the processes are craft
48
te
49 based operations and technical analyses, planning and monitoring.

50
51 3.3 Archetypes of FM value chains
52 The FM value chain consists as described in section 2.1 of core business as the customer, which is
53 supported by an internal FM organisation responsible for service provision; possibly with a
54 combination of in-house provision and provision from external providers, who also can have sub-
55
56
providers. From the analysis it was found that FM value chains could be grouped according to the
57 type of facilities and ownership of facilities that the core business occupy. It was found appropriate
58 12
59
60
1
2 to group the value chains according to core businesses in rented facilities, own (owned) facilities
3 and facilities operated to be used by other companies like serviced offices etc.
4
5
6
The distinction between rented and own facilities is not related to the formal financial arrangement
7 but to who has the owner responsibility; particularly in relation to building maintenance and
8 operation of the shell and basic technical infrastructure and for multi-user property also of shared
9 facilities outdoor and indoor. Rented and own facilities are both typically related to situations,
Jo
10 where staff in the company and possibly visitors are the end users.
11
12
Facility operators are seen as organisations, who have FM as integrated part of their core business.
ur
13
14 Here the end users typically are staff from customer companies for the operator or individual
15 customers. For instance, shopping centre management companies are responsible for operating
na
16 shopping centres and their direct customers are the shops, who rent space at the shopping centre,
17 but the public using the shopping centre are customers for the shops. Thus, the public using the
18 shops are customer’s customers for the shopping centre management company, and their shopping
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19 experience is essential for the whole shopping centre as explained in a case study of a Danish
20
shopping centre management company (Jensen et al., 2008).
21
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22
23 The formal ownership is not important in this context for shopping centres and many other types
24 of facilities operators, but when it comes to management of housing estate, ownership has a
or
25 fundamental importance. According to an analysis by Nielsen et al. (2012) of the so-called strategic
26 FM organisation in housing organizations under different types of ownership, a difference between
27 a strong demand driven strategic management in social and cooperative housing associations and
po
28
29
an increasingly stronger supply driven management in privately owned housing companies could
30 be identified.
31
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32 Table 5 presents an overview of eight archetypes of FM value chains divided in the three groups
33 with the modification that the first group both can be relevant for rented and own facilities. For
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34 practical reasons, the value chains are shown in the opposite order than in Figure 1 and 2 starting
35
with core business in the second column from left.
36
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37
38
39 FM value Core business FM Providers Sub-providers
40 chain
al
41 FM-VC1 Rented facilities or Caretaker/ Single service

42 Own facilities Limiting cost
43 FM-VC2 Contract manager Single
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44 Bundled services
45 I-FS Single service
FM-VC3 Own facilities Building owner/ Single service
ta
46
Operational efficiency Bundled services
47
Building work
48
te
FM-VC4 Active building owner/ As above plus

49
Flexibility Consultants
50
Legal advisors
51 ESCO
52 FM-VC5 Preferred partner/ As above or If I-FS or Management
53 Proactivity I-FS or contractor:
54 Management Single service
55 contractor Building work
56 Consultants
57
58 13
59
60
1
2 Legal advisors
3 FM-VC6 Innovator/ As above plus As above
4 Strategic value creating R&D partners
5 FM-VC7 Facilities operator Real estate Single service
6 (serviced office providers, shopping centre, administration Bundled service
7 airports, culture houses, housing associations, Building work
8 PPPs etc.) Consultants
9 FM-VC8 Single service
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10 Bundled service
11 Building work
12 Consultants
ur
13 Legal advisors
14 ESCO
15
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16 Table 5. Typical FM value chains
17
18
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19 Two value chains are the same for rented and own facilities. FM-VC1 includes an in-house FM
20
21
organisation with focus on Caretaking/Limiting cost (BM-IH1) possibly withinvolvement of single
fC
22 service providers. FM-VC2 includes an in-house Contract Manager (BM-IH6), who engage single
23 and/or bundled service providers. FM-VC1 and FM-VC2 are placed together and can both be seen
24 as being on the lowest level of maturity with of focus on ‘no frills’ FM product as Katchamart
or
25 (2013b) call the lowest level of complexity in his characterisation of FM products. However,
26 contract management can be on a high level of sophistication particularly with I-FS solutions and
27 thereby equivalent to one of the higher maturity levels for in-house FM organisations.
po
28
29
30 Besides FM-VC1 and FM-VC2, there are four value chains specifically for own facilities and they
31 reflect the maturity models, which formed the main basis for Table 2. FM-VC3 is related to
ra
32 Building owner/Operational efficiency (BM-IH2), which might engage single service, bundled
33 service and/or building work providers. FM-VC4 is related to Active building owner/Flexibility,
te
34 which additionally might engage consultants, legal advisors and/or ESCO. FM-VC5 is related to
35
Preferred partner/Proactivity, which might engage the same as FM-VC4 or an I-FS provider or a
36
management contractor as well as various sub-providers. FM-VC6 is related to Innovator/Strategic
Re
37
38 value creating, which might engage R&D partners in addition to those for FM-VC5.
39
40 Facilities operators are characterised by representing both core business and FM as FM is an
al
41 integrated part of the core business. There are two value chains for facilities operators. FM-VC7
42 involves engaging a real estate administration, which might engage single service, bundled service
43
Es
44
and/or building worker sub-providers and/or consultants. FM-VC8 involves the facility operator
45 directly engaging single service, bundled service and/or building work providers and possibly
consultants, legal advisors and/or ESCO.
ta
46
47
48
te
49 4. Discussion
50
51
52
Origin of the different sourcing strategies and business models
53 Contract management has existed for centuries and was developed to some sophistication during
54 the Roman Empire as shown by Bröchner (2010). Caretaking probably has even longer historical
55 roots and was in earlier historical times often undertaken by slaves.
56
57
58 14
59
60
1
2 In modern times, out-tasking with single services initially was the dominant solution of external
3 provision and often procured by negotiation without detailed requirement specifications and
4 competitive tendering. An example is the cleaning contract between the Danish Broadcasting
5
6
Corporation (DR) and ISS in the early 1990’s had 50 years anniversary without ever having been
7 in a competition. That possibility was abandoned by introduction of EU’s procurement legislation
8 for public clients and DR soon after had all cleaning service out for EU tendering resulting in
9 drastic cost reductions as well as initial problems to obtain the required quality (Jensen, 2008b).
Jo
10 Outsourcing with bundled services is relatively new phenomenon and has gradually developed as
11 an extension of out-tasking/single services since the 1990’s.
12
ur
13
14 Managing contracts were introduced in the Nordic countries in 1995 by IBM’s pan-European FM
15 contract with Johnson Controls (Jensen, 2008a). This was followed in Sweden by the establishing
na
16 of Skanska FM (now Coor Service Management) as a management consulting company in 1998,
17 and they for instance started a long lasting collaboration with the Swedish telecommunication
18 company L.M. Ericsson in 2000. The threat of being reduced to a sub-provider for management
lo
19 consultants resulted in ISS changing its strategy in 2000 from being a cleaning company towards
20
becoming an I-FS provider. Case studies of these developments are included in Jensen et al. (2008).
21
fC
22
23 For property investors, the collaboration with real estate administrations goes a long way back.
24 Serviced offices and incubators mostly started after year 2000 and was later followed by co-
or
25 working spaces.
26
27 Public-Private Partnerships were started in the UK by political decision in the 1980’s during
po
28
29
Margaret Thatcher’s government. Iceland became the frontrunner for PPP in the Nordic country
30 until it collapsed during the financial crisis from 2008. In Denmark, PPP was introduced after year
31 2000 on government initiative and the first project was a school building in Jutland starting in 2004
ra
32 (Jensen et al., 2008). ESCO has a long history in some countries like Sweden and USA (Jensen et
33 al., 2008), but ESCO was introduced in Denmark around 2008, when it started to be used by a
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34 number of municipalities (Nardelli et al., 2015).

35
36
The characteristics of business models in the FM sector
Re
37
38 The presented business models are regarded as representing the most important types. Individual
39 organisations will belong to one type, but their specific business model will have more details and
40 not least, the capabilities and the relationships between the building blocks must have special
al
41 characteristics for the company to create unique features and competitive advantage as pointed out
42 by Teece (2010). However, the FM sector is a demand based sector. Thus, the demand side needs
43
Es
to set sourcing conditions for their providers, so that there is a sufficient number of provider
44
45 companies that can comply with them. Similarly, the supply side needs to have business models
that are general enough to be attractive to a sufficient number of different clients. This limits how
ta
46
47 unique the business models for FM providers can be.
48
te
49 Christensen et al. (2016) developed a life cycle model with three stages of business model’s
50 journey. It resembles the well-known product life cycle. They claim that business models over time
51
52
become more resistant to change. However, this seems to be based on an analysis of supply based
53 companies (like much international business management literature) that pushes products to a
54 market, while for FM as demand based sector, client organisations pull service contracts via
55 tendering from providers. Therefore, it could be hypothesized that business models in the FM sector
56 are less tightly knit and more flexible in relation to modifications in accordance to changes in the
57
58 15
59
60
1
2 market conditions. The FM relationship lifecycle model developed by Coenen and Nwanna (2014)
3 might be more relevant for the FM sector than the mentioned BM life cycle model.
4
5
6
Influencing factors
7 The variety of value chains in the FM sector is an expression of the high complexity that
8 characterises the sector. The value chains are strongly dependent on the facility solution that the
9 core business make use of, but there are still more than one available value chain for each of the
Jo
10 three main facilities solution. There are at least three factors influencing the choice of value chain
11 and some likely influences are suggested in the following.
12
ur
13
14 Company size: The larger an organisation is, the more likelihood there is of a more complex value
15 chain or making use of more than one value chain.
na
16
17 Company complexity: The higher the complexity of a business, the more likelihood is over time to
18 develop an FM organisation on a higher maturity level and make use of a more complex value
lo
19 chain. Office based companies will typically have a rather simple value chain, while more complex
20
businesses like production companies, airports, hospitals, universities etc. probably will make use
21
fC
22 of more complex value chains.

