Navigant Research Blog

Two Big Reasons 2017 Looks Bright for Intelligent Buildings

— November 30, 2016

Intelligent BuildingInformation technology has permeated nearly every aspect of our daily lives, and the convenience, efficiency, and productivity benefits of utilizing our favorite apps has created a new set of expectations for workspaces. As we look to the beginning of a new year, this widespread demand for technology underscores two signals that 2017 will support continued investment in intelligent building technologies. First, customer satisfaction is paramount;  second, major corporations remain committed to sustainability. Intelligent building technologies, specifically Internet of Things (IoT)-enabled analytics and managed services, are cost-effective investments that provide broad business insights to meet these two top line goals.

IoT for Customer Satisfaction

The bottom line for business is growing revenue and building market share, and customer loyalty is fundamental to this success. IoT-enabled intelligent building solutions can help businesses by creating comfortable and productive space. From retail stores to offices, intelligent building technologies help facilities managers and building owners maximize equipment performance and direct the use of their spaces to maximize customer satisfaction.

Navigant Research recently hosted a roundtable webinar on IoT for small and medium businesses, and the conversation several times turned to the importance of customer satisfaction. The deployment of an IoT-enabled intelligent building solution can generate comprehensive data sets on equipment performance and space use, and analytics can then translate these data streams into valuable business information. For example, in retail stores, occupancy sensors can send data about foot traffic to direct improvements in HVAC and lighting for energy savings, but also provide insight for product placement and customer service needs that can ensure and enhance customer satisfaction. Once an IoT platform has been deployed, there are many software as a service (SaaS) analytics options to translate data into information for strategic business decision-making for any vertical.

IoT for Sustainability

According to a recent Forbes article, a recent international manufacturing conference in Japan provided some surprising new statistics on sustainability. In particular, the study found that 75% of US consumers account for sustainability while shopping, and an even more striking 7 of 10 millennials define themselves as social activists—as put in the conference presentation, “For millennials, CSR [corporate social responsibility] is the new religion.” Even more striking is the corporate commitment to combating climate change, underscoring the importance for business bottom lines. Companies including the Gap, General Motors, Levi Strauss, and Starbucks have signed a plea to the incoming administration to retain the commitments set in the Paris Climate Accord.

What does this mean for intelligent buildings? US businesses can tackle their sustainability footprint head on by optimizing operations to reduce energy consumption and associated carbon emissions.

Commercial buildings are notoriously inefficient, generating about 20% of the total CO2 emissions in the United States. IoT changes the game by delivering cost-effective devices (moving price points from tens of thousands of dollars to hundreds of dollars) that bring insight into waste that was previously invisible. Customers that manage smaller buildings likely never considered deploying automation and controls for energy management and sustainability, but with the IoT platforms and SaaS analytics available today, they can access facility information remotely, quickly identify inefficiencies, and improve performance to improve their sustainability.

 

Insurance Companies Expand into Energy Management to Mitigate Risk

— November 23, 2016

Home Energy ManagementInsurance companies are starting to get smart about the smart home and energy management. Though these companies are in the very early stages of participation in this market, interest has been piqued and insurers are starting to partner with vendors to offer consumer energy management and connected home solutions. For example, State Farm has partnered with ADT Pulse and Generac to offer consumers discounts for home energy products and services. SmartThings, before it was acquired by Samsung in August 2014, had partnerships with four of the 10 largest insurance companies, including American Family Insurance, which joined with SmartThings and Microsoft to create a smart home incubator in Seattle.

Homeowner Alerts

Insurance companies can find value in data from connected devices by detecting issues and alerting homeowners before catastrophe strikes, especially with large appliances and HVAC equipment. They can also use them to develop more informed policies and offer discounts for adopting these technologies. Energy management is especially appealing to insurance companies because it allows residential customers to remotely monitor and control a range of connected energy devices such as thermostats, lighting, appliances, and electronics, which can be useful in powering down devices during emergencies and even deploying backup power during outages.

Insurance providers in particular have an incentive to offer these types of solutions because it can avoid costly payouts. A monitored, controlled, and automated home that can better mitigate risk and avoid disaster can save insurance companies a significant amount of money in avoided insurance claims.

Emerging Opportunities

While insurance providers have reason to offer consumers these solutions, they are not the only non-utility companies interested in energy management. In recent years, companies outside the traditional energy industry have engaged in this space and found value in offering energy management solutions as part of connected home offerings. These include companies such as AT&T with its Digital Life platform, Comcast with its Xfinity Home offering, and Vivint Smart Home. As Alex Hawkinson, CEO of SmartThings, has said, “The number of services that could be spun out of this is limitless. You can pick industry after industry. The ramifications of making the entire world self-aware are simply massive.”

These new players are just beginning to unlock the possibilities of connected homes to provide increased energy efficiency, comfort, and control. There is something happening in this space, but it is still in a very early stage of development. Many major insurance providers are interested in the smart home, but most are still exploring where they can find value in energy management. Expect to see more engagement from insurance companies in the near future.

 

IoT Device Manufacturers Cut Prices, Making the Smart Home More Affordable

— November 7, 2016

Home Energy ManagementThe cost of setting up a smart home with Internet of Things (IoT) devices is an expensive endeavor, even with recent increased adoption among consumers. Average selling prices for basic IoT devices are steep; in North America, smart thermostats cost about $220, smart lighting networks cost $103, security-home management systems cost $300, and smart plugs cost about $53, according to Navigant Research’s Market Data: Internet of Things for Residential Customers report. These devices are expensive on an individual basis compared to their dumb counterparts, let alone when purchased together as a connected home bundle.

However, there is recent evidence of increasing affordability, as seen from the launch of the new ecobee3 lite smart thermostat. The company has ditched room sensor support and dropped $80 from the price tag of its flagship product. This makes ecobee’s newest offering a more affordable option compared to those from competitors such as Nest, which sells its smart thermostat for $249, and Honeywell’s second generation Lyric thermostat, which runs $199. This recent trend of undercutting the competition on price is not exclusive to the smart thermostat market. Google recently announced that its Home offering, a voice-activated Wi-Fi speaker hub, will be released to the market at a price $50 cheaper than Amazon’s Echo.

Competition Breeds Accessibility

Undercutting competing smart devices may not be the case across the board, as Google also recently announced its Pixel smartphone at a price equivalent to the new iPhone 7 from Apple, surprising industry specialists who expected the Pixel to be priced lower than both Apple and Samsung offerings. Nonetheless, the decline in prices of connected home hardware is expected to perpetuate as industry players try to grasp hold of market share and become leaders in this space. This level of competition is making the smart home concept more accessible and affordable to consumers. Price cuts are pushing the market that much closer to a mainstream reality instead of a futuristic dream.

What this means for the energy industry is increased adoption of energy management devices and greater engagement among consumers. Devices such as smart thermostats are increasingly being bundled as connected home solutions, and as these solutions become more affordable and mainstream, energy management is expected to see increased uptake. Consumers are now finding energy management devices available through connected home solutions framed as security, entertainment, automation, or telecommunications offerings. Utilities can take advantage of this shift in the market by partnering with vendors incorporating energy devices into their connected home solutions, and by using these devices to better engage customers with energy efficiency and demand response programs.

See Navigant Research’s recently published Market Data: Home Energy Management report for more information on the nexus of energy management and the connected home.

 

The Digital Transformation of Buildings: Creating Business Value, Not Just Data

— November 2, 2016

Intelligent BuildingThe ubiquity of unstructured and real-time data streams has the potential to revolutionize business. Consumers expect technology to make their homes more comfortable, their schedules more productive, and their travel more efficient. The unyielding pressure to be connected is beginning to transform expectations for how commercial buildings are operated. The challenge is now to align occupant and business expectations with real estate and facilities management realities.

Navigant Research has been tracking the development of the intelligent building industry and specific innovation through the convergence of IT with commercial building equipment and controls. Energy efficiency has been the bedrock of market development because the improvements in operations translate into reductions on utility bills—a transparent monetization of return on investment. The energy story is a critical starting point, but it is only part of the promise of intelligent building technologies. As the market continues to mature, a more comprehensive story is unfolding around the business value of digital transformation in commercial buildings.

IoT for Bigger Impact and Better Decisions

The Internet of the Things (IoT) characterizes an important shift in positioning technology for improving commercial building operations. The fundamental idea is that IoT is a platform approach to data creation, communications, aggregation, and analysis. It’s about creating data-rich environments for a more comprehensive view of what is happening inside the walls of a commercial facility to make better decisions. The ability to translate the data into information that resonates across business units and stakeholder points of view is what’s really impactful about IoT in commercial buildings. In other words, one IoT intelligent building solution can address big business pain points—energy efficiency for the head of sustainability, predictive maintenance for the head of engineering—while also generating enterprisewide key performance indicators (KPIs) for the C-suite.

There is a big-picture opportunity here. When IoT-enabled intelligent buildings are a reality, the benefits are wide-reaching. As explained in a recent Huffington Post article, “It is through a change in mindset, enabled by the Internet of Things, that buildings become smart. If we get buildings right, we get the energy system right. … Smart buildings reduce the cost of the energy transition—both upfront, as smart buildings allow fewer investments in new power capacity, and on an ongoing basis due to less energy consumption and integration of renewables such as surplus energy from other parts of the city.” Navigant Research agrees. In fact, we have been outlining the importance of buildings in our ongoing research into the energy industry transformation, or as we frame it, the development of the Energy Cloud. In our most recent Energy Cloud white paper, we discuss this very idea as Building