Navigant Research Blog

The IoT and Intelligent Buildings: An Optimization Roadmap

Casey Talon — June 7, 2016

Intelligent BuildingThere is a lot of discussion around the importance of buildings in tackling big challenges, ranging from climate change to energy resilience. Intelligent building solutions are the tools that maximize the flexibility and responsiveness of facility operations to manage energy consumption, allowing for reduced greenhouse gas emissions and response to grid pressures. The intelligent buildings market has been maturing through investments made predominately by the largest customers managing large portfolios and facilities. Technology, and specifically Internet of Things (IoT) and data-driven services, are the evolutionary developments of the intelligent buildings market that now enable optimization of the market as a whole. The opportunity is huge, and as a result, technology giants are making big investments. New partnerships and acquisitions set the stage for deeper market penetration with enterprise customers as well as the midmarket.

Enhancing the Enterprise

Navigant Research has tracked the development of the intelligent buildings market and specifically the evolution of software solutions. Building energy management systems  have been the focus of our research, as they are the offerings that first disrupted the building automation and facilities management industry. This market continues to evolve, and the focus on investment increasingly spans both energy and operational efficiency. The growing demand for showcasing operational efficiency has been the foundation for big moves on the business front, including partnerships and acquisitions.

Siemens and Capgemini recently announced the Navigator platform, a “joint engagement to provide analytics-based services for connected buildings.” The move underscores the magnitude of opportunity to engage enterprise customers in the intelligent buildings market. As the press release framed it, “Together with Capgemini, Siemens is now further developing this Navigator platform to help corporate real estate owners drive business results and meet energy efficiency goals, while maximizing the lifecycle potential of their customers’ real estate assets.” Other major technology players have announced similar partnerships, including Hitachi’s launch of its Insight Group, which is expected to deepen partnerships with tech partners such as SAP and Microsoft. The investment and commitment of both the building technology and information technology and services giants validates the bullish outlook on the intelligent buildings market for enterprise customers.

Setting the Stage for Midmarket Penetration

The midmarket is another important segment of the facilities industry because of the sheer number of these facilities and a legacy of inefficiency in operations that presents big opportunity for optimization. Navigant Research’s new Building Energy Management Systems for the Midmarket report presents the outlook for investment to 2025. The acceleration of the IoT market and continued growth in customer awareness sets the stage for rapid investment in BEMS for the midmarket, which we estimate to reach $1.6 billion by 2025 (at a 24% growth rate from 2016). Our optimistic outlook on the market is built on clear market signals, including similar partnership and acquisition trends that we are tracking in the enterprise segment.

For example, Current by GE announced the acquisition of Daintree Networks to enhance its IoT and energy management capabilities. As a company press release states, “This acquisition will enable Current to expand its building automation platform and its energy-as-a-service offering to small- and medium-size facilities through the deployment of Daintree’s open, standards-based wireless control systems.” There are others taking advantage of the new opportunities in the midmarket through IoT; for example, Intel has made numerous partnerships with companies from Lucid to Building Robotics.

IoT may seem to be a buzzword, but it is increasingly evident the technology trend is changing the game for building energy and operational efficiency. Expect significant partnership and acquisition announcements through the rest of 2016 as the market continues on a fast pitch to broad customer adoption.

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