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Services Integrator

16 November 2007

Kevin Elliott, MD Johnson FM

Johnson FM has the ambition to replicate its leading position as an integrator of FM services to the retail sector also in the public sector and the corporate arenas, Kevin Elliott tells to Jane Fenwick how this can be achieved

ATYPICAL SHOPPING TRIP TO A BRITISH HIGH STREET could include visiting Boots for some toiletries, trying on fashions in an Arcadia group store such as Burton or Top Shop, drawing money from the local branch of Alliance and Leicester, before popping into BHS or Woolworth’s, and finally, upgrading a mobile phone at Carphone Warehouse. This exhausting morning might be concluded with a pub lunch probably one of over 8,000 pubs in the Spirit Group.

The common denominator that links all these high street brands is that their property and maintenance needs are managed by SGP. In fact, SGP’s maintenance and property service support of one in five shops on the high street. Now the thinking and business strategies that made this company the leader in retail property support and maintenance in just six years, has been brought to the traditional FM sphere through the combining of Workplace Management and SGP within Johnson FM.

SGP was formerly part of the Sears retail group, created in 2000 from an MBO of its property management activity. In 2005 it was acquired by Johnson Group to join its earlier acquisition, Workplace Management. This year, these two companies were rebranded as Johnson FM to form the specialist FM arm of a group that also includes clothing supplier, Johnson Clothing, workwear cleaning specialist, Johnson Apparallmaster and the high street dry cleaning chain, Johnsons.

In the last two years these two companies have been assimilated and consolidated into an integrated organization branded as Johnson FM, but both companies also retain their original identities in those markets where their brand is strong. In the case of SGP that throughout the retail sector, and for Workplace Management high profile public and private sector clients such as in the Treasury building in Whitehall.

“Where sensible we have consolidated the two organisations, but where it is very customer facing, the people have retained their original brand identities,” explained Kevin Elliott, managing director of Johnson FM.

Elliott, was formerly MD of SGP Property Services and part of the MBO team that extracted SGP from Sears. He explained that the process of integrating the two businesses has seen rationalization of some common functions. There is now just one procurement department and one supply chain management team, and back office functions and help desks have been combined. By Christmas the whole organization will run on the same accounting system.

Johnson FM comprises a number of key divisions. Its operations division includes the supply chain and procurement, help desk and planned maintenance functions. Working across the business is the technical division which delivers capital projects, office moves, fit out and opening of new stores and building surveying; the property division delivers estates services including landlord and tenant activities such as rates and service charges; the risk management division supports health & safety, quality and environmental compliance; and finally the core IT, HR and finance service functions.

“Every division is a profit centre in its own right, giving accountability and responsibility as close to the ‘coal face’ as possible,” explained Elliott. “This approach comes from our retail experience and ensures that any problems that arise are not ‘someone else’s.”

He continued: “This has had a fantastic effect. We have had a phenomenal year because people have focussed on selling more services to the clients and are getting some return personally.

This is not the only lesson to be drawn from the experience of SGP in the retail sector. Two others are its management of the supply chain and its IT systems.

Supply chain
Elliott is a specialist in supply chain management having spent 10 years rebuilding the supply chain management of the engineering divisions of British Rail leading up to its privatization, and then heading up the main supplies centre for the whole rail network which was ultimately sold to Unipart. “Now that whole industry lives and breaths supply contracts,” he commented.

He moved to Sears at what he described was a ‘challenging time’ for that organization. “All my background was about very tight control of the management of the supply chain. I took this to a different arena and found that in retail, everything that was non-merchandise was poorly organised. They wanted me to apply tight management of the supply chain and apply best practice in the retail arena.”

The Sears organization ultimately failed to recover but this spawned the MBO of its property management activities as SGP Property Services. The original 30 people at the time of the MBO in 2000 grew to 250 after six years. As Elliott described, “When we started we had 350 retail outlets and by the time we sold it, SGP looked after 35,000 – that’s 20 per cent of the ‘boxes’ on the high street. We had come from a retailer and thought like a retailer but soon realized that for FM and maintenance we needed to bring a different approach. This was to develop an open relationship with our clients so that they could see the cost of contractors and see that we made no money from these bought in costs, just a fee for the management activity.”

The other plank of their success has been creating IT systems that work for the client. Elliott explains:
“Typically in the retail sector, money is spent on stock control and EPOS systems, and there is no interest in the FM and maintenance systems. We based our systems on the universal Microsoft products so that clients had access to their information and could see what was happening on their account as it happened.”

Elliott strongly believes in maintaining an in-house expert IT resource. This enables the business to continuously listen to client needs, adapt its systems to meet them and roll out good ideas to its entire client base, he says. “If this service is free, it gets clients to think of different ways to make it work better. At Boots, for example, we pump information into their finance system in the way their accountants want it, but this is not visible to the maintenance and FM operatives who see this information in a different format. We sit with the clients and examine the systems and process to reduce their spend or arrange the service spend differently.”

He also explained that they work closely with their suppliers to discover what they want the IT systems to do. In total, Johnson FM has about 3,000 suppliers to provide national coverage but in reality it works most closely with about 150 of these. It uses just 10 M&E contractors, for example, who cover most of the country. He said, “They have to understand what we need and work with our systems, but we also sit with them to ask what they want our IT to do. Periodically we get all our similar suppliers in the same room so that they can all see how each other is performing.”

Elliott sees Johnson FM as offering a new breed of white collar FM delivery model. “We are an integrator rather than offering ‘integrated services’. Lots of people talk about integration but I am still looking for the one that has really pulled this off. I am passionate about this fact. I’m not a cleaner or an engineer, but I can get the best of breed on all these parts and integrate them together. We have spoken to the market about this vision and have received some significant tenders from people who clearly think the same way and whose experience of ‘integrated services’ has fallen short of expectations. Maybe delivering integrated services from one company will never exist, and in fact the way forward is to choose the best in class in all parts.”

This was the thinking behind the launch earlier this year of the Johnson FM ‘Smarter FM and property thinking’ approach and the creation of ‘Fusion’, an integrated facilities and property management model. Elliott recognised that while SGP has developed from a more entrepreneurial environment than Workplace Management, the latter had excellent processes, procedures, people and service delivery. At the time of its acquisition by Johnson Group, Elliott admits that “SGP had reached the stage that it needed a big company culture without killing its entrepreneurial character. We recognised that we had grown so fast that the company needed stronger control systems and procedures in place. At the same time Workplace Management needed some entrepreneurial energy.“

Lease strength
One of the key strengths of Johnson FM across its key markets is its strength in property services, service charges and lease negotiation. This strength developed in the retail sphere where SGP is seen as a ‘tenant organisation’ and uses its property teams to challenge service charges on behalf of its clients. “In a shopping centre if you are acting for the key retailers, you can negotiate with the managing agent to challenge the service charges. Sometimes weight of numbers is needed to deal with landlords.”

The formation of Johnson FM has created an organisation with over 800 employees, delivering and managing over £1.2bn of client spend to over 50,000 locations throughout the UK and Ireland. Elliot concludes. “Nothing suggests to me that the way we took off in the retail sector should not also happen in
the FM arena.

Link: Johnson FM

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