23
24 Dynamics of the environment: This can influence in different ways and be related to the generic
or
25 space strategies identified by O’Mara (1999):

26  Companies in a fast changing and uncertain market, for instance start-ups, IT and consulting
27
companies, are likely to follow an incremental strategy and apply a simple value chain with
po
28
29 rented facilities
30  Well consolidated companies under secure and expanding market conditions are likely to
31 follow a standardisation strategy and make use of a complex value chain
ra
32  Companies with a value-based strategy are likely to reconsider their FM value chain to become
33 aligned with the new values, which can have varying consequences depending on the views of
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34
35
the top management.
36
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37
38 5. Conclusion
39
40
al
The purpose of this paper was to identify typical sourcing strategies and business models in
41 Facilities Management (FM) and map archetypes of value chains with complementary sourcing
42
43
strategies and value chains. The paper identified 8 archetypes of FM value chains divided in three
Es
44 groups according to whether the core business organisation occupy rented facilities, occupy owned
45 facilities or has facilities operation as a core business like serviced office providers etc. While there
ta
46 is a huge amount of literature on sourcing in FM, the business models and value chains have only
47 be limited researched. The novelty of the paper is the combination of investigating of sourcing
48 strategies, business models and value chains in FM.
te
49
50
51 The results can be used on a general level by everybody, who needs to get an overview and
52 understanding of the complex structure of the FM sector and how FM create value. This includes
53 professional and trade associations, politicians and public authorities, teachers and researchers, top
54 managers involved in decision-making concerning FM and strategists in organisations involved in
55 the FM sector. The results can also help all parties involved in the FM value chain to get a clearer
56
57
58 16
59
60
1
2 understanding of their position in the chain and help them further develop their sourcing strategies
3 and/or business model, depending on their type of organisation.
4
5
6
The paper is conceptual, based on theory and case studies from previous research. The sourcing
7 strategies are well documented, and the business models are at an overall level also well known,
8 but the detailed analysis of the different business models could benefit from validation by other
9 researchers and further empirical foundation. Most of the identified FM value chains much be
Jo
10 regarded to have a preliminary character and need substantial validation.
11
12
ur
13
14 References
15
na
16 Andersen, P.D., Andersen, A.D., Jensen, P.A. and Rasmussen, B. (2014), “Innovation-system
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lo
19 Atkins and Brooks (2009), Total Facilities Management, Third Edition, Wiley-Blackwell,
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23 Berg, B.B., Thuesen, C., Ernstsen, S.K. and Jensen, P.A. (2019), “Constructing Archetypes:
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27 Bröchner (2010), “Innovation and ancient Roman facilities management”, Journal of Facilities
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34 Coenen, C. and Nwanna, P. (2014), “Discovering the Relationship Lifecycle in FM: Phases and
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management”, 44(2), pp. 5-16.
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te
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51
52
53
54
55
56
57
58 19
59
60
1
2 BUSINESS MODELS IN FACILITIES MANAGEMENT VALUE CHAINS
3
4
5
6
Abstract
7
8 Purpose: To identify typical sourcing strategies and business models in Facilities Management
9 (FM) and map archetypes of value chains with complementary sourcing strategies and value chains.
Jo
10
11 Methodology: The paper is based on literature and case studies from previous research.
12
Theoretically, the paper takes a generic value chain as a starting point together with the recent ISO
ur
13
14 standard on sourcing process and a business model framework. A conceptual framework is
15 developed and typical sourcing strategies and business models for FM are investigated.
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16 Archetypical values chains are established by a combination of sourcing strategies and business
17 models.
18
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19 Findings: The paper identify 8 archetypes of FM value chains divided in three groups according
20
to whether the core business organisation occupy rented facilities, occupy owned facilities or has
21
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22 facilities operation as a core business like serviced office providers etc.

23
24 Implications: The results can be used on a general level by everybody, who need to get an
or
25 overview and understanding of the complex structure of the FM sector. Furthermore, the results
26 can help all parties involved in the FM value chain to get a clearer understanding of their position
27 in the chain and help them develop their sourcing strategies and/or business model, depending on
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28
29
their type of organisation.
30
31 Originality: While there is a huge amount of literature on sourcing in FM, the business models
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32 and value chains have only be limited researched. The paper is original in combining an
33 investigation of sourcing strategies, business models and value chains in FM.
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34
35
Keywords: Facilities Management, value chain, sourcing strategies, business models, maturity,
36
archetypes
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37
38
39 Paper type: Conceptual
40
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41
42
43
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1. Introduction
44
45 During the last decades, the interest infor business models has become evident in business
management literature and research into business models has also become important. A main
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46
47 reason for this interest has been the introduction of the internet and other ICT technologies, which
48 have created the possibility to develop many new types of business models, including new
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49 disruptive innovations and related business model.

50
51
52
However, within the field of Facilities Management (FM) there has been very little research on
53 business models. One example is a study of business models in connection to university campus
54 management in Finland (Rytkönen and Nenonen, 2014). Another example is a study of business
55 model innovation in a Danish biotech company (Nardelli, 2018xx). Business models are closely
56
57
58 1
59
60
1
2 related to value creation and value chains, and this is another topic, where there only has been
3 limited research within FM.
4
5
6
On the other side, sourcing has had much attention in FM research, particularly concerning
7 outsourcing and decisions about what services to provide in-house and what services to provide by
8 external companies (i.e. Ikediashi et al, 2014; Lok and Baldry, 2015; Plane and Green, 2011;
9 Redlein and Zobl, 2014). This obviously have to do with FM being a demand driven sectorfield,
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10 where the client og in-house FM organisation via their sourcing strategies set the conditions for
11 external providers – even though the external providers by their marketing activities try to influence
12
the decisions. In that way, sourcing strategies, business models and value chains are closely
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13
14 connected in FM.
15
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16 The term ‘FM sector’ is used in the paper, as FM is not just an industry branch consisting of a
17 conglomeration of companies within the same field. The FM sector is centred on specific work
18 activities in companies in combination with markets and service providers and a superstructure
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19 with professional bodies and academic institutions (Andersen et al., 2014).
20
21
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22 The question in focus of this paper is how sourcing strategies, business models and value chains
23 are connected and what are the typical combinations of these three interrelated elements. Thus, the
24 purpose is to identify typical sourcing strategies and business models in Facilities Management
or
25 (FM) and map archetypes of value chains with complementary sourcing strategies and value chains
26 in FM.
27
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28
29
The term ‘FM sector’ is used in the paper, as FM is not just an industry branch consisting of a
30 conglomeration of companies within the same field. The FM sector is centred around specific work
31 activities and a profession in combination with markets and companies and a superstructure with
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32 professional and trade associations, education and an academic discipline (Jensen and Dannemand-
33 Andersen, 2010).
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34
35
The paper is conceptual and draws on literature reviews and a number of case studies from previous
36
research with a combination of the author’s own research from the Nordic countries in Europe and
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37
38 case studies from various European countries presented in literature by other authors (i.e. Coenen
39 and Nwanna, 2014; Katchamart, 2013a; Nardelli and Broumels, 2018). Therefore, the paper does
40 not include a separate methods section. The reviewed literature is a combination of sources from
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41 the author’s earlier research on FM, including sourcing strategies and business model, as well as
42 reviews of the general literature on value chains conducted as part of an ongoing research project
43
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concerning business models in relation to sustainable building renovation and the construction
44
45 value chain (Berg et al., 2019).
ta
46
47 The paper reviews theory on value chains, sourcing strategies and business modelsthe mentioned
48 three elements in section 2, which results in a conceptual model to be used in the further analysis.
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49 Section 3 presents tThe paper is conceptual and draws on a number of case studies from previous
50 research with a combination of the author’s own research from the Nordic countries in Europe and
51
52
case studies from various European countries presented in literature by other authors. Therefore,
53 the paper does not include a separate methods section. The method of analysis is presented together
54 with analysis and findings in section 3. The paper is finishesd with discussion in section 4 and
55 conclusion in section 5.
56
57
58 2
59
60
1
2
3
4
5
6
2. Theory and conceptual framework
7
8 2.1 Value chains
9 The concept of value chain has been important in business management since Michael Porter
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10 introduced a generic value chain in his seminalvery influential book on Competitive Advantage
11 (Porter, 1985). Porter’s value chain focused on the activities inside a company, but the concept has
12
later been used also for chains of different companies, where output from one part of the chain
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13
14 functions as input tofor the next part with the customer as the final part. A closely related term is
15 supply chain (Nelson, 2004), but in this paper, the term value chain is used.
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16
17
Porter’s generic value chain does not specifically address FM, but it does distinguish between
18 primary activities and support activities, where the primary activities are directly involved in
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19 creating value for the external customers, while the secondary activities creates value internally.
20 Thus, both primary and support activities are necessary elements in creating value. FM usually is
21 seen as a support activity.
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22
23 Jensen (2011a) made an analysis of the relation between FM and core business in a Danish
24 broadcasting corporation, which had applied Porter’s generic model to define their value chain.
or
25 The analysis found that besides the horizontal value chain of the core business, a separate related
26
vertical FM value chain could be identified, which supported all the other internal parts in the value
27
chain.
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28
29 Jensen and Scupola (20190) analysed the FM value chain in a study of the use of IT in FM. This
30
31
resulted in the value chain model shown in Figure 1, which distinguish between the basic horizontal
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32 FM value chain with external providers, that deliver facilities service to in-house FM, who supports
33 and core business atnd the top and ICT-suppliers and consultant at the bottom. Suppliers and
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34 consultantsthat can deliverer IT-solution and consultancy services to all parts in the basic FM value
35 chain. Different suppliers and consulting companies may deliver to each part in the basic value
36 chain, so they are shown for each part as a vertical value chain at the bottom. The basic horizontal
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37
FM value chain at the top in Figure 1 will isbe the basis for the analysis in this paper.
38
39
40
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Figure 1. The FM Value Chain (Jensen and Scupola, 2019xx)

