Word on the proverbial grape vine is that construction giant Balfour Beatty is in the process of finding a new home for its WorkPlace facilities management and support services business. Following a report in the FT earlier this month, BB was forced to admit that it is ‘currently exploring strategic options for this business in keeping with its strategy to focus on economic infrastructure’ – in other words it is ditching support services to focus back on construction.
Albeit on the outskirts of our SITS world, BB is of interest to us as one of the construction/support services players that had been keen to build out its higher margin services business, and broader business process services capabilities – something that we have seen support services market leader Serco achieve with great success in recent years (see here and work back).
BB piqued our interest last August when it won a true white collar BPS deal covering finance, procurement, revenues and benefits, ICT, customer services and HR at North Tyneside Council with Capita picking up the traditional support services (see Capita and Balfour Beatty role reversal at North Tyneside). BB also featured in our report IT-enabled support services: opportunities in a converging space where we investigated the capabilities leading support services players have in the IT/BP sector.
Any sale of WorkPlace would be an admission of defeat for BB in FM support services. However we are assured BB isn't giving up on its IT/BPS ambitions. WorkSmart, the part of BB, which delivers white collar services like procurement, payroll, accounting, employee benefits, and IT support, is apparently staying put.
Nonetheless, the situation isn't at all clear, and this will only add to confusion for customers, like North Tyneside, who will no doubt want some asurrances from BB.
We had thought it very sensible for construction companies to move into support services and BPS as an antidote to their declining construction activities. However this goes to show just how difficult a shift to a services business model can be, particularly for the construction sector where projects are king. We’ll have to see whether BB does indeed cast WorkPlace adrift. Either way there is clearly a lesson here in BB sticking to its knitting.