by Brianna Crandall — March 22, 2017 — The Australian facilities management (FM) sector is a mature market with a relatively high level of penetration of integrated FM services, finds global growth partnership company Frost & Sullivan. However, the firm’s latest study on the Australian FM market anticipates that the impact of improved connectivity in the built environment, coupled with the need for improving FM efficiencies, will cause significant disruption in terms of who will hold competitive advantage in this market, with its relatively high outsourcing rate.
According to the report, the mining sector has traditionally been one of the key drivers of FM demand in the Australian market for services to mine sites and remote camps. It has also sustained FM demand in a range of related sectors that support mining. However, the marked slowdown in mining investments has taken its toll.
According to the Australian Government Department of Employment, a 14.1 percent decline in employment growth in the mining sector is forecast between November 2015 to November 2020. This is likely to deter FM market growth in this sector.
In other end-markets as well, cost pressures continue to hamper FM sector revenue growth. While essential maintenance is unlikely to be compromised, it is likely that backlog maintenance levels will increase in the short term, and potential projects with long payback periods may be reassessed. This may lead to reduced ongoing revenue for some FM providers, as well as fewer new business opportunities in the short term. In such an environment, where commoditized services are challenged by price pressure, the search for competitive differentiation becomes critical.
Ivan Fernandez, Industry director, Frost & Sullivan Australia and New Zealand, stated:
Whilst the usual competitive factors remain valid, such as price competitiveness, compliance with regulatory requirements, expertise in FM service delivery, reputation and portfolio, as well as established client relationships, the FM industry must also leverage appropriate technologies in built environments. This will be for productivity benefits, as well as to engage the future workforce.
Australians are not only early adopters of new technology, but also among the leaders in the region in terms of levels of smartphone penetration, use of contactless payments, use of social media, and the leverage of smart solutions in specific industries. As a result, the adoption of technologies such as the Internet of Things (IoT), mobility solutions, smart sensors, and real-time data analytics is expected to drive Australian FM market development over the long term.
The Australian FM market is also seeing the adoption of new business models, with Anything-as-a-Service (XaaS) gaining traction. Lighting as a Service (LaaS) would be one example, notes the report.
These technology-driven trends open up new opportunities for FM service providers, whether through enhancing capacity to self-deliver or in collaborating with other solution providers. For FM professionals, though, it will mean significant upskilling so that these new technologies are used to deliver improved outcomes for all stakeholders involved.
Frost & Sullivan’s report, Australian Facilities Management Market – Forecasts to 2023, available for purchase, forms a part of the Frost & Sullivan Energy and Environment Research program. All research services included in this subscription provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.