41
42
43 Facilities Internal Core
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44
45 service FM function business
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46
provider (customer) (client)
47
48
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49
50 ICT suppliers/ ICT suppliers/ ICT suppliers/
51 consultants consultants consultants
52
53
54
55
56
57
58 3
59
60
1
3 Sourcing is an essential part of FM and much have been written about outsourcing versus in-house
4 provision and different types of outsourcing (i.e. Ikediashi et al, 2014; Lok and Baldry, 2015; Plane
5
6
and Green, 2011; Redlein and Zobl, 2014). There has even been an international standard
7 published, which includes guidelines for strategic sourcing (ISO, 2016). The standard is structured
8 according to a sequential sourcing model with the following 10 main phases:
9
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10 1. Sourcing strategy and core business context
11 2. Identify current and future needs
12
3. Translate needs into requirements
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13
14 4. Describe the Service Levels
15 5. Identify service delivery options
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16 6. Business case development
17 7. Select preferred sourcing/service delivery option
18 8. Facilities service provision
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19
 Internal service provision
20
21  External service provision
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22 9. FM service procurement & FM Agreement

23 10. Measure service provision performance
24
Jensen (2017) studied the strategic sourcing process in a Danish case organisation and compared it
or
25
26 with the process in the ISO standard. It showed that the process in the case organisation had less
27 phases and more parallel activities in developing the sourcing and procurement strategy. The main
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28 problem with the standard is that it is based on the sequential model starting with detailing the
29
30
demand and needs before investigating sourcing option. The case showed that the ways, needs are
31 specified in tender material depends on the chosen sourcing models. However,Besides that the
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32 standard has a sound approach to strategic sourcing being open to combining internal and external
33 service provisions.
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34
35 Strategic sourcing is theoretically related to the classical corporate management question of making
36
or buying and related to this, coordination based on corporate organisation (hierarchy) or market
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37
38
(Williamson, 2008). The question can be seen as a narrow and short- term economical question of
39 finding the cheapest solution, but it can also be regarded as a strategic issue, where long termlong-
40 term benefits and risks are more in focus. As many organisations have achieved increased
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41 experience with outsourcing of FM, the strategic view seems to become more important. Vitasek
42 (2016) investigated ‘strategic sourcing business models’, but not particularly in relation to FM.
43
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44
2.3 Business models
45
A business model describes, is a model for what value a business provides to its customers, how it
ta
46
47 create the value, and how it generate income. There are many definitions of business models. Fielt
48 (2013) analysed many such definitions and concluded, “We define a business model as a
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49 representation of the value logic of an organization in terms of how it creates value and captures
50 customer value”. Teece (2010) claims that a business model is more generic than a business
51 strategy. However, it is necessary to couple strategy and business model analysis to protect
52
53
competitive advantage resulting from new business model design. Patenting products and
54 processes can be an effective way to protect business models, but Teece (2010) also points to co-
55 specialisation as a way to create competitive advantages byof having key resources and processes
56 developed together over time to create a unique and valuable combinationas a way.
57
58 4
59
60
1
2
3 One of the most widely usedcommon frameworks for analysing and developing business models
4 is the Business Model Canvas (Osterwalder and Pigneur, 2010), which also was used in the earlier
5
6
mentioned study by Rytkönen and Nenonen (2014). However, the Business Model Canvas includes
7 many different elements and can be complicated to use in research across organisations as
8 experienced by Berg et al. (2017). Therefore,. For this this paper applies the simplerit was decided
9 to use the so-called four blockfour-block framework by Christensen et al. (2016). Theis framework
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10 includes Priorities divided in Value proposition and Profit formula and Capabilities divided in
11 Resources and Processes as shown in Table 1. The authors stress that the interrelationships and
12
balance between the four blocks are essential. The value proposition is the first among equals and
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13
14 iscan seen as the central dimension of athe business model as stated by Fielt (2013).
15
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16
17
18 Table 1: The Four- Block Business Model Framework (based on Christensen et al., 2016)
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19
20
21
Priorities Capabilities
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22 Value proposition Resources

23 A product that helps customers to more People, technology, products, facilities,
24 effectively, conveniently, and affordably do a equipment, brands, and cash that are required
or
25 job they’ve been trying to do to deliver this value proposition to the

26 targeted customers
27
Profit formula Processes
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28
29 Assets and fixed cost structure, and the Ways of working together to address recurrent
30 margins and velocity required to cover them tasks in a consistent way: training,
31 development, manufacturing, budgeting,
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32 planning etc.
33
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34
35
36 2.4. Conceptual framework
In this paper, sourcing strategies and business models are seen as complementary, where sourcing
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37
38 strategies are related to the demand side and business models are related to the supply side. Thus,
39 between each part of the value chain there is a connection to neighbouring parts consisting of a
40 sourcing strategy and one or more business models depending on the sourcing strategyies. This is
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41 shown illustrated in Figure 2, which includes an elaboration of the basic horizontal FM value chain
42
43
in Figure 1. Cwhere the core business on the right is the ultimate customer, while the chain can be
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44 continued to the left with different levels of sub-providers. In this paper, sub-providers will only
45 be addressed as part of the analysis of the other parts.
ta
46
47
48 Figure 2: The FM Value Chain with complementary sourcing strategies and business models
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49
50
51
52
53 SOURCING SOURCING SOURCING
54 SUB- STRATEGY PROVIDERS STRATEGY FACILITIES STRATEGY CORE
55 PROVIDERS MANAGEMENT BUSINESS
56 BUSINESS BUSINESS BUSINESS
57 MODEL MODEL MODEL
58 5
59
60
1
2
3
4
5
6
7 3. Analysis and findings
8
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10 There are a number of different options for sourcing in relation to FM both for the core business
11 and for an in-house FM organisation.
12
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13
14 For core business, the basic question is, whether FM should be provided centrally by a special FM
15 organisation or provided de-centrally by each department or business unit. Except for very small
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16 businesses, it is has increasingly become most common to establish a special FM organisation. The
17 FM organisation can be in-house with different positions in the corporate structure. It can be an
18 internal staff function, which typically is managed as a cost centre, or it can be a line organisation
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19 in which case it possibly can be a profit centre with internal rent and debiting (Kaiser, 1989; Jensen,
20
2008a). FM can also be part of a shared service centre together with other support function, which
21
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22 is shownthere are in a case studyies of both concerningfrom public organisations in the Netherlands
23 (Katchamart, 2013a) and a private corporation in Denmark (Jensen and Katchamart, 2012). A
24 solution mainly used by large corporations with subsidiary companies is to establish a sub-
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25 subsidiary FM company operating on more or less commercial conditions. Two case studies of this
26 are included in Jensen et al. (2008) – one from Denmark and one from Sweden.
27
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28
29
Furthermore, there are solutions with integrated space and service provision like serviced offices,
30 incubators and co-working spaces. Jensen et al. (2008) present two case studies of this – an
31 international case of an office hotel company and a case of an incubator at a university in Denmark
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32 and Vvan Meel (2015) presents three3 case studies of co-work offices from Amsterdam,
33 Copenhagen and Paris. A special option for public organisations is provision of space and services
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34 in new buildings via Public-Private Partnership (Kristiansen, 2019)PPP). Three case studies of PPP
35
are included in Jensen et al. (2008) – two from Denmark and one from Iceland.
36
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38 For in-house FM organisations, the basic question is to which degree services should be provided
39 in-house or by external providers. In most cases the solution will be a combination. The external
40 provision can take place as out-tasking of single services, outsourcing of bundled services or an
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41 integrated delivery of most services. The latter solution is sometimes called I-FM (Integrated FM)
42 or T-FM (Total FM), but in this paper it isthis solution will be called I-FS (Integrated Facilities
43
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Services). Text and reference books on FM like Jensen (2008a) and Wiggins (2010)The mentioned
44
45 sourcing solutions are generally cover the mentioned sourcing solutions.ed by text and reference
books on FM, for instance Jensen (2008a) and Wiggins (2010).
ta
46
47 There are several other solutions and terms used for sourcing like co-sourcing (partnerships, joint
48 ventures), insourcing and right-sourcing, but the first mentioned are seen as the most important
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49 sourcing solutions for in-house FM organisations. Partnerships will be addresses in section 4.

50 Discussion.
51
52
54 There isare a number of typical business models (BM’s) both for in-house FM organisations and
55 for providers.
56
57
58 6
59
60
1
2 BM’s for in-house FM (BM-IH)
3 For in-house FM, a possible solution is to establish a contract management organisation, which do
4 not provide any operational service, but on the core business (CB) is in charge of managing
5
6
contracts with one or more external providers - oftentypically an I-FS contract with one provider
7 company. Such a contract management organisation is sometimes called ‘the intelligent client’
8 (Williams, 1989; Wiggins, 2010) or the ‘informed client’ (Atkins and Brooks, 2009).
9
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10 To identify other solutions based on developing an in-house FM organisation with some internal
11 service provision, maturity models for FM have been studied as part of this research. Several such
12
maturity models have been developed. In the related field of CREM (Corporate Real Estate
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13
14 Management), Joroff et al. (1993) early on developed a very influential model was developed early
15 on by Joroff et al. (1993). For this paper, the author has mainly used a combination of two models
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16 developed for public FM organisations in Denmark. One One was developed in connection to
17 establishing a property centre in Copenhagen Municipality and it is described in a case study ( by
18 Jensen et al., (2008). The other was developed as part of consultancy report from a management
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19 consulting company about generally improving FM in Danish municipalities (EY, 2017). Both
20
maturity models include five levels. Table 2 presents the results of an analysis of the five maturity
21
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22 levels and the contract management solution based on the four block BM framework by
23 Christensen et al. (2016).
24
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25
27 BM-IH1: Basic offering: Basic offering:  Service staff  Service operations
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28 Caretaker/  Basic facilities  Budget allocation from several and craft based
29 Limiting cost services (cost centre) service lines operations according
30 Additional: Additional:  Skilled staff to norms and
31  Minor building  Refund of external management
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from one or
32 works cost of building more trades instructions.
33 work  Single service  Input and transaction
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34 providers oriented contracts

35  Building work with providers.
36 providers  Cost focus and no
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37  Materials defined policies.

38  Equipment
39  Decentral
40 management
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41 BM-IH2: Basic offering: Basic offering: As above As above plus

42 Building  Basic facilities  Budget allocation exceptplus central  Minor planning
43 owner/ services (cost centre) or management activities and
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44 Operational  Basic space income from plus dialogue with client.

45 efficiency management internal rent and  Technicians  Standardisation of
ta
46 Additional: debiting (profit service levels and

47  Building works centre) contracts.
48  Additional:  Cost and possibly
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49  Refund of external also income focus.

50 cost of building
51 work
52 BM-IH3: Basic offering: Basic offering: As above plus  Service operations
53 Active building  Facilities services  Budget allocation  Bundling of and craft based
54 owner/  Technical (cost centre) or some services operations based on
55 Flexibility monitoring income from  Monitoring SLAs with some
56  Space management internal rent and systems output based
Additional:  Consultants contracts.
57
58 7
59
60
1
2  Building works debiting (profit  Building work based
3  Internal consulting centre) on project
4 Additional: specifications.
5  Refund of external  Technical analyses,
6 cost of building planning, monitoring
7 work with a focus on
8 optimisation.
9  Dialogue with client
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10 and customers.
12 Preferred  Facilities services  Income from  Helpdesk  Focus on portfolio
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13 partner/  Technical internal rent and development and
14 Proactivity monitoring debiting (profit added value.
15  Space management centre)  Dialogue with client,
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16  User feedback Additional: customers and end-
17 Additional:  Refund of external users as wells as
18  Building works cost of building collaboration with
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19  Internal consulting work other support
functions.
20
21  Perhaps outcome
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based contracts.
22
BM-IH5: Basic offering: Basic offering: As above plus As above plus
23
Innovator/  Facilities services  Income from  Strategic  Focus on
24
Strategic value  Technical internal rent and partnerships development of the
or
25
creating monitoring debiting (profit with external market.
26
 Space management centre) providers.  R&D projects and
27
 User feedback Additional:  R&D partners innovation.
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28
Additional:  Refund of external
29 cost of building
 Building works
30 work and
 Internal consulting
31
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 Joint development development

32 projects
projects with CB
33
BM-IH6: Basic offering: Basic offering:  I-FS provider  Governing,
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34
Contract  Procuring and  Budget allocation  Contract managing and
35
management controlling a (cost centre) manager supervising external
36
contract with an I-  Supervisors provision
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37
FS provider, who  Consultants  Dialogue with client
38 delivers all  Legal advisors and customers.
39 facilities services
40
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and related
41 planning and
42 management
43
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44
45
Table 2. Analysis of BM’s for in-house FM organisations (BM-IH)
ta
46
47
48 BM-IH1, Caretaker/Limiting cost, is the most basic, where the value proposition is just to sustain
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49 the core business with necessary facilities services with no ambitions of improving the core
50 business. Besides the basic facilities services, minor building works can be included in the offering.
51
The profit formula is typically a budget allocation to a cost centre for the basic service and refund
52
53 of external cost for additional building works. In-house resources mostly include Service staff from
54 several service lines (soft services) and Skilled staff from one or more trades (hard services) and a
55 decentral management, which may not have a special FM qualifications. Besides, the organisation
56 procure external single service providers, building work providers, materials and equipment. The
57
58 8
59
60
1
2 processes include service operations and craft based operations according to norms and
3 management instructions. Contracts with providers are typical with transaction oriented input
4 based specifications. Decision- making mostly has cost focus without any defined policies.
5
6
7 BM-IH2, Building owner/Operational efficiency, is also rather basic but with a similar value
8 proposition, but includewith a stronger focus on space planning. Thus, basic space management is
9 included in the offering. The profit formula can be the same, but it also be based on income from
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10 internal rent and debiting (profit centre). Technicians are added to the resources and the processes
11 further include minor planning activities and dialogue with client, standardisation of service levels
12
and contracts. Management of FM is centralised and beside and the beside the focus on cost in
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13
14 decision- making, an income fhocus might be included.
15
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16 BM-IH3, Active building owner/Flexibility, also has a similar value proposition, but with a
17 stronger focus on professional and technical oriented management. Thus, technical monitoring and
18 possibly internal consulting, is included in the offering. The profit formula is the same as the second
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19 BM-IH2, but to the resources are added bundling of some services, monitoring systems and use of
20
consultants. The processes included service operations and craft based operations based on Service
21
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22 Level Agreements (SLAs) with some output-based contracts, building work based on project
23 specifications, technical analyses, planning, monitoring with a focus on optimisation and dialogue
24 with client and customers.
or
25
26 BM-IH4, Preferred partner/Proactivity, is characterised by a focus on not just sustaining but also
27 attempts to improve the core business. Thus, responsiveness to user feedback in included in the
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28
29
offering., The basic profit formula is based on income from internal rent and debiting (profit
30 centre). A helpdesk is added to resources and to processes are added a focus on portfolio
31 development and added value, dialogue with client, customers and end-users as wells as
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32 collaboration with other support functions and perhaps use of outcome based contracts.
33
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34 BM-IH5, Innovator/Strategic value creating, has an even stronger focus onand improving the core
35
business and creating joint innovations and development. Thus, joint development projects are
36
added to the additional offering. The profit formula is the same as the fourth BM-IH4 except for
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37
38 adding possibly refunding of cost of development projects. To resources are added strategic
39 partnerships with external providers and collaboration with R&D partners and to processes are
40 added focus on development of the market and R&D projects and innovation.
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41
42 BM-IH6, Contract management, is fundamentally different bywith a value proposition with the
43
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basic offering to procure and control a contract with an I-FS provider, who delivers all facilities
44
45 services and related planning and management. This can be based on a pure cost focus, but it can
also be based on focus on quality and joint development in a strategic partnership, depending on
ta
46
47 the priority of the core business. The profit formula for contract management is a budget allocation
48 (cost centre) to cover the in-house cost as well aslso payments to the I-FS provider and other
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49 external cost. The resources are mainly the contractor manager, supervisors and the I-FS provider,
50 but other external partners like consultants and legal advisors could also be involved for specific
51
52
assignments. The main processes are gGoverning, managing and supervising external provision as
53 well as dialogue with client and customers.
54
55
BM’s for providers
56
57
58 9
59
60
1
2 For providers it was found appropriate to distinguish between the more general service providers
3 to FM and providers specifically targeting building owners with main focus on building related
4 services - also called ‘hard FM’.
5
6
7 The BM’s for service providers (BM-SP) more or less mirrors the sourcing options for in-house
8 FM organisations. They include provision of single service, bundled service and I-FS. These are
9 models where services typically are procured by tendering with price competitions. An additional
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10 option is management contracting, where a management consultant company takes responsibility
11 for organising the service provision by external providers based on a management fee, incentive
12
based bonus fees and reimbursement of the cost of the service provision. Nardelli and Broumels
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13
14 (2018) did a case study on FM innovation concerning an energy supply company in the
15 Netherlands, which involved a managing contractor. Table 3 presents the results of an analysis of
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16 those four business models for service providers and management consultants based on the four
17 block BM framework by Christensen et al. (2016).
18
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19
21 BM-SP1: Basic offering: Basic offering:  Specialised  Standardised service
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22 Single service  Specialised service  Fixed price staff from one operations based on
23 delivered regularly Additional: service line SLA’s, norms
24 on the client’s sites  Hourly rates or  Materials and/or management
or
25 for a contract agreed price  Equipment instructions.

27 Additional:
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29 service on order
31
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Bundled  Two or more  Fixed price staff from two  Coordination of

32 services specialised services Additional: or more service service provision
33 delivered regularly  Hourly rates or lines
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34 on the client’s sites agreed price  Materials

35 for a contract  Equipment
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37  One point of
38 contact
39 Additional:
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41 service on order
43 I-FS  Several specialised  Fixed price with staff from  Ongoing reporting,
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44 services delivered annual adjustment several service governance,

45 regularly on the  Bonus incentives lines improvements and
client’s sites for a  Technicians consulting
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46 and gain sharing

47 contract period Additional:  Sub-providers
48  One point of  Hourly rates or  Materials
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49 contact agreed price  Equipment

50  Annual cost  Claims from  Management
51 reductions deficiencies in
52  Improvement contract
53 proposals specifications
54 Additional:
56 service on order
57
58 10
59
60
1
2 BM-SP4: Basic offering: Basic offering:  Management  Management of
3 Management  Responsibility for  Fixed management consultants standardised service
4 contracting several specialised fee  Supervisors operations based on
5 services delivered  Bonus incentives  Technicians SLA’s
6 regularly on the  Direct cost for  Providers  Ongoing reporting,
7 client’s sites for a service provision is  Management governance,
8 contract period refunded improvements and
9  One point of Additional: consulting
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10 contact  Direct cost for extra
11  Annual cost service is refunded
12 reductions  Hourly rates or
ur
13  Improvement agreed price for
14 proposals additional
15 Additional: management tasks
na
17 service on order
18
lo
19 Table 3. Analysis of BM’s for service providers to in-house FM organisations (BM-PS)
20
21
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22 BM-SP1, Single service, involves a value proposition with a basic offering of specialised service
23
24
delivered regularly on the client’s sites for a contract period with the additional possibility of
related extra service on order. The profit formula is typically based on a fixed price for the basic
or
25
26 offering and payment according to hourly rates or agreed price for extra service. RThe resources
27 are specialised staff from one service line, materials equipment and management. P and the
po
28 processes are mostly standardised service operations based on SLA’s, norms and /or management
29 instructions.
30
31
ra
32 BM-SP2, Bundled services, resembles BM-SP1, but the value proposition is with a basic offering
33 of two or more specialised services - instead of just one - delivered regularly on the client’s sites
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34 for a contract period and with one point of contact. The profit formula is the same. Resources also
35 include specialised staff from two or more service lines instead of just from one. To processes is
36 added coordination of service provision.
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37
38
39
BM-SP3, I-FS, is more complex. The value proposition includes several specialised services
40 delivered regularly on the client’s sites for a contract period with one point of contact, annual cost
al
41 reductions and improvement proposals and as for the former BM-SP’s, additionally extra service
42 on order. The profit formula includes fixed price with annual adjustment related towith bonus
43 incentives and gain sharing as well as additionally payment of extra service according to hourly
Es
44 rates or agreed price and as a new and in some cases important aspect; claims from deficiencies in
45 contract specifications. Resources include specialised staff from several service lines, technicians,
ta
46
47
sub-providers, materials, equipment and management. The processes include the same as BM-SP2
48 with addition of ongoing reporting, governance, improvements and consulting.
te
49
50 BM-SP4, Management contracting, is in principle very different in the value proposition and profit
51 formula, but in other waysways, it resembles I-FS with an integrated delivery. The basic offering
52 includes responsibility for several specialised services delivered regularly on the client’s sites for
53
a contract period, one point of contact, annual cost reductions and improvement proposals and
54
55 additionally extra service on order. The profit formula includes fixed management fee, bonus
56 incentives and refunding direct cost for service provision and additionally refunding of direct cost
57 for extra service provision and payment for additional management tasks according to hourly rates
58 11
59
60
1
2 or agreed price. Resources include management consultants, supervisors, technicians, providers
3 and management. Pand processes include management of standardised service operations based on
4 SLA’s and ongoing reporting, governance, improvements and consulting.
5
6
7 The BM’s for providers targeting building owners (BM-BO) arewere divided in providers of
8 building work like maintenance, real estate administrations and ESCO (Energy Service
9 Companies). Table 4 presents the results of an analysis of those three BM’s. based on the four
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10 block business model framework by Christensen et al. (2016).
11
12
ur
13
Business model Value proposition Profit formula Resources Processes
14
BM-BO1: Basic offering: Basic offering:  Skilled staff  Craft based
15
na
Building work  Specialised services  Fixed price from one or operations according
16
delivered on a Additional: more trades to project
17 project basis at the  Hourly rates or  Technicians specifications
18
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client’s sites agreed price  Materials
19 Additional:  Claims from  Equipment
20  Related extra deficiencies in  Management
21 service on order project
fC
22 specifications
23 BM-BO2: Basic offering: Basic offering:  Economist  Administrative
24 Real estate  Rent out space for  Fee as a fixed  Lawyers processes; possibly
or
25 administration building owners percentage of rent supplemented with:

 Technicians
26 and collect rent income for rent  Service operations
 Caretakers and
27 from tenants administration service staff  Craft based
po
28 Additional: Additional: operations,

 Supervisors
29  Operation and  Fee as a fixed  Project management
 Sub-providers
30 maintenance percentage of rent  Consulting
 Management
31
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 Rebuilding and income for

32 refurbishment operation and
33  Real estate maintenance
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34 development  Hourly rates or

35  Consultancy agreed price for
36 projects and
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37 consultancy
38 BM-BO3: Basic offering: Basic offering:  Technicians  Craft based
39 ESCO  Energy savings in a  Fee based on  Skilled staff operations and
40 portfolio of guaranteed energy from different technical analyses,
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41 buildings for the savings trades planning and

42 building owner Additional:  Monitoring monitoring
43 Additional:  Gain sharing from systems
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44  Instruction of in- additional savings  Management

45 house FM staff  Claims from
changes in baseline
ta
46
47
48 Table 4. Analysis of BM’s for providers targeting building owners (BM-BO)
te
49
50
51
52
BM-BO1, Building work, is characterised by a value proposition of specialised services delivered
53 on a project basis at the client’s sites and additionally extra service on order. The profit formula is
54 as simple as fixed price often based on competitive tendering and additionally payment for extra
55 service according to hourly rates or agreed price and as for BM-PS3 (I-IFS); claims from
56 deficiencies in project specifications. Resources include skilled staff from one or more trades,
57
58 12
59
60
1
2 technicians, materials, equipment and management and processes include craft based operations
3 according to project specifications.
4
5 BM-BO2, Real estate administration, is characterised by a value proposition of renting out space
6
7
for building owners and collecting rent from tenants and additionally operation and maintenance,
8 rebuilding and refurbishment, real estate development and consultancy. The profit formula is fee
9 as a fixed percentage of rent income for rent administration and additionally fee as a fixed
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10 percentage of rent income for operation and maintenance payment according to hourly rates or
11 agreed price for projects and consultancy. Resources include economist, lawyers, technicians,
12 caretakers/service staff, supervisors, sub-providers and management. Processes includes
ur
13 administrative processes; possibly supplemented with service operations, craft based operations,
14
15
project management and consulting.
na
16
17 BM-BO3, ESCO, represents a ratherquite unique BM. The value proposition is energy savings in
18 a portfolio of buildings for the building owner and additionally instruction of in-house FM staff,
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19 while the profit formula is fee based on guaranteed energy savings and additionally gain sharing
20 from additional savings and claims from changes in baseline. The resources include technicians,
21
skilled staff from different trades, monitoring systems and management and the processes are craft
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22
23 based operations and technical analyses, planning and monitoring.
24
3.3 Archetypes of FM value chains
or
25
26 The FM value chain consists as described in section 2.1 of core business as the customer, which is
27 supported by an internal FM organisation responsible for service provision; possibly with a
po
28 combination of in-house provision and provision from external providers, who also can have sub-
29
30
providers. From the analysise it was found that FM value chains could be grouped according to the
31 type of facilities and ownership of facilities that the core business occupy. It was found appropriate
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32 to group the value chains according to core businesses in rented facilities, own (owned) facilities
33 and facilities operated to be used by other companies like serviced offices etc.
te
34
35 The distinction between rented and own facilities is not related to the formal financial arrangement
36 but to who has the owner responsibility; particularly in relation to building maintenance and
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37
38
operation of the shell and basic technical infrastructure and for multi-user property also of shared
39 facilities outdoor and indoor. Rented and own facilities are both typically related to situations,
40 where staff in the company and possibly visitors are the end users.
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41
42 Facility operators are seen as organisations, who have FM as integrated part of their core business.
43
Es
Here the end users typically are staff from customer companies for the operator or individual
44
customers. For instance, shopping centre management companies are responsible for operating
45
shopping centres and their direct customers are the shops, who rent space at the shopping centre,
ta
46
47 but the public using the shopping centre are customers for the shops. Thus, the public using the
48 shops are customer’s customers for the shopping centre management company, and their shopping
te
49 experience is essential for the whole shopping centre as explained in a; see case study of a Danish
50 shopping centre management company (in Jensen et al., (2008).
51 A similar situation characterizes airports, where the direct customers for the airport operator are
52
53
the airlines and the shops in the airport, while the passengers are customers for the airlines and
54 shops. Thus, the passengers are customer’s customers for the airport operator, and their experience
55 of visiting the airport is just as important for the whole airport as it is for the whole shopping centre;
56 see case study of Copenhagen Airport in Jensen et al. (2008).
57
58 13
59
60
1
2
3 The formal ownership is not important in this context for shopping centres and airports and many
4 other types of facilities operators, but when it comes to management of housing estate, ownership
5
6
has a fundamental importance. According to an analysis by Nielsen et al. (2012x) of the so-called
7 strategic FM organisation in housing organizations under different types of ownership, a difference
8 between a strong demand driven strategic management in social and cooperative housing
9 associations and an increasingly stronger supply driven management in privately owned housing
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10 companies could be identified.
11
12
Small companies will typical choose between one of the three groups for their facilities solution.
ur
13
14 Large corporations may have a combination of occupying facilities from all three groups but in that
15 case, they utilise a combination of value chains. Production companies often own their
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16 headquarters and production facilities, but they may rent additional offices and storage space as
17 well as serviced office spaces in different locations.
18
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19 Table 5 presents an overview of eight archetypes of FM value chains divided in the three groups
20
with the modification that the first group both can be relevant for rented and own facilities. For
21
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22 practical reasons, the value chains are shown in the opposite order than in Figure 1 and 2 starting
23 with core business in the secondfirst column from left.
24
or
25
26 FM value Core business FM Providers Sub-providers
27 chain
po
28 FM-VC1 Rented facilities or Caretaker/ Single service

29 Own facilities Limiting cost
30 FM-VC2 Contract manager Single
31 Bundled services
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32 I-FS Single service

33 FM-VC3 Own facilities Building owner/ Single service
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34 Operational efficiency Bundled services

35 Building work
36 FM-VC4 Active building owner/ As above plus
Flexibility Consultants
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37
38 Legal advisors
39 ESCO
40 FM-VC5 Preferred partner/ As above or If I-FS or Management
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41 Proactivity I-FS or contractor:

42 Management Single service
43 contractor Building work
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44 Consultants
Legal advisors
45
FM-VC6 Innovator/ As above plus As above
ta
46
Strategic value creating R&D partners
47
FM-VC7 Facilities operator Real estate Single service
48
te
(serviced office providers, shopping centre, administration Bundled service

49
airports, culture houses, housing associations, Building work
50 PPPs etc.) Consultants
51 FM-VC8 Single service
52 Bundled service
53 Building work
54 Consultants
55 Legal advisors
56 ESCO
57
58 14
59
60
1
2
3 Table 5. Typical FM value chains
4
5
6
7 Two value chains are the same for rented and own facilities. FM-VC1 includes an in-house FM
8 organisation with focus on Ccaretaking/L and limiting cost (BM-IH1) with possiblye
9 withinvolvement of single service providers. FM-VC2 includes an in-house Ccontract Mmanager
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10 (BM-IH6), who engage single and/or bundled service providers. FM-VC1 and FM-VC2 are placed
11 together and can both be seen as being on the lowest level of maturity with of focus on ‘no frills’
12
FM product as Katchamart (2013b) call the lowest level of complexity in his characterisation of
ur
13
14 FM products. However, contract management can be on a high level of sophistication particularly
15 with I-FS solutions and thereby equivalent to one of the higher maturity levels for in-house FM
na
16 organisations.
17
18 Besides FM-VC1 and FM-VC2, there are four value chains specifically for own facilities and they
lo
19 reflect the maturity models, which formed the main basis for Table 2. FM-VC3 is related to
20
Building owner/Operational efficiency (BM-IH2), which might engage single service, bundled
21
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22 service and/or building work providers. FM-VC4 is related to Active building owner/Flexibility,
23 which additionally might engage consultants, legal advisors and/or ESCO. FM-VC5 is related to
24 Preferred partner/Proactivity, which might engage the same as FM-VC4 or an I-FS provider or a
or
25 management contractor as well as various sub-providers. FM-VC6 is related to Innovator/Strategic

26 value creating, which might engage R&D partners in addition to those for FM-VC5.
27
po
28
29
Facilities operators are characterised by both representing both core business and FM as FM is an
30 integrated part of the core business. There are two value chains for facilities operators. FM-VC7
31 involves engaging a real estate administration, which might engage single service, bundled service
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32 and/or building worker sub-providers and/or consultants. FM-VC8 involves the facility operator
33 directly engaging single service, bundled service and/or building work providers and possibly
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34 consultants, legal advisors and/or ESCO.

35
36
Re
37
38 4. Discussion
39
40 Origin of the different sourcing strategies and business models
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41 Contract management has existed for centuries and was developed to some sophistication during
42 the Roman Empire as shown by Bröchner (2010). Caretaking probably has even longer historical
43
Es
roots and was in earlier historical times often undertaken by slaves.

44
45
In modern times, out-tasking with single services initially was the dominant solution of external
ta
46
47 provision and often procured by negotiation without detailed requirement specifications and
48 competitive tendering. An example is the cleaning contract between the Danish Broadcasting
te
49 Corporation (DR) and ISS in the early 1990’ies had 50 years anniversary without ever having been
50 in a competition. That possibility was abandoned bychange with introduction of EU’s procurement
51
52
legislation for public clients and DR soon after had all cleaning service out for EU tendering
53 resulting in drastic cost reductions as well asnd also initially problems to obtain the required quality
54 (Jensen, 2008b). Outsourcing with bundled services is relatively new phenomenon and hasve
55 gradually developed as an extension of out-tasking/single services since the 1990’s.
56
57
58 15
59
60
1
2 Managing contracts were introduced in the Nordic countries in 1995 by IBM’s pan-European FM
3 contract with Johnson Controls (Jensen, 2008a). This was followed in Sweden by the establishing
4 of Skanska FM (now Coor Service Management) as a management consulting company in 1998,
5
6
and they for instance started a long lasting collaboration with the Swedish telecommunication
7 company L.M. Ericsson in 2000. The threat of being reduced to a sub-provider for management
8 consultants resulted in ISS changing its strategy in 2000 from being a cleaning company towards
9 becoming an I-FS provider. Case studies of these developments are included in Jensen et al. (2008).
Jo
10
11 For property investors, the collaboration with real estate administrations goes a long way back.
12
Serviced offices and incubators mostly started after year 2000 and was later followed by co-
ur
13
14 working spaces.
15
na
16 Public-Private Partnerships were started in the UK by political decision in the 1980’s during
17 Margaret Thatcher’s government. Iceland became the frontrunner for PPP in the Nordic country
18 until it collapsed during the financial crisis from 2008. In Denmark, PPP was introduced after year
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19 2000 on government initiative and the first project was a school building in Jutland starting in 2004
20
(Jensen et al., 2008). ESCO has a long history in some countries like Sweden and USA (Jensen et
21
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22 al., 2008), but ESCO was introduced in Denmark around 2008, when it started to be used by a
23 number of municipalities (Nardelli et al., 2015).
24
or
25 Trends in the development

26 The general trend towards increased use of external providers (outsourcing in a broad sense) is
27 ongoing even though slowly in the most mature markets in Northern Europe, while there is a fast
po
28
29
growth, for instance in parts of Asia. Market surveys for The Netherlands, which is one of the most
30 mature markets, showed the growth continued during the financial crisis from 63 percent in 2009
31 to 64 percent in 2011 even though the total market volume slightly decreased in the same period
ra
32 (Van der Spil, 2013).

33
te
34 The Swedish branch of the management consulting company Capgemini made a study of the Nodic
35
FM market, which concluded that the Nordic countries are leading the trend towards I-FS and
36
expected that I-FS would have a higher growth rates than other parts of the outsourcing market
Re
37
38 Capgemini (2005). At least in Denmark, it seems that managing contracts have been replaced by
39 I-FS on comprehensive contracts, and managing contracts are mainly used in catering, where
40 quality and user satisfaction often I given higher priority than lowest price, because catering is seen
al
41 as a fringe benefit of importance to attract and attain staff.

42
43
Es
In recent years, there has been an increased focus on more partnership based I-FS contract with
44
45 focus on outcome specification with user satisfaction as a main KPI, which in some cases is used
to determine the remuneration of the I-FS provider. A case study from the mobile communication
ta
46
47 company Sony-Ericsson is included in Jensen and der Voordt (2017). An American author has
48 developed as special version of outcome based contract calle Vested Outsourcing (Vitasek, 2016).
te
49 Other studies have showed that increased global coordination of FM in multinational companies
50 has developed and that multinational companies increasingly make use of global FM providers
51
52
(Jensen, 2013; Katchamart, 2013; Van der Kluit, 2005).
53
54 The development in Denmark has shown that the uptake of PPP has been limited in spite of strong
55 political interest from central government (Kristiansen, 2019). ESCO has had a fast development
56
57
58 16
59
60
1
2 in Danish municipalities since the start in 2008, but the interest among municipalities has been
3 reduced again, but ESCO is increasingly used in other sectors like hospitals, housing and industry.
4 Serviced offices and co-working are becoming more and more widespread and this is probably a
5
6
global trend. Van Meel (2015) writes that the first co-work space to style itself as such started in
7 San Francisco in 1995 and he cites a survey from 2010 stating co-working mostly was a hipster
8 phenomenon. He also refers to another survey from 2013 estimating that there were about 2,500
9 co-work spaces across the world with approx. 110,000 members. Van Meel found these number
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10 quite impressive for such a young phenomenon and expected the concept will become more
11 mainstream in the coming years.
12
ur
13
14 The characteristics of business models in the FM sector
15 The presented business models are regarded as representing the most important types. Individual
na
16 organisations will belong to one type, but their specific business model will have more details and
17 not least, the capabilities and the relationships between the building blocks must have special
18 characteristics for the company to create unique features and competitive advantage as pointed out
lo
19 by Teece (2010). However, the FM sector is a demand based sectorfield of business. Thus, the
20
demand side needs to set sourcing conditions for their providers, so that there is a sufficient number
21
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22 of provider companies that can comply with them. Similarly, the supply side needs to have business
23 models that are general enough to be attractive to a sufficient number of different clients. This
24 limits how unique the business models for FM providers can be.
or
25
26 Christensen et al. (2016) developed a life cycle model with three stages of business model’s
27 journey. It resembles the well-known product life cycle. They claim that business models over time
po
28
29
become more resistant to change. However, this seems to be based on an analysis of supply based
30 companies (like much international business management literature) that pushes products to a
31 market, while for FM as demand based sectorbusiness, client organisations pull service contracts
ra
32 via tendering from providers. Therefore, it could be hypothesized that business models in the FM
33 sector are less tightly knit and more flexible in relation to modifications in accordance towith
te
34 changes in the market conditions. The FM relationship lifecycle model developed by Coenen and
35
Nwanna (2014) might be more relevant for the FM sector than the mentioned BM life cycle model.
36
Re
37
38 New business models for FM are likely to be developed in the future and particularly new
39 disruptive technologies and other innovations will probably change part of the industry. There is at
40 the moment high expectations to the potential impact of Internet of Things, censor technology, big
al
41 date and robotics, but the disruption may come from unexpected sources and in surprising ways.
42 However, one of the characteristics of the FM sector is that most services have to be delivered on
43
Es
the specific sites, where client organisations are located. This sets some restrictions to what new
44
45 developments are possible, but it also make remote and wireless monitoring and control very
powerful.
ta
46
47
48 Influencing factors
te
49 The variety of value chains in the FM sector is an expression of the high complexity that
50 characterises the sector. The value chains are strongly dependent on the facility solution that the
51
52
core business make use of, but there are still more than one available value chain for each of the
53 three main facilities solution. There are at least three factors influencing the choice of value chain
54 and some likely influences are suggestedpresented in the following.
55
56
57
58 17
59
60
1
2 Company size: The larger an organisation is, the more likelihood there is off a more complex value
3 chain or making use of more than one value chain.
4
5
6
Company complexity: The higher the complexity of a business, the more likelihood is over time to
7 develop an FM organisation on a higher maturity level and make use of a more complex value
8 chain. Office based companies will typically have a rather simple value chain, while more complex
9 businesses like production companies, airports, hospitals, universities etc. probably will make use
Jo
10 of more complex value chains.
11
12
Dynamics of the environment: This can influence in different ways and be related to the generic
ur
13
14 space strategies identified by O’Mara (1999):
15  Companies in a fast changing and uncertain markets, for instance start-ups, IT and consulting
na
16 companies, are likely to follow an incremental strategy and apply a simple value chain with
17 rented facilities
18  Well consolidated companies under secure and expanding market conditions will are likely to
lo
19
follow a standardisation strategy and make use of a complex value chain
20
21  Companies with a value-based strategy are likely to reconsider their FM value chain to become
fC
22 aligned with the new values, which can have varying consequences depending on the views of
23 the top management.
24
or
25 Space strategies will typically change over time. A case study of the Danish Broadcasting
26
Corporation over its lifetime from 1925 to 2005 showed that the space strategy in average changed
27
every 12 years (Jensen, 2011b). This will probably lead to changes in business model and value
po
28
29 chain as well.
30
31 Implications
ra
32 Firstly, the results can be used on a general level by everybody, who needs to get an overview and
33 understanding the complex structure of the FM sector and how FM create value. This includes
te
34
35
professional and trade associations, politicians and public authorities, teachers and researchers, top
36 managers involved in decision-making concerning FM and strategists in organisations involved in
the FM sector. Secondly, the results can help all parties involved in the FM value chain to get a
Re
37
38 clearer understanding of their position in the chain and help them further develop their sourcing
39 strategies and/or business model, depending on their type of organisation.
40
al
41
42
43
5. Conclusion
Es
44
45 The purpose of this paper was to identify typical sourcing strategies and business models in
ta
46 Facilities Management (FM) and map archetypes of value chains with complementary sourcing
47 strategies and value chains. The paper identified 8 archetypes of FM value chains divided in three
48 groups according to whether the core business organisation occupy rented facilities, occupy owned
te
49
facilities or has facilities operation as a core business like serviced office providers etc. While there
50
51 is a huge amount of literature on sourcing in FM, the business models and value chains have only
52 be limited researched. The novelty of the paper is the combination of investigating of sourcing
53 strategies, business models and value chains in FM.
54
55
56
57
58 18
59
60
1
2 TFirstly, the results can be used on a general level by everybody, who needs to get an overview
3 and understanding of the complex structure of the FM sector and how FM create value. This
4 includes professional and trade associations, politicians and public authorities, teachers and
5
6
researchers, top managers involved in decision-making concerning FM and strategists in
7 organisations involved in the FM sector. TSecondly, the results can also help all parties involved
8 in the FM value chain to get a clearer understanding of their position in the chain and help them
9 further develop their sourcing strategies and/or business model, depending on their type of
Jo
10 organisation.
11
12
The results can be used on a general level by everybody, who need to get an overview and
ur
13
14 understanding of the complex structure of the FM sector and how FM create value. Furthermore,
15 the results can help all parties involved in the FM value chain to get a clearer understanding of their
na
16 position in the chain and help them further develop their sourcing strategies and/or business model,
17 depending on their type of organisation.
18
lo
19 The paper is conceptual, based on theory and former case studies from previous research. The
20
sourcing strategies are well documented, and the business models are at an overall level also well
21
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22 known, but the detailed analysis of the different business models could benefit from validation by
23 other researchers and further empirical foundation. Most of the identified FM value chains much
24 be regarded to have a preliminary character and need substantial validation. However, they present
or
25 a synthesis of the author’s experience and knowledge from 15 years as practitioner and 15 years as
26 researcher of FM and is expected to provide a profound basis for further research.
27
po
28
29
30 References
31
ra
32 Andersen, P.D., Andersen, A.D., Jensen, P.A. and Rasmussen, B. (2014), “Innovation-system
33 foresight in practice. Nordic facilities management foresight”. Futures, 61(September), pp. 33-44.
te
34
35
36
Atkins and Brooks (2009), Total Facilities Management, Third Edition, Wiley-Blackwell,
Re
37
38 Chichester, UK.
39
40
al
41 Berg, B.B., Thuesen, C., Ernstsen, S.K. and Jensen, P.A. (2019), “Constructing Archetypes:
42 Mapping Business Models in the Construction Value Chain”. Working paper presented at ARCOM
43
Es
2019 Conference, Leeds, UK, 2-4 September 2019.

44
45
Bröchner (2010), “Innovation and ancient Roman facilities management”, Journal of Facilities
ta
46
47 Management 8(4), 246-255.
48
te
49 Capgemini (2005), More for less – A Nordic Facilities Management Study 2004/2005, Capgemini,
50 Stockholm.
51
52
Christensen, C.M., Barman, T. and van Bever, D. (2016) “The Hard Thruth about Business Model
53 Innovation”. MIT Sloan Management Review 58(11), pp. 30-30.
54
55
56
57
58 19
59
60
1
2 Coenen, C. and Nwanna, P. (2014), “Discovering the Relationship Lifecycle in FM: Phases and
3 Driver of Costumer Value Perceptions”, Proceedings of EFMC 2014 Conference and Research
4 Symposium, Berlin, 4-6 June 2014.
5
6
EY (2017), Kortlægning af facility management i kommunerne,. Ernst & Young, Denmark.
7
8
9 Fielt, E. (2013), “Conceptualising Business Models: Definitions, Frameworks and Classification”,
Jo
10 Journal of Business Models 1(1), pp. 85-105.
11
12 Ikediashi, D.I, and Ogunlana, S.O. and Boateng, P. (2014), “Determinants of outsourcing decision
ur
13
14 for facilities management (FM) services provision”, Facilities, 32(9/10), pp. 472-489.
15
na
16 ISO (2016), Facility Management - Part 2: Guidance on strategic sourcing and the development
17 of agreements, International Standard ISO 41012, International Organization for Standardization.
18
lo
19
Jensen, P.A. (2008a) Facilities Management for Practitioners and Students, Centre for Facilities
20
21
Management - Realdania Research, DTU Management Engineering, Lyngby, Denmark
fC
22
23 Jensen, P.A. (2008b), “The Origin and Constitution of Facilities Management as an Integrated
24 Corporate Function”, Facilities 26(13/14), pp. 490-500.
or
25
26 Jensen, P.A. (2011a), “Organisation of Facilities Management in relation to Core Business”,
27
Journal of Facilities Management 9(2), pp. 78-95.
po
28
29
30 Jensen, P.A. (2011b), “Strategy and Space: A Longitudinal Case Study of Broadcasting Facilities”,
31 International Journal of Strategic Property Management, 15(1), pp. 35-47.
ra
32 Jensen, P.A. (2012), “International coordination of facilities management in multinational

33 corporations”, Proceeding of International Congress on Construction Management Research – CIB
te
34 International MCRP Conference, Montreal, 26-29 June 2012.

35
36
Jensen, P.A. (2017), “Strategic Sourcing and Procurement of Facilities Management Services”,
Journal of Global Operations and Strategic Sourcing 10(2), pp. 138-158.
Re
37
38
39 Jensen, P.A. and Dannemand-Andersen, P. (2010), , Research Report. Centre for Facilities
40 Management – Realdania Research, DTU Management Engineering, Report 21.2010, Lyngby,
al
41 Denmark.
42
Jensen, P.A. and Katchamart, A. (2012), “Value Adding Management: A Concept and a Case”,
43
Es
44
chapter 10 in Jensen, P.A., van der Voordt, T. and Coenen, C. (eds.): The Added Value of Facilities
45 Management – Concepts, Findings and Perspectives, Centre for Facilities Management - Realdania
Research, DTU Management Engineering, and Polyteknisk Forlag, Lyngby, Denmark, pp. 164-
ta
46
47 176.
48 Jensen, P.A. and Scupola, A. (2010), “ICT Adoption in the Danish Facilities Management Supply
te
49 Chain: What are the factors that matter?”. Construction Matters Conference. Copenhagen 5-7 May
50
2010.
51
52 Jensen, P.A. and van der Voordt, T. (eds.) (2017), “Facilities Management and Corporate Real
53 Estate Management as Value Drivers: How to Manage and Measure Adding Value”, Routledge,
54 Oxfordshire, UK.
55
56
57
58 20
59
60
1
2 Jensen, P.A., Nielsen, K. and Nielsen, S.B. (2008), Facilities Management Best Practice in the
3 Nordic Countries – 36 cases, Centre for Facilities Management - Realdania Research, DTU
4 Management Engineering.
5
6
7 Joroff, M., Louargard, M., Lambert, S. and Becker, F. (1993), Strategic Management of the Fifth
8 Resource: Corporate Real Estate Management, Industrial Development Research Foundation,
9 USA.
Jo
10
11 Kaiser, H.H. (1989), Facilities Manager’s Reference – Management, Planning, Building Audits,
12
Estimating, R.S. Means Company, INC. Construction Consultants and Publishers, Kingston, MA,
ur
13
14 USA.
15
na
16 Katchamart, A. (2013a), Profiling Value Added Position in FM, PhD thesis 8.2013, DTU
17 Management Engineering, Lyngby, Denmark.
18
lo
19 Katchamart, A. (2013b), “Mapping value added positions in facilities management by using a
20
product-process matrix” Journal of Facilities Management 11(3), pp. 226 - 252.
21
fC
22
23 Kristiansen, K. (2019), Public-Private Partnerships and FM. Chapter in: Jensen, P.A. (ed.)
24 “Facilities Management Models, Methods and Tools – Research results for practice”. Routledge,
or
25 Oxfordshire, UK.
26
27
po
28 Lok, K.A. and Baldry, D. (2015), “Facilities management outsourcing relationships in the higher
29 education institutes”, Facilities, 33(13/14), pp. 819-848.
30
31
ra
Nardelli, G, and Rajala, R. (2018), “The evolution of facility management business models in
32
33
supplier–client relationships” Journal of Facilities Management 16(1), pp. 38-53.
te
34
35 Nardelli, G. and Broumels, M. (2018), “Managing innovation processes through value co-creation:
36 a process case from business-to-business service practise”, The International Journal of Innovation
Re
37 Management, 22(03).
38
39
40
Nardelli, G, Jensen, J.O and Nielsen, S.B. (2015), “Facilities management innovation in public-
al
41 private collaborations: Danish ESCO projects”, Journal of Facilities Management 13(2), 2015.
42
43
Es
Nelson, M.-M. (2004), “The Emergence of Supply Chain Management as a Strategic Facilities
44 Management Tool”, chapter 7 in Alexander, K., Atkin, B., Bröchner, J. and Haugen, T. (Ed.),
45
Facilities Management – Innovation and Performance, Spon Press, London and New York, pp.
ta
46
47 83-94.
48 Nielsen, S.B., Jensen, P.A. and Jensen, J.O. (2012), ”The Strategic Facilities Management
te
49 Organisation in Housing: Implications for Sustainable Facilities Management”, International

50 Journal of Facility Management 3(1).
51
52 O’Mara, M. (1999), Strategy and Place – Managing Corporate Real Estate and Facilities for
53
54
Competitive Advantage, The Free Press, New York.
55
56 Osterwalder, A. and Pigneur, Y. (2010). Business model generation: A handbook for visionaries,
57 game changers, and challengers, self-published.
58 21
59
60
1
2 Plane, C.V. and Green, A.N. (2011), “Buyer-supplier collaboration: the aim of FM procurement?”,
3 Facilities, 30(3/4), pp. 152-163.
4
5
6 Porter, M.E. (1985), Competitive Advantage – Creating and Sustaining Superior Performance, The
7 Free Press, New York.
8
9 Redlein, A. and Zobl, M. (2014), “Outsourcing: a cost-saving approach in FM?”, Proceedings of
Jo
10
11
CIB FM Conference, 21-23 may 2014. Technical University of Denmark.
12
ur
13 Rytkönen, E. and Nenonen, S. (2014), Business Model Canvas in University Campus Management,
14 Intelligent Buildings International 6(3), pp. 138-154.
15
na
16
Scupola, A. (2019), ICT in the FM supply chain. Chapter in: Jensen, P.A. (ed.) “Facilities
17
18 Management Models, Methods and Tools – Research results for practice”. Routledge, Oxfordshire,
lo
19 UK.
20
21 Teece, D. (2010), “Business Models, Business Strategy and Innovation”. Long Range Planning 43,
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22
pp. 172-194.
23
24 Van der Kluit, J. (2005), Managing a Multinational’s Facility Management organization across
borders, Master Thesis. Wageningen University. August 2005.
or
25
26 Van der Spil, T. (2013) “Facilities market contracts again – survey of the Dutch FM market
27 published”, European FM Insight, EuroFM, Naarden, pp. 5-6.
po
28 Van Meel, J. (2015), Workplaces Today, ICOP and Centre for Facilities Management - Realdania
29 Research, Technical University of Denmark.
30
31
ra
32 Vitasek, K. (2016), “Strategic sourcing business models”, Strategic Outsourcing: an International

33 Journal 9(2), pp. 126-138.
te
34
35 Wiggins, J. (2010), Facilities Manager’s Desk Reference, Wiley-Blackwell, Chichester, UK.
36
Re
37 Williams, B. (1999), Facilities Economics, Building Economics Bureau Limited, Kent.

38
39
40
al
Williamson, O.E. (2008), “Outsourcing: transaction cost economics and supply chain
41
42
management”, 44(2), pp. 5-16.
43
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44
45
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46
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48
te
49
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58 22
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1
2
3
4 Response to editor and reviewers’ comments
5
6 Thanks to the editor and reviewers for the constructive comments. Please find my response in the
7
8
tables below.
9
Jo
10
11 Editor’s comments Response
12
Please shorten the paper to fit within the
ur
The paper has been reduced and is now below
13
14 8,000 word limit of the journal the 8.000 word limit. Particularly the
15 discussion section has been shortened and the
na
16 sub-section on Trends in the development has
17 been completely skipped.
18 The reviewers both mention that your paper With the revision and shortening of the paper,
lo
19 heavily leans on references to your own 9 references has been removed, including 6
20
21
previous works. So, I invite you to respond to from my own previous research, while 9 new
fC
22 the reviewer(s)' comments and revise your references have been added.
23 manuscript, but also especially want to
24 challenge you to include discussion of other
or
25 authors and try to limit self-referencing where

26 other works exist as well.
27
po
28
29
30 Reviewer 1 Response
31
ra
The development of the paper is good and the The introduction section now includes the
32 discussion of business models in FM is following paragraph:
33
relevant. I think you need to include a “The paper is conceptual and draws on
te
34
35 methodology on how you accessed your literature reviews and a number of case studies
36 literature as the paper is highly dependent on from previous research with a combination of
this and also further discuss the different the author’s own research from the Nordic
Re
37
38 cases you use. countries in Europe and case studies from
39 various European countries presented in
40
al
literature by other authors. Therefore, the

41
42
paper does not include a separate methods
43 section. The reviewed literature is a
Es
44 combination of sources from the author’s

45 earlier research on FM, including sourcing
ta
46 strategies and value chains, as well as reviews

47 of the general literature on business models
48
conducted as part of an ongoing research
te
49
50 project concerning business models in relation
51 to sustainable building renovation and the
52 construction value chain (Berg et al., 2019).“
53 1. Originality: The paper is original in Thanks
54 outlining traditional and upcoming business
55
56
57
58 1
59
60
1
2
3 models for FM which also link to value
4
5
chains
6 2. Relationship to Literature: The literature is With the revision and shortening of the paper,
7 well done and aid in the explanation as to why 9 references has been removed, including 5
8 the work is important. There does seem a from my own previous research, while 4 new
9 reliance on Jensen's work which is relevant, references have been added.
Jo
10 but would be interesting to get contrasting
11
12
views.
ur
13 3. Methodology: The paper does not include a See response to the first comment from
14 clear method on how the author chose his reviewer 1 concerning literature.
15 literature which is important in a literature Case studies are not part of the results but
na
16 based paper. Including a clear method would used to show examples and underpin the
17 aid in understanding the reliance on Jensen as different sourcing strategies and business
18
opposed to other authors in the same field. models.
lo
19
20 Also, the author states at the end that case
21 studies were part of the results. The author
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22 should therefore include a background and

23 number of case studies included. Within the
24 text - the author refers to case studies in other
or
25 publications - but perhaps it is useful to

26
produce a table of the different case studies
27
discussed.
po
28
29 4. Results: Good and clear results with tables Thanks
30 and underlying description of each business
31 model and the context they work within.
ra
32 5. Implications for research, practice and/or Thanks

33
society: This is a useful source for eduation of
te
34
35 FM and practitioners who want to know more
36 about the different types of business models
for FM.
Re
37
38 6. Quality of Communication: The paper The paper has been proof checked.
39 structure is done very well. The English needs The column of 'FM value chain' has been
40
al
a proof check. It is quite readable but some moved to be the first column in Table 4.
41
42
part are grammatically incorrect. Suggest
43 moving the column of 'FM value chain' to be
Es
44 the first column in table 4.

45
ta
46
47 Reviewer 2 Response
48
te
49 Overall the paper is good and comply with all Thanks for the suggestion. However, due to
50 the requirements for publication. the requirement from the editor to reduce the
51 One recommendation: size of the paper, I have not found it possible
52 It would interesting to see the results on a to add one mere table.
53 table summary in one page, Just to have a
54 quick overview and understanding about the
55
relationship and logic of the work done and
56
57
58 2
59
60
1
2
3 the results. That would make the paper much
4
5
easier to read and more engaging.
6 1. Originality: The paper contains significant Thanks
7 information in the way that it connects the
8 sourcing strategies, business models and
9 value chains and the typical combinations in
Jo
10 the FM industry.
11
12
The documents serves as a one sources of
ur
13 information to understand about business
14 models in FM over the last years and also
15 how they extend.
na
16 2. Relationship to Literature: Yes the paper Thanks
17 contain a wide understanding of the literature
18
and the years of experience of the author
lo
19
20 investigating about value and business models
21 in the FM industry.
fC
22 3. Methodology: The paper is conceptual, Thanks

23 based on case studies and theories. The author
24 provides the necessary content according to
or
25 the methodology followed.

26
27
4. Results: Yes the results are presented Thanks
po
28 correctly and analyzed properly.

29 There is a good structural logic in the paper.
30 5. Implications for research, practice and/or Due to the requirement from the editor to
31
ra
society: The paper mentions that new reduce the size of the paper, I have skipped
32 disruptive business models can happen with the paragraph mentioning disruption in the
33
more extended use of new technologies. I discussion.
te
34
35 would like to see some examples of how this
36 could happen or impact the industry.
Especially from practice point of view what
Re
37
38 business models are already being disrupted.
39 In practice this paper gives a general
40
al
comprehensive reference for business models.

41
42
I think future work from other researchers can
43 study the vulnerability of how some business
Es
44 models can be changed or impacted.

45 6. Quality of Communication: The paper Thanks
ta
46 reads well, there are no communication

47 issues.
48
te
49
50
51
52
53
54
55
56
57
58 3
59
60

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Business models in facilities management value chains

Jensen, Per Anker

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Link back to DTU Orbit

BUSINESS MODELS IN FACILITIES MANAGEMENT VALUE

Journal: Journal of Corporate Real Estate

Manuscript Type: Research Paper

Value chains, Sourcing strategies, Business models, Maturity,

22 facilities operation as a core business like serviced office providers etc.

34 value chain (Berg et al., 2019).

2. Theory and conceptual framework

25 Facilities Internal Core

32 ICT suppliers/ ICT suppliers/ ICT suppliers/

49 and for an in-house FM organisation.

32 BM’s for in-house FM (BM-IH)

22 Additional: debiting (profit service levels and

BM-IH3: Basic offering: Basic offering: As above plus

 Space management internal rent and systems output based

37 work planning, monitoring

 Dialogue with client

Preferred  Facilities services  Income from  Helpdesk  Focus on portfolio

46  Space management centre)  Dialogue with client,

49  Building works cost of building collaboration with

34 services - also called ‘hard FM’.

49 Business model Value proposition Profit formula Resources Processes

22  One point of  Hourly rates or  Materials

Management  Responsibility for  Fixed management consultants standardised service

34 regularly on the  Ongoing reporting,

37  One point of Additional: consulting

reductions  Hourly rates or

Additional: management tasks

32 SLA’s and ongoing reporting, governance, improvements and consulting.

41 BM-BO1: Basic offering: Basic offering:  Skilled staff  Craft based

44 project basis at the  Hourly rates or  Technicians specifications

46  Claims from  Equipment

22 BM-BO1, Building work, is characterised by a value proposition of specialised services delivered

41 project management and consulting.

49 based operations and technical analyses, planning and monitoring.

41 FM-VC1 Rented facilities or Caretaker/ Single service

FM-VC4 Active building owner/ As above plus

34 number of municipalities (Nardelli et al., 2015).

22 of more complex value chains.

25 space strategies identified by O’Mara (1999):

25 2019 Conference, Leeds, UK, 2-4 September 2019.

32 Innovation”. MIT Sloan Management Review 58(11), pp. 30-30.

41 Fielt, E. (2013), “Conceptualising Business Models: Definitions, Frameworks and Classification”,

25 Management Engineering, Lyngby, Denmark.

37 education institutes”, Facilities, 33(13/14), pp. 819-848.

41 supplier–client relationships” Journal of Facilities Management 16(1), pp. 38-53.

32 Vitasek, K. (2016), “Strategic sourcing business models”, Strategic Outsourcing: an International

37 Williams, B. (1999), Facilities Economics, Building Economics Bureau Limited, Kent.

22 facilities operation as a core business like serviced office providers etc.

49 disruptive innovations and related business model.

Figure 1. The FM Value Chain (Jensen and Scupola, 2019xx)

22 9. FM service procurement & FM Agreement

22 Value proposition Resources

25 job they’ve been trying to do to deliver this value proposition to the

49 sourcing solutions for in-house FM organisations. Partnerships will be addresses in section 4.

34 providers oriented contracts

37  Materials defined policies.

41 BM-IH2: Basic offering: Basic offering: As above As above plus