FACILITIES MANAGEMENT - Saving on the paper chase

A study of document outsourcing in the finance sector* commissioned by Xerox Business Services and carried out by Research International confirms that facilities management has become a key element in current management thinking and practice.

However, although the potential for reducing the headcount and operational costs drives the decision to outsource certain functions, in practice the advantages have more to do with improved business performance through better management and control.

For example, one key benefit cited by management respondents was having a fast route to specialist industry expertise – either where there was no expertise before or it would have been too costly to employ this expertise directly.

‘It’s really the idea that you don’t have to be expert in everything,’ says report author Graham Cannon, associate director of Research International, a sister company of the Henley Centre for Forecasting.

Another perceived benefit of outsourcing was increased flexibility. This could mean, for example: coping with rapid business expansion and contraction without having to continually hire and fire staff; providing guaranteed absentee cover; and being able to terminate a contract if the service was not up to scratch.

On a cautionary note, UK organisations did foresee a number of potential pitfalls, including the quality and reliability of outsourced staff and loss of control. However, the report indicates success can be assured if businesses exert close control over contractors, build close partner relationships with suppliers and are more discriminating about the areas selected for outsourcing.

A growing market

Certainly the market for facilities management is growing, although estimates on the size of these markets vary considerably. One estimate suggests the annual UK spend is currently around u20bn while the Centre for Facilities Management at the University of Strathclyde suggests it could be as high as u160bn.

Figures produced by the Management Consultants Association are more conservative but show a 200% increase in income for their members from outsourcing activities over the past year to u360m, not including fee revenues.

The Research International study shows that document management is an excellent candidate for outsourcing. This is not only because documents are vital to every organisation but because controlling the ever-growing paper mountain poses a number of technological challenges many companies find difficult to solve.

Who benefits?

These challenges include an increasing demand for both hard copy and electronic documents; a dramatic increase in the use of colour; the focus on corporate branding; more use of electronic communications; greater demand for electronic storage; and the trend towards digital copying and printing on demand.

What is often attractive about outsourcing document services is that it presents an alternative to capital investment in equipment. In other words, you gain immediate access to leading-edge technology for current needs while being assured that the equipment can be changed or upgraded without penalty. Equally importantly, you are protected from the risks of investing in the wrong technology as well as the costs of obsolescence.

Avoiding the high costs of recruiting, training and retaining specialist staff is another advantage.

The need for action on finding effective document solutions is underlined by Rank Xerox research which indicates that documents consume an average of 60% of office workers’ time, up to 40% of labour costs and, as a result, can affect up to 10% of revenues. UK organisations which decide to face up to these challenges are the ones which can be more confident of maintaining their competitive edge.

The Royal Bank of Scotland is showing the way by adopting a policy destined to make it one of the first banks to install a fully networked in-house print solution. This year RBS became the first UK bank to offer Internet banking.

This forward-thinking attitude has been applied by the bank to centralising its resources and building a technology infrastructure capable of supporting all business functions.

With a current staff of more than 20,000, training in everything from accountancy to computing is vital to running the business effectively.

With a production rate in excess of 7.8 million manuals a year, the bank was spending over u70,000 per annum with commercial offset litho printers.

The high costs were incurred mainly because of the tendency to order more manuals than required. An additional downside was VAT charges that could not be reclaimed.

A more cost-effective solution recommended by Rank Xerox was on demand production print facilities, using the expertise and resources of Xerox Business Services (XBS) to run the operation. Not only has it resulted in a significant saving in overall printing and storage costs, it has generated #40,000 VAT savings in 1996.

Good staff communications is also vitally important for the bank. Its regular information bulletin, Focus, contains news on job vacancies, product developments and procedure changes and up to date information on key issues.

Focus is published three times a week and has a 4,000 print run. In the past, it was created and designed in one building and physically transferred to another for printing.

Today, following the installation of the two Xerox DocuTech digital production printers linked to a network of Apple Mac computers, authors now send their work directly to printers via the bank’s email system. This has resulted in a three-fold increase in the turnaround speed with a significant reduction in associated costs.

Stephen Bennetts, RBS’s purchasing manager, comments: ‘The system has transformed the print room into an accountable business rather than a pure cost centre. Costs are reclaimed by charging individual business centres. The sheer professionalism of the installation team and ongoing support service has meant that the transfer has been totally transparent to users. Transfer of existing staff was achieved with the minimum of disruption.’

Partnerships

By developing a close partner relationship with Xerox Business Services, RBS is now looking towards the future with the aim of making further improvements in its corporate communications.

Plans are being discussed to extend the Xerox solution to support its customer service operations. The bank has already formed an internal taskforce to look at the possibility of using Xerox DocuTech to produce business forms on demand. This would reduce both central and branch storage costs and virtually eliminate wastage.

Bennetts concludes: ‘The relationship between the bank and Rank Xerox has been considerably enhanced over the last year by the provision and implementation of a service incorporating expertise and new technology.’

* Document facilities management, a research study of the UK finance sector, the way to the Millennium, an independent report carried out by Research International.