Macro is back – part II Macro is back – part II

The 25th of June saw the launch of the new Macro.  Elliott Chase talked with CEO Ross Abbate about what that means for the business.

The Macro name came back on the scene in November last year, of course.  But that was just one step – albeit a big one – in the company’s relaunch as an independent service provider.  Stretching out behind that landmark is quite an interesting history, even in the context of the multiple interesting histories to be found in UK FM’s annals.

We’ve documented some of the highlights in Macro’s history here.  In a nutshell, that story is this: established in 2002, a few acquisitions, years of solid growth and development, rebranded in 2020 as Mace Operate as its parent company sharpened its structure, returned as Macro with new company eyeing up an independent future, the management buy-out.

And now, in the next stage in this process, we have a new logo, new website and – importantly – a new statement of purpose. 

So, why the MBO?  “The original vision that brought Macro into being was that Mace would offer a full service: consult, construct and operate,” Ross Abbate recalls.  As Mace grew and developed, though, the first two of those service areas became considerably larger businesses than the third (£500m, £1.5bn and £100m, respectively, on rounded 2022 figures).  Discussions were had from time to time over recent years about the operate business and the possible options for its future.  Ultimately, Mace made the decision that consulting and construction were its core service areas and operations was not.  That decision led to the MBO concept, with Abbate and colleagues coming to an arrangement with Mace that excluded the involvement of external investment and instead hinged on payment to Mace over five years. 

“We did look at PE investment as a possibility when we were considering the options,” Abbate explains, “but we weren’t comfortable with the typical private equity ‘three years and then we’ll flip it’ approach.  We didn’t want to be driven by that sort of pressure.” 

As you would expect from two businesses focused on managing relationships, the deal negotiated with Mace was clear and thorough.  Abbate continues: “We agreed a nine-month transition programme that will see us fully separated from Mace later in July, though we may be able to accelerate that to the end of June.  We’re introducing new systems for our business – for finance and HR – and our IT system is already up and running.  So, completion of all that will give us total separation from a functional point of view. 

“We also have a framework agreement in place with Mace that will see them do project management work for us and us do FM work for them.  And they are supporting us with some sustainability and responsible business work, too.  Overall, it’s a good relationship – in fact, we’re staying in the same building: Mace has an empty floor and we’re going to sublet that, which also has the benefit of us not having to change the addresses on everything.  This all works for both sides – so why wouldn’t we do it?”

Managing business
In its early days Macro seemed a bit the odd one out, determined to stick to the ‘managing agent’ business model even as most FM companies were expanding their direct-delivery capabilities.  “We’re still there,” Abbate says.  “We only direct deliver services for front-of-house.  That has been a deliberate strategic decision.  We did have about 100 technicians in a business in the Middle East, but we sold that two years ago.  There’s a niche in the market for what we do.  Being a self-delivery business is a totally different mindset and requires a different sort of investment.  Mace has never been a self-delivery business, and that concept was built into Macro from the beginning. 

“And,” he continues, “we’re seeing more and more organisations now wanting to separate service delivery and management.” 

One sign that the business has made the right choice is the fact that it is in good company, so to speak. The competitors it most often comes up against for new business are CBRE and JLL – both proponents of the managing agent model and both, of course, considerably larger and perceived as industry heavyweights. 

But, Abbate reminds us, like so much in FM there is more than one way of approaching this sort of outsourcing.  “Increasingly, he says, “we are acting as principal contractor on many of our contracts.  In simple terms,” he explains, “’managing agent’ means the service delivery contracts are with the client and the client is taking the risk on those.  ‘Principal contractor’ sees the contracts with us – so we deliver the service by using sub-contractors. 

“The terminology can be confusing.  We do act as managing agent, for example, for one major sports retailer where we manage their Europe portfolio.  But at other clients, we are principal contractor.  So, basically, the FM services we deliver are contracted out; it’s just that there are two models for that. 

“But we don’t describe ourselves with either of those models.  We describe ourselves as an integrated facilities management company because we integrate services for our clients.”

Why Macro?
So, what makes this business different; why does a client choose to partner with Macro?  Abbate is clear on this: “I think the starting point is often the fact that we are privately owned.  This is a key factor in the relationship issue, which is often a very big one for clients.  If they have a question or a problem, they can pick of the phone to me or to anyone on the senior leadership team and someone will deal with it.  That’s a really big thing for many client organisations.

“The other thing here is we are really driving the technology-enabled service delivery concept. Many people talk about new technology, but the real question is ‘what is it actually doing?’.  We’re working to use technology to drive value, whether that be in experience or in efficiency.  It has to have a beneficial outcome for the client; we’re not using technology for technology’s sake.  We’ve made a big investment in this, especially in data collection and reporting. Our management information is really detailed, with the aim of giving clients the right information to drive their portfolio decisions. 

“But the biggest thing that makes us different is the personal touch.  The fact that we are comparatively small but with a footprint across 46 countries does make us unique.  We’re small enough to preserve personal relationships, but we also have the capability to deliver just about anywhere.” 

That reference to 46 countries doesn’t mean 46 offices with 46 country managers on the ground.  In fact, the business runs out of four hubs – the UK, UAE, US and Singapore.  “We’ve grown in those countries because our clients have asked us to,” Abbate says. “It’s been organic:  I don’t have an ambition to move into new territories and try to launch our business there.  Often our presence in one country has led to another client saying we have a presence there too, and we have grown in that way.  We are also structured around global accounts, not countries, so the focus is on the client not on local growth. 

“For instance, we are talking to an American company that has operations across Europe, in some places where we don’t currently operate – but we will go into those countries for that company.” 

This is clearly an approach that has worked well for Macro. In addition to its geographical spread, it’s client type spread is quite broad, too.  The company is currently managing a good mix of commercial offices sites, as well as pharmaceutical, retail, manufacturing and warehousing.

The big issue of technology 
Every conversation about FM these days inevitably comes round at some point to technology.  Tech changes, challenges and opportunities have been shaping the business for some years and will continue to do so for, well, probably forever.  At Macro, one current focus is on deploying IoT networks – bringing together industry-standard technology with industry-standard software, then integrating that into the firm’s CAFM system for monitoring and managing building systems and assets. 

“We are pulling together external components and tailoring the connections so they work for us,” Abbate reports.  “We’re also looking now at integrating an AI engine so our systems can not only flag up, say, a need for service to an engineer but also tell the engineer more about what to expect and the parts likely to be needed.  That is practical stuff that will add value – more first-time fixes and greater efficiency in use of the engineer’s time.” 

He continues: “We’ve also got smart cleaning systems in place with some clients, with IoT networks tracking use levels in various building areas in order to adjust cleaning schedules.  We’ve managed to reduce costs by 20% for one client with this system.  In this case, again, the next step is to introduce AI to assist in the work schedule modification. 

“Our approach to these applications is generally to use system components that are already on the market, bringing them together and tailoring that to our own needs – whether we do the tailoring in-house or with an external partner.  The point is to get something that does the job and delivers real value. And perhaps the most exciting aspect of this is the increasing opportunity to put AI into these systems.  This is practical FM service delivery these days.” 

There’s an interesting trend across the industry of companies developing their own tech solutions by buying in parts and tinkering with them to build what it is they really want. If this is the ‘cottage industry’ stage, will there come a point when tech companies see the appeal of building something that fills the market gap?  “I could certainly see FM tech following the ERP [enterprise resource planning] development route, with technology companies producing standard packages with multiple features and then tailoring the operation to the needs of the specific FM and its client,” Abbate says, noting: “There are already examples of this happening in some areas.”

Continuing on that theme, he adds: “I think the availability of ERP-type platforms for FM would make a big difference.  But, fundamentally, people like to do business with people.  We have some cleaning robots in places and in one case we have a robot on reception, but really the preference among clients – especially for reception services – is people.  Technology will help a lot with the back-office stuff, including much of the compliance obligation, but we need to focus on the customer experience aspects of what we do, which means people providing services to people.  I think we’ll be seeing even more emphasis being put on hotel-type service levels.” 

There’s another interesting dimension to the technology issue, too, which leads to some question over the actual pace of change.  “The very big FM groups, with their established processes and procedures, are not going change quickly,” Abbate argues.  “And what I find fascinating is that you can talk to clients, or answer tender questions, where the focus is technology and innovation; but then in the normal course of service delivery the view is often ‘let’s keep what we have’. Few clients want to be the first to do something different – some will look to break new ground, but much of the business world is inherently conservative.” 

One challenge for the industry is the tendency towards a short-term view: what do we have to do now to save money, to be more efficient?  For technology, the first question about investment is what’s the payback and when?

“Cost is always a consideration, but it is a big thing at the moment,” Abbate says.  “Falling in behind that as a big decision driver is experience, getting more and better out of the workplace – questions like ‘what do I have to do to get my people back into the office?’  Too much empty space is a worry.  And the two, costs and workplace change, are linked of course.”

Macro doesn’t do workplace consultancy per se.  But it does do journey mapping, for example, starting with questions such as ‘what do you want to achieve with your workplace and what has to be done to deliver that?  How can FM support and contribute to that?’ Abbate sees this as a value-add service for clients, broadly the same view he takes of the agility Macro can offer. “Agility is vital these days,” he says. “And it is likely to get more so.  Businesses are changing more and more quickly now, which requires us to be ready to change too. 

“Looking forward,” he adds, “we’re looking at more of the same to a large extent - but the response needs to be smarter, better and faster.

“These are exciting times,” Ross Abbate says.  “We can do good things with our clients and with our people, too.  The feedback we get from clients is most often about our people: ‘they’re really good, they’re really engaged’.  And I’m excited about that.  Too often the focus in this industry is ‘how do we make more money’; but it should not be about that – it should be ‘how do we deliver a really great service’.  The motivation has to be doing the right thing for the client.  Then everything falls into place after that.”   

The ‘new’ Macro is definitely one to watch.