The next generation of FM – will tech cannibalise or enhance business models?

Wednesday, November 6, 2019


The facilities management (FM) industry has long been reliant on the unending demand for labour. It was good for everyone. The slow and steady growth seemed guaranteed, and there was a well-known operating model for how to win.

But the good times are over. Large players have been losing share price or underperformed, with abundant profit warnings. The world is changing, but the providers are not.

Robots and automation tech are disrupting how services are delivered across industries. The reliance on labour in FM make the industry particularly vulnerable – yet, few if any providers have adapted, but can this truly continue?

Innovations have already reached the FM industry: autonomous floor scrubbers, robotic window cleaning systems and robotic waste sorting to name a few. The response is polarised between the tech-oriented start-ups (such as Avidbots, that raised $24m earlier this year) and traditional FM companies refusing to adapt.

Waiting for the winner

Despite investment and new innovative solutions, no clear winner has come forward. The robots have a long way to go in putting a dent in the $1,000bn+ global FM market, as adoption remains very low. The tech start-ups have not been able to access the huge pool of potential global demand, and the FM companies are holding on to old successes. The stand-off leaves the field open for a new winner to emerge, where robots and labour are used alongside each other to deliver the most efficient and complementary solutions (depending on the environment and client needs). The stage is set for winners to emerge.

Learning from security

The building security industry is a great example of the opportunity and threat from tech disruption. Building security has seen a plethora of innovations over several decades: CCTV cameras, access gates, smart cards and motion detectors, among others – tech that is now commonplace. Yet, the number of security guards per site has continued to grow, as the tech complemented or created new activities for the guards.

More innovative and disruptive security tech are coming to market and gaining traction, such as drone and robot surveillance, virtual check-in assistants, biometric access control, video incidence analytics, gunshot detection and thermal perimeter detection. In some ways, these technologies appear game-changing – with thermal detection the guard does no longer need to regularly patrol the perimeter of the site. However, in most cases the new tech is still there to enhance the security rather than to replace a guard, and there are constraints in what tech can do. A guard will be needed to respond to incidents. A drone cannot fly indoors. A robot struggles with obstacles. Therefore, under a pessimistic scenario manned guards would still only fall by a modest amount over the next decade. Understanding the threat of automation is not a simple matter – there is no ‘silver-bullet’ answer of how to respond.

A sea of opportunity

Tech and labour can co-exist, and together create something that is more valuable than the parts. Traditional FM companies have a huge latent opportunity: customers already trust them, customers are looking for someone they trust to sell tech, and tech is fetching higher margins. The industry is not short of potential, but those that want to win will have to ask themselves three critical questions:

  • Who are the customers that already want, or will be early adopters, of tech solutions?
  • How can tech solutions be monetised in new and innovative ways, while protecting, or more than offsetting decline in labour-driven earnings?  How do you solve the cannibalisation conundrum?
  • How will you build the necessary capabilities and integrate them fluidly into your organisation?

For those that choose to lead the industry, it is time to act.


Pontus Lofquist, Associate Partner

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