Agilent Technologies, Inc., the world’s premier measurement company, and Johnson Controls Global WorkPlace Solutions have been working together since 2003. Over the course of nine years, the relationship between the two companies has evolved from a simple facilities management agreement, to a truly strategic alliance that is set to enter its third-generation.
The contract, which was recently renewed to extend the relationship to 2017, sees Johnson Controls providing a broad range of hard and soft facilities management services, as well as real estate transaction management to Agilent sites in 29 countries.
Neil Rees, Vice President of Workplace Services for Agilent Technologies, Inc. took time to share his thoughts on how to create a successful long-term outsourcing relationship and how to keep it fresh.
What were the main reasons for taking the relationship to the third-generation?
We were clear about the financial goals we wanted to reach in the third-generation of the contract, and had no fear in taking the opportunity to market if we had to. We employed a consultant to benchmark recent contracts by all the major players in the industry. After our analysis we were very satisfied that Johnson Controls had the capability to evolve and deliver the results we were striving for. Every stage of our relationship with Johnson Controls has been different. Each generation of the contract has been smarter, clearer, more transparent and more creative than the previous. We completely recognized that, although we would be going into our third term with the same provider, the creativity they had brought previously would allow the relationship to be taken into a higher gear.
What are the secrets of developing a long-term relationship?
Even though the word is overused, the main thing is trust. We have the greatest respect for Johnson Controls’ technical capabilities, ethics, standards and quality, and I believe their team feels exactly the same way about us. It’s a good cultural fit – we both are out to do the right thing, and we both want to see the other be successful. I also believe that it’s very important that you challenge yourself as much as your outsource provider – you have to take a long, hard look in the mirror and ensure you are holding your organization to the same level of standards as you are asking of your suppliers. You also have to make sure you are promoting the right kind of behaviors and acting in the right way to encourage and foster a long-term relationship.
What are the differences from the first generation, how has the model changed?
Initially, I think the lack of transparency created uncertainties and questions about motives etc. The biggest change is that our relationship is completely open now. We can see every dollar that Johnson Controls spends – down to the penny. With that said, we trust Johnson Controls and we are confident that the money being spent is being spent the right way. We also know each other much better now. They understand Agilent, our industry and what we are setting out to achieve. There’s a maturity in our relationship, in that we both are honest with one another and we both challenge one another to be better. We [Agilent] provide constructive input if needed and give credit where it’s due and we expect Johnson Controls to challenge and push us too.
How does your outsourcing strategy support Agilent’s wider business goals?
Operational continuity is our number one goal. The service we provide is very much context, rather than core. Nobody buys Agilent products because we have nice looking sites. However, if a data center goes down, or there’s a fault at a manufacturing plant, then there’s a huge impact on productivity and ultimately our customers. We want to ensure we are operationally excellent. Secondary to that, we need to ensure flexibility. We are in an industry that is somewhat cyclical and we’ve had our share of global recessions, acquisitions and divestitures over the years, so the ability of our providers to flex with portfolio changes is invaluable. It’s about managing our infrastructure and providing services in a way that allows the core business to focus on customers and products. Finally, as we continue to expand into new territories or industry segments, such as life sciences, the broader depth and breadth of a global outsource provider [such as Johnson Controls] can bring invaluable experiences and best practices to the table.
What does the future hold for Agilent and Johnson Controls?
As our industry evolves and as Johnson Controls learns more from other clients and industries, I’m convinced that our relationship will evolve as well. We will continue to push and challenge one another, as I believe this is a key element of our success. As Agilent continues to grow and move into new markets and countries, there’s no doubt in my mind that Johnson Controls – given their worldwide presence – will provide ‘feet on the street’ and industry experience in new market segments to help us as we expand.
What would your advice be to a company that was entering in to an outsourcing agrement?
If you really want the benefits from outsourcing, like finding synergies, flexibility and expertise, then you have to be bold and outsource a significant proportion of a portfolio. If you do it in baby steps you will not see the benefits. Outsourcing one site, or just the hard services, but not the soft services, makes it hard to find leverage and you won’t get much out of an outsourced relationship. My advice would be to go for it – be bold and take a leap of faith that the provider will do what you are paying them for. Also, make sure you measure purely on outcomes – you are paying for industry expertise and so let go and let them do their thing – don’t tell them how to get the job done based on the way you have done it for the past 30 years. Having said that, to keep the relationship healthy, you do need to retain some internal expertise that will go toe-to-toe with the supplier and have healthy arguments on specific issues or projects. I would also say that you need tons of data. You want complete insight into cost structure and service levels so you can really see what you’re doing and what levers you want to pull. Finally, I would say that you have to look at your own organization in the mirror and hold your internal team to the same standards as you would of your outsource provider. If you don’t, then your internal team can get in the way and it will become hard for the relationship to be truly successful.
The Agilent Technologies / Johnson Controls relationship was recently recognized for innovation at the May 2012 EFMC conference in Copenhagen, where it won the Partners Across Borders award.