Best Practices in Outsourcing Building Automation Systems Management Many manufacturing companies are outsourcing non-core activities including Building Automation Systems (BAS) management. Whether it is outtasking specific operation/maintenance activities or forming a strategic alliance with a total facilities management provider, BAS management outsourcing is a trend that will impact nearly every company. That does not mean, however, that outsourcing BAS management is the right strategy for every company. This insight is designed as a guide for companies considering outsourcing their BAS management to a third party service provider.

1. THOUGHT LEADERS FOR MANUFACTURING & SUPPLY CHAIN
ARC INSIGHTS
By David Clayton
INSIGHT# 2003-37M
SEPTEMBER 3, 2003
There are many benefits afforded to
companies that make an informed
decision to outsource BAS
management for the right reasons
including reduced operating costs and
higher employee productivity, which
lead to lower overall costs.
Best Practices in Outsourcing Building
Automation Systems Management
Keywords
Best Practices, Building Automation Systems, Facilities Management, Out-
sourcing, Key Performance Targets
Summary
Many manufacturing companies are outsourcing non-core activities includ-
ing Building Automation Systems (BAS) management. Whether it is out-
tasking specific operation/maintenance activities or forming a strategic al-
liance with a total facilities management provider,
BAS management outsourcing is a trend that will
impact nearly every company. That does not mean,
however, that outsourcing BAS management is the
right strategy for every company. This insight is de-
signed as a guide for companies considering
outsourcing their BAS management to a third party
service provider.
Analysis
The decision to outsource BAS management is not always clear cut and
should not be considered trivial. There are many benefits afforded to com-
panies that make an informed decision to outsource BAS management for
the right reasons including reduced operating costs and higher employee
productivity, which lead to lower overall costs. There are, however, a
number of potential pitfalls waiting for companies that make the decision
before fully understanding the impact it will have on their employees and
operations including lower employee productivity and reduced effective-
ness of core business units, which lead to higher overall costs. Below are
some rules of thumb to follow when considering outsourcing BAS man-
agement.
Define Clear Achievable Goals
The obvious goal of outsourcing BAS management is to allow increasingly
limited resources to focus on the “core competencies” that separate your

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company from the competition. To truly benefit from BAS management
outsourcing, however, you must take a closer look to quantify and priori-
tize realistic goals you hope to accomplish. Is your top priority to reduce
operations costs or improve employee productivity? It is crucial to choose
a clear, achievable set of goals that can be easily defined and measured to
ensure your company’s most important needs are taken into consideration.
Defining a clear set of goals at the onset of the project is the only way to
measure the future success or failure of the outsourcing project.
Carefully Analyze In-house Costs vs. Outsourcing Bids
Once you define the company’s goals, you should conduct a financial
analysis of current BAS management costs against the anticipated cost of
outsourcing BAS management. At this point, you should request bids from
a number of potential service providers and begin evaluating the bids
against current BAS management costs. Care must be taken to ensure you
are comparing apples to apples during this step as some bids may include
hidden fees such as charge backs or transaction fees and your in-house fa-
cilities group may carry overhead costs service providers would not. You
should ask potential service providers to
include performance guarantees in their
bids and evaluate those guarantees
against the in-house facilities’ current
performance. This is an extremely im-
portant step because it often turns out the
current in-house facilities management
group is actually competitive in terms of
cost and performance.
Choose a Compatible Service Provider
Once you have decided outsourcing is the best way to achieve your com-
pany’s specific goals, it is time to choose the most appropriate service
provider. As you evaluate potential service providers, it is important to
truly get to know each company. The service provider’s financial stability
and corporate culture should be of particular concern. The importance of
the service provider’s financial stability is obvious: you want to make sure
they are going to remain in business for the length of the contract. The ser-
vice provider’s corporate culture, however, is just as important. It is
important to choose a service provider that has a corporate culture com-
Define Clear Achievable Goals
Carefully Analyze In-house Costs vs. Outsourcing Bids
Choose a Compatible Service Provider
Define Clear Measurable Performance Targets
Actively Manage the Relationship
Best Practices in Successful BAS Management
Outsourcing

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For a BAS management outsourcing
agreement to succeed, facilities
executives must identify clear,
measurable performance targets that
can be used to actively track the
service provider’s performance in
reaching these goals.
patible with your company’s to ensure both companies can agree on an ap-
propriate approach to solve the inevitable problems as they arise.
Define Clear Measurable Performance Targets
Once a service provider is chosen, it is time to make sure everyone is clear
regarding the key performance targets you plan to use to measure the suc-
cess of the relationship in reaching the pre-defined goals. For a BAS
management outsourcing agreement to succeed, fa-
cilities executives must identify clear, measurable
performance targets that can be used to actively track
the service provider’s performance in reaching these
goals. Clear and measurable performance targets are
crucial to the long-term success of any outsourcing
arrangement, and it’s important to agree with the
service provider on the performance targets up front.
Actively Manage the Relationship
The outsourcing process does not end once a service provider has been cho-
sen and a contract signed. BAS management outsourcing relationships
must be actively managed. Not only do facilities executives have to track
the project’s key performance targets, they should also carefully examine
the way the service provider plans to subcontract any or all of the work.
Ideally, these subcontracts or alliances should be in place and agreed upon
before a contract is signed. It is also recommended that the contract in-
cludes a clause stipulating the right to reject any subcontractor changes the
service provider suggests.
Recommendations
• When deciding whether or not to outsource BAS management, remem-
ber to take the needs of your employees into consideration as well as
the business needs of the company. Your employees are the true cus-
tomers of BAS outsourcing services. If BAS management services don’t
meet their needs, employee productivity will suffer.
• Make sure your BAS management outsourcing contract is structured in
such a way that it allows the service provider to provide adequate ser-
vices and support without losing money. Outsourcing relationships are
long-term commitments and should be built on a basis of mutual trust.

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©2003 • ARC • 3 Allied Drive • Dedham, MA 02026 USA • 781-471-1000 • ARCweb.com
If the contract is designed so that the service provider can’t effectively
provide proper services and support, your company’s performance will
suffer.
• Make any BAS management outsourcing decision based on the long-
term health of the company and not simply to achieve immediate cost
savings. When done correctly, BAS management outsourcing can cre-
ate an environment that supports the company’s core business
objectives. If rushed into for the wrong reasons, however, BAS man-
agement outsourcing can negatively impact the ability of the company’s
core business units to operate effectively and create rising costs for the
company.
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