3.6 What type of outsourcing and relationship models do you see other
companies using?
JLL clients buy integrated real estate portfolio services in a number of ways. The key drivers in their buying
approach frequently revolved around how they are organized, their internal corporate real estate capacity and
what services they believe they need. They may also have a strong preference for an exclusive relationship
(which provides a single point of contact for multiple services) or a preferred or non-exclusive relationship (which
they perceive as creating a competitive environment or avoiding all eggs in one basket).
Client Organization – Where there is not a strong centralized CRE organization, buying preferences
may be driven by autonomous business units or geographies which can result in a preference toward
multiple service provides.
Internal CRE Capacity – Where there is an established internal CRE organization, they may elect
to self-perform services such as lease administration or project management or even some of the larger
transactions. Small, efficient CRE teams will frequently seek to leverage themselves with a single trusted
provider capable of delivering all services.
Services needed – In cases where they have invested in technology or internal staffing, they may
want to keep that in house. Or, they may not recognize the value of a fully integrated service platform.
The chart below shows the pros and cons of various service delivery methods.
SINGLE PROVIDER FOR ALL
SERVICES
Cost Implication: has the potential for
the least cost as the economies of scale
can be fully leveraged.
Quality / Uniformity of Service:
structured around a single-point-of-
contact managing a cohesive team of
professionals, allows for the greatest
likelihood that standard processes and
procedures will be delivered consistently.
The learning curve can be shortened
with one team / one goal.
Governance / Management: requires
less management time by client since
there are fewer variations to manage.
Some clients believe that having multiple
vendors gives ability to ‘keep them
honest’ by creating ongoing competitive
environment or, at a minimum, an
ongoing comparison. This may be right
for some clients, but the inefficiencies
created may be too great for others.
Other ways to maintain a competitive
edge with a single provider are
performance-based fees, KPI’s, SLA’s, etc.
MULTIPLE PROVIDER
(TEAMS FOR EACH SERVICE)
Cost Implication: while this model
has benefits, cost is generally not
one of them. Although there are
exceptions to every rule, it is more
difficult to leverage economies of
scale.
Quality / Uniformity of Service:
one potential (or perhaps perceived)
advantage to this model, under the
theory that no one firm does all things
best, is it is easier to receive ‘best-
of-class’ services when each service
area is retained independently.
Quality / Uniformity of Service:
creates a higher level of management
required by the in-house client
team. A greater amount of planning,
effort and governance needs to be
applied to the relationship to ensure
coordination between the various
disciplines required to deliver each
step of the process. Essentially, the
client is assuming the role of service
integrator.
DISTRIBUTED PROVIDER NETWORK
(MULTIPLE PROVIDERS FOR
EACH SERVICE)
Cost Implication: by dividing the work associated
with a single discipline, clients lose the ability to
leverage the purchasing power of the work volume
associated with the portfolio. Additionally, the
need to manage multiple providers and ensure a
consistent delivery of services often requires a larger
corporate staff.
Quality / Uniformity of Service: both a pro
and a con. The positive is that the quality of service
increases as one service provider wants to perform
at a level higher than the second service provider
under contract for the same service area. The
negative is that service consistency across the
portfolio would be far more difficult to achieve.
Quality / Uniformity of Service: no matter how
well structured, the responsibility to manage the
multiple providers falls squarely in the lap of the
client and requires a larger corporate staff than the
other models.