Potential synergies in purchasing and management of service providers

The more external service providers a financial institution employs in order to operate and manage its real estate portfolio, the higher are the required effort and costs of control. The centralization of purchasing power and a reduced number of contracted service providers allows not only the realization of cost advantages, but also the implementation of “service level agreements" in favor of end users.

A complete responsibility transfer for real estate functions to external service providers (outsourcing) can reduce the vertical integration, thus achieving a stronger focus on core business. This applies virtually unlimited to all non-core operational functions of real estate management.

However, with regard to strategic tasks and management functions it has to be ensured that the coordination with company strategy and corporate development, the management of the interface to the service provider, and an effective performance measurement are guaranteed. As long as the property and all real estate related activities are not completely outsourced to an independent company, a certain amount of real estate related management tasks remains as a “Retained Organization” in the central CREM-unit of the financial institution.