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Integrated future for the public sector

Author : Tim Fryer

30 November 2012

Debbie White, CEO of Sodexo UK

Still in her first year at the helm of Sodexo in the UK and Ireland, Debbie White sees the market trend towards integrated FM as a developing opportunity, as she explained to Tim Fryer.

Tim Fryer: Sodexo’s heritage is as a caterer, but over the year’s the balance of services has gradually moved in other directions, how has that come about and how does it tie in with your own career?

Debbie White: I have been with Sodexo for eight and a half years. I started as CFO of the UK business and did that role for three years at a time when only a quarter of Sodexo’s business was not food. So we put in place a plan to drive our non- food business, basically driving us away from being a caterer into, in those days, what we called a soft and hard FM provider. That was the start of the journey.

I then spent a year with Paris, with the Group CEO, working on a couple of global strategic initiatives and then went for four years to the US [as CFO] where again I drove the campaign of how to become an integrator of facilities services, not necessarily a bundler. Adding service by service can be good, it gets you the footprint, but how do you present yourself to the market as an integrator? In the US part of that was setting up something we called the Solution Centre. The Solution Centre had all the hard FM capability embedded in it and it was a way of leveraging our capability.

TF: Is that the same idea as the Centres of Excellence in the UK?

DW: Yes. It is our way of making sure with our FM platform that we absolutely know what excellence looks like, what quality services looks like and we support the business through the Centres of Excellence. I think that this is something that differentiates us from our competitors.

TF: Did this model work in America because the TFM model is more advanced over there?

DW: I would say in the corporate space they are quite well advanced. All the big financial institutions, all the big manufacturers, they all like TFM or they are definitely heading in that direction. In the other parts of the business, like healthcare they are behind. The drivers are perhaps not the same as they are in the UK. In the UK quite frankly, taking cost out of delivering public services has been an agenda item as long as I have been in business. Healthcare in the US is not a public service and the funding mechanisms are very different. Basically the main drive in the US has been around patient satisfaction, if your patient satisfaction scores were not great then you had to look at what you were doing. In the last three or four years, with the economic recession and with healthcare reform act in the US that Obama put in place two years ago, there is much more focus on cost base, but patient satisfaction and superb clinical outcomes are extremely important to drive patient numbers, which means that the TFM piece has not in the past really got the focus.

In the UK there is a different dynamic in the marketplace, which is how do you really help your clients deliver their proposition, what they are trying to do, rather than just accessing services. That is our philosophy - We feel very strongly that we are here to deliver quality of life services. Yes we do that through an outsource relationship but, as we all know, if you can’t differentiate yourself and bring different value to your client you will be commoditised.

TF: You said in America you drew a distinction between bundled services and integrated services, what is your view of the difference?

DW: I think for me, and it is quite a personal perspective, putting services together and adding them on component by component is bundling. For me, integrating is about having an overall services manager who is responsible for all services and can operate across the whole portfolio, putting the right emphasis in the right place for the client. I think integration requires a technical platform that supports all services and not individual services. As we all know, catering has one sort of platform and technical services has another sort of platform, but what we are seeing our clients ask for is the full picture. They want everything in one place.

TF: Presumably that needs to be client driven. You can present it as an option but the client needs to go for it?

DW: They do and different clients will get there by different routes, but I do think it will go that way, because that is potentially where you will drive more value for clients and start to make a meaningful difference for them. We have already got hospital clients talking about patient satisfaction scores and how do we as Sodexo help them improve these scores. What that means is that clients are looking more for outcome measures rather than inputs. An example is if you look at the government agenda and re-offending rates - they want outsourced providers in the prison space to demonstrate that they can reduce re-offending rates.

TF: You obviously see great potential for Sodexo in this environment, is this why you returned to the UK?

DW: The reasons were two-fold really. The first reason was the family. We have ageing parents and wanted to spend more time with them and we also wanted to come back for the children’s education. But the second big reason was that the Group CEO asked me to come back and run the UK and it is always an exciting time when someone says do you want to run your own show, to take the UK to its next level. So professionally it was perfect and for once professionally and family wise the two things went together and it doesn’t always happen like that.

The UK business has been about £1bn for some period of time and the question for me coming into this job was ‘What can be different about it?’ I have spent the last nine months really focusing on what is the strategic direction for the UK business and what are our ambitions, where can we grow.

TF: How important is growth for a company like Sodexo?

DW: If you are going to give your employees the sort of opportunities that they are looking for you need to be growing, We have about 3735,000 people, which goes up to about 40,000 in the summer with the events – I believe very strongly that we have a responsibility to provide those opportunities and I think if you are not growing that makes that a bit more challenging. More importantly, I think our clients are expecting more of us and they are creating the growth opportunities as much as we are keen to have them. We have spent a lot of time over the past three months really understanding what the public sector opportunities are and particularly in IFM in the public sector, despite some of the bad publicity that has been out there, the opportunities are enormous. Quite frankly I don’t think Sodexo has been as well positioned as it could be going forward in the public sector space. One of the downsides of being segmented and all my senior CEO colleagues in the UK will recognise this is that you look through a certain lens at the marketplace and sometimes that stops you from looking at the whole marketplace. So whilst being segmented is great because it makes you client specific and client focussed and industry knowledgeable, what it doesn’t give you is the full picture. And I think in the public sector space we have missed some of the big picture. But we are addressing it rapidly and you will see a large part of our growth going forward in the public sector. 50% of our business now is in the public sector and you probably wouldn’t look at Sodexo and think that.

TF: An interesting one was in the pathology lab you recently opened - was that client lead or did you develop the service in order to win the contract?

DW: It’s a bit of both in that the Government has been very open to the private sector and have invited us to talk to them, but at the end of the day it has to be something that the client is comfortable with. In the case of pathology services, and every hospital needs them, then if it can be done cheaper and better on a consolidated basis then I think the private sector has a part to play. It is probably more of a learning process for the public sector as it is for us. For example a whole hospital has now been outsourced including clinical care – everyone will be keeping an eye on that to see how it works. But it is too early for one or two projects to represent a trend.

TF: And what trends do you see emerging in the UK market? Will TFM or IFM squeeze the smaller single service providers out of business?

DW: TFM may not be suitable for all clients for various reasons and, despite some consolidation, there is enough room in the market place for large and small operators, mainly because I do think that the rate of outsourcing will continue to increase, not decline - particularly in the public sector space. One thing I have noticed in terms of trends, clients are much more likely to entertain ideas about outsourcing things than ever before, things that they have never even thought of. Like pathology in the public sector, or lab services in the private sector. That is driven partly by the economy, but it is also driven by businesses being very clear about what their core is and what it isn’t. This will help the trend for TFM to continue, but I don’t think the small operators will die out. They bring a different proposition and that proposition will be what some clients are looking for. I just think there is tons of opportunity.

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