Navigant Research Blog

Understanding Related Markets to Identify Differentiators

— November 11, 2016

HVAC RoofTo an end user or purchaser, categories of commercial building technologies can look and largely feel the same. Take, for example, the commercial HVAC market, where most vendors offer systems with little differentiation other than minor specification or performance differences. Look at the product offerings from any of the large HVAC OEMs and you’ll find a host of chillers, air handlers, and packaged systems with little difference between brands other than the nameplate. An engineer might balk at this statement, but it is their responsibility to look for and understand these small differences. Other stakeholders, such as a company’s CFO or a facilities manager, might have different features that are important to them, such as cost, automation capabilities, or service and maintenance programs included with a purchase.

Lost in Translation

So how do companies in highly technical markets differentiate themselves when detailed engineering specifications may get lost in translation? Through the development and execution of their overall go-to-market strategies. “Go-to-market” means meaningful and insightful customer engagement with products, services, and information that is specifically important to them. This is very Marketing 101, but it can’t be stressed enough.

In the HVAC market, companies such as Trane and Johnson Controls are differentiating themselves by pushing deeper into whole building optimization so that they can leverage their extensive existing customer bases to drive growth, smooth revenue streams during difficult economic times, and upsell customers with new product and service offerings. Other leading HVAC OEMs are offering mobile toolsets to sales and engineering staff in the field to help identify differentiators and promote their technologies over competitor offerings in understandable terms and with information that is meaningful to the particular audience.

Strategy Shift

Finding, enabling, and promoting differentiation can at times entail a high-level strategy shift, and these shifts can take years of effort and determination to realize. Implementing a strategy that calls for embedding digital intelligence into current equipment offerings may entail a shift in the culture of the entire company. It may also involve developing or acquiring significant new internal capabilities that currently don’t exist. If this course of action is followed and implemented soundly, however, it can be difficult for competitors to duplicate.

The key to all of this is not only knowing and understanding the market for the specific technologies, but also related markets, competing expenditures, and even the economy. In the case of Johnson Controls and Trane, they now must understand the HVAC market, the building energy management system market, and potentially the energy service company market, among others.  This is how markets evolve and change, helping to create new products, services, technologies, and ways to compete along the way.


Moving Toward Building Systems Integration with New Market Offerings

— September 26, 2016

HVAC RoofThe More Things Change?  

Energy efficient building market trends in 2011 included the increased adoption of intelligent systems throughout commercial buildings. The main focus of these systems was to more effectively manage energy consumption. Today, most vendors serving the commercial buildings market have moved toward intelligent building systems and controls. These systems not only manage building energy consumption, but also critical aspects of a building’s operations, including tenant comfort, asset management, wayfinding, predictive maintenance, and a host of other functions. It’s now a strategic necessity for commercial buildings to have some form of software monitoring, data collection, visualization, and control of key systems as this market evolves.

The Convergence of Building Equipment and Operational Silos

The industry as a whole is recognizing the benefits of taking a more holistic view of managing disparate building systems and processes. New construction design is made simpler by dealing with fewer vendors and systems that may not easily communicate with one another. Retrofits can also be made simpler and less costly with Wi-Fi wireless networking technologies. Overall, maintenance and serviceability can be managed more easily, and duplication of sensors, software monitoring solutions, controls, and other system infrastructures can be eliminated.

Earlier this month, Acuity Brands, Inc. introduced the nLight ECLYPSE controller, which allows the integration of commercial building lighting systems with a building’s heating, ventilation, and air conditioning (HVAC) controls onto one common platform. Acuity follows Daintree Networks, which offers ControlScope, a programmable wireless HVAC thermostat that connects to any conventional or heat pump HVAC system. These advanced tools give building owners and managers the ability to configure, monitor, and control an integrated set of critical building equipment systems using a common interface. With real-time data acquisition and monitoring, the efficiency of critical building systems and operational processes can be maximized while maintaining optimal energy consumption.

Adoption Hurdles Still Exist

These benefits do not preclude the presence of hurdles to the adoption of integrated building systems. As with any technology adoption cycle, early adopters see the benefits of these types of technologies, but others are slower on the uptake. Facilities managers can be hesitant to change and be trained on the most effective use of integrated systems with a common interface. The vast amount of data collected by a multitude of sensors is effective only if it is being used, and used appropriately. Connected devices of any kind increase the risk of security breaches, necessitating the coordination of facilities management and IT departments—a historically uncommon pairing. Finally, proving that the financial ROI and payback period estimates are within acceptable corporate standards continues to be a significant vendor challenge.

Acuity Brands and Daintree Networks have taken an important strategic step with their integrated technology offerings. It all makes sense and should see increasing adoption in the market over time. But commercial building operations has been one of the industries that is historically slow to adapt to technological change. With strategies and technologies that help vendors access both new construction and retrofits in commercial buildings, it may be inevitable that fully integrated building systems become commonplace in the coming decade.


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