"We're going to see new business models come through in the next 12-18 months. There'll be, in my opinion, joint ventures floated or large projects, long-term projects being handed out with very specific performance criteria. FM companies which are high on capital, both finance and intellect, will actually emerge stronger in those categories."

- Umesh Bhutoria, Founder & CEO, Xempla

Episode Summary

A solo episode by our Founder & CEO Umesh Bhutoria on the State of Facilities Management in the UAE - as of 2023. This episode brings you six predictions for the future of the industry, based on Umesh's interactions with leaders, experts, and customers in this up-and-coming Middle East country. As the sequel to our episode "State of Facilities Management in the Middle East" released in Nov 2021, we carry forward from the predictions and observations we had made then. During the time that has passed since its release, 3 out of 5 predictions have turned out true with respect to digital transformation and technology adoption in the region. In the episode, Umesh also explains what strategies have worked and why (and what haven't worked and why) along with some advice on how companies should really start to differentiate their offering and transform their business model for the times to come. We're keeping a close eye on the movements within the FM space in the UAE and would love to know your views on where the industry is headed! Send Umesh a message on LinkedIn to tell him what you think.

Full Transcript

Hello everyone. Welcome back to yet another episode of the Forever Forward Podcast. Uh, this is, uh, sort of, uh, uh, an interesting episode because, you know, especially in the context of whatever is happening in facilities management, digital transformation, and hard services in the ua, uh, you know, almost around the middle of 2021, approximately 18 months back, we did, uh, a podcast, which is called the State of FM in the Middle East. Uh, Um, you know, and there were a few recommendations and, and, and predictions that we had done, um, and said that this is probably what's gonna happen across the 12 to 18 months. And, uh, from, from the time we published a podcast and we thought, uh, why not? Look back at some of them, see what's happened, and also, Probably a very opportune time to take out the episode on, uh, state of FM in ua, uh, in 2023. The reason why we decided to move from Middle East to UAE initially is, I mean, right now is, is uh, obviously when you look at the, the, the Middle East, uh, GCC broadly, you would see that every other country is in a different maturity state as far as digital transformation or even facilities management as a. As a, as a, as a sector is concerned. So we thought, we'll, we'll sort of stick to the UAE, uh, in this particular episode and see what's worked, what's not worked and, and what's going to be the future. So firstly, let's look back at, at some of the, the, the top things that we said in the previous edition and perhaps has come true, uh, in very significant way. First, we said that there is gonna be a change in a digital stack. Everyone's going to, uh, sort of over the next 12 to 18 months. That is in 2021 we said. It's going to deploy their own stack. We've seen that five of, almost all of them, the tier one FM companies now have a digital stack, uh, as far as their digital strategy is concerned. And that's a hundred percent coverage as far as the tier one FM companies are concerned. So that's, that's a welcome move. So you've seen announcements from almost all of them. Uh, in, in a lot of ways we are gonna see the war of dashboards, which is not good, but, but, but kind of good. Uh, but there's been a, a, a fair enough coverage that's happening on the digital front. The only, uh, downside I would say a lot of people are introducing, you know, CAFM as rebranding or, uh, cafm or reintroducing, which I think is a bummer according to me, because, you know, at this stage in the uae. The adoption of cafe and stroke, C M M S loosely interchangeably used, should have been very high by now in itself. I mean, if not, then that's a cause of concern, especially from the FM perspective. The second thing we said that there's gonna be segmentation. Some of the companies which are uh, are, are leading, are going to establish further niche. And we have seen that. In fact, we can clearly see the top two of the TF one FM companies have really gone away from the blood bath and the race to the bottom, uh, which is what it's called in the FM world. They've stayed away from it. In fact, they've started looking at opportunities where they can leverage the, the capital that they have. They leverage the intellect, uh, capital, both in terms of finance and intellectual capacity, and also in terms of the niche that, uh, that like fundamentally they've been strong in international markets. They're bringing that to the forefront and actually establishing a very strong differentiator there. Which is, which is, which is very good. Uh, and, and, and the third is that there is a widening of the gap between FN players. We said there's going to be a widening of the gap in terms of technology adoption, and we are clearly seeing that as well, even more when it comes to the overall sort of digital stack. So one is obviously widening in terms of how the leadership is thinking about the business going forward, but also in terms of how you're connecting the dots as well as the, the digital transformation is concerned. I think, uh, I don't think FM can be a brick on modern mechanism anymore. It, it initiatives need to be, need not be confused with digital strategy. And a lot of FM companies in the UA are kind of confusing their IT initiatives to be, to be digital in sort of strategies and initiative, which, which I think is only one loop. Come back and hit them hard. Uh, not in the, in the long distance, in the, in sort of the medium or short to median term, uh, future in that sense. But what are the recommendations for 2023 are the points that we should be looking out for? Uh, one is that I think 2023 to 2024 is gonna be a watershed moment from the perspective of digital transformation. I think POCs. Largely from FM companies. Established FM companies is gonna be a thing of past. I think everyone will have to show real projects. Real value, real cost savings and real digital stack. Like you cannot just have a reincarnation of a cafe and CMMS and, and go back to your customer and say, Hey, we have a great product. Or just show them dashboards and they'll be convinced there's so much movement happening that you've got to have something that is differentiated and that's going to fundamentally happens. As far as UAE is concerned, I think, uh, the customers would want to see real innovation, not just on the. On the product side, but on the business model side as well. So I think that's, that's something that's, that's going to happen. And my second prediction is kind of connected that we are gonna see wider adoption of vested model or car performance based model. Given the fact that there's been, there will be a lot of maturity of the industry and in the industry from the digital process perspective and the digital stack perspective. I think that is going to contribute to, to west trade, uh, model in, in, in my opinion. Thirdly, the gap that we were talking about as far as the facility management companies are concerned, tier one, tier two R, tier three and below. I think that's going to continue to grow wider. As far as the digital, uh, stack is concerned, I think the ones who had started earlier, three, four years back are clearly currently solving for operational challenges, which is how do you solve four things at scale or four scale? Uh, as far as the operations is concerned, um, which is building the capacity across the, the, the entire workforce from engineering to technician level, uh, to work in a data first environment, that is something that's their focus. Uh, I think the ones who's started now, I mean, they'll continue to make the same mistakes. It shouldn't happen, but my hunch is they'll continue to make the same mistake, which is actually gonna prove very costly. One of the, the regrets I have and what I've seen as a, as someone who's been very closely working with FM companies, very few FM leaders are actually willing to learn from others or even companies. And again, this also clearly points out, uh, the, the native absence of, of a playbook, which is there at an industry level. No one wants to share that. No one has that. And I think that's a problem that everyone's kind of doing the same thing, making the same mistake, and I think, which is gonna be very costly now. So it's, if you, if, if an effect company is starting now, uh, makes the same mistakes, you're, you're in effect going much beyond, much, like you're further back than everyone else. Versus just a couple of years, because by that time, the, the early adopters are actually gonna move significantly, uh, ahead. Having said that, we are also going to see some early adopters actually struggle because, uh, one of the downsides are actually making a move early is that you start to believe that you've done almost all the things right. So I think there's gonna be a bit of shake up that's gonna, that's gonna happen. Uh, I think the fourth point I have is largely linked to asset owners, the ones that have large portfolio. Will eventually make independent moves on the digital front. Uh, and when I say digital front, not just on the C M M S perspective, but actually the entire stack so that they can control in one way or the other, the total cost of ownership, the asset performance, uh, sort of management across the lifecycle. What it means is there's gonna be new business models that could come through. There'll be, in my opinion, joint ventures floated or large projects, long-term projects being handed out, uh, with very specific performance criteria, so on and so forth, which ultimately is gonna mean that FM companies, which are high on capital, both finance and intellect, will actually emerge stronger in those categories. And, and that's my personal, uh, opinion that we'll see that. Fifth on the ESG front, I think it's gonna continue to make the, make the move. Uh, ESG is very strong in the region, in UAE. The government obviously is, is, has taken mandates around the targets that they have for sustainability. Um, aligning to net zero or part to net zero. So all of that is going to continue to remain in focus, giving an opportunity for FM companies to. To be more strategic player, uh, partner to their customers beyond the mundane stuff that they do, uh, in, in, in that sense. And I think one last point that I would say that we are gonna see in UA organizational capacity is gonna take center stage, which means FM companies and leaders are gonna start to think across the mid to senior level and say, okay, how are we gonna reimagine how the leadership or the managerial, uh, sort of workforce. Adapts to an AI first environment. I know this would not have been a conversation, uh, you know, three to four months back, but, but with the way. Things are evolving with generative AI and, and the ease at which, you know, applications can be dev developed, the problems can be solved. We are really going to look at, at, at significant changes. Now, when I look at the top half of, of FM leadership or, or the, the, the middle half of, of FM leadership, you think a lot of time going into reporting into. Into aspects, uh, which, uh, are kind of, can be automated and will be automated. Uh, simply look at the kind of amount that is spent across helpdesk or, uh, the team that manages the C M M S, so on and so forth. I think that's very significant. I think that's, that's absolutely going to be a prime candidate to, to, to, to look at whenever everyone is looking at cost optimization. Just, that's just an example. There are so many of them across the entire fm uh, sort of process and function. And at the bottom of the, the pyramid, which is the most important, is that at technician level, the organizations are going to think, how are we going to, uh, reset the skills? And what skills are we gonna really impart when we expect them to work in a data first environment? Because that's going to be the reality going forward. So I think these are broad six, uh, sort of predictions that I have for what I consider is gonna be the state of FM in uae. Uh, and, uh, eventually it'll pan out over the next 12 to 18 months. We'll, obviously keep a close eye on the same, and if you have, uh, Points you think are gonna be worth watching out for, do let us know. Uh, we are more than, we'll be more than happy to, to host you or someone you know, who could, who could, who has really valid points across what the industry, um, where the industry is headed to. We would love to host them on the podcast. Uh, and again, these are. Interesting times for the industry specific, specifically in uae, where you've had some level of maturity and you're gonna have some more level of maturity coming in in terms of digital, uh, transformation and initiatives. So the, there couldn't be a more interesting time to be in the industry. Then now, uh, we are gonna watch out how things will pan out, and in the meantime, I'm looking forward to connecting back with you in the next episode. Until then, take care.