In 2007, I wrote the following article for IFMA regarding outsourcing and the "Extended Enterprise". Back in 2007, companies were outsourcing to become best in class and to innovate. Leading companies still have this goal. Today, as we emerge from the hangover of the "Great Recession", companies are under more pressure to manage costs and to grow, without allowing expenses to expand. In other words, many C-suite executives are asking their teams to accomplish more with less. This dynamic is accelerating the push into real estate outsourcing in virtually all industry sectors.
The Extended Enterprise and the Future of Corporate Real Estate"
Corporate America is moving away from traditional vertically integrated business models to a more complex approach that maximizes every link in the value chain by leveraging best-in-class resources from within and outside the enterprise. Corporate real estate and facilities managers are increasingly faced with the choice: defend the status quo and risk losing competitiveness; or leverage the extended enterprise and prepare for significant change.
As companies seek to maximize efficiency throughout the entire value chain, they are focusing their attention on functions where they excel, and tapping best-in-class expertise for non-core functions. Done right, these “extended enterprises” are delivering unbeatable results department by department.
The extended enterprise approach recognizes that a business is made up not just of its management, employees and shareholders but also its partners, service providers and customers. This elimination of inside/outside boundaries is driven by the need to deliver more value, increase speed and flexibility, and compete in the unforgiving global economy.
The extended enterprise concept is a natural outgrowth of a company's transition away from vertical integration, the idea that the company should own the entire value chain. Vertical integration was designed to give management control over quality and speed of delivery. But it required a company to excel at every aspect of business, and not many companies could live up to that. Companies that farmed out non-critical tasks to expert service providers typically gained an advantage over competitors that adhered to vertical integration.
via www.ifma.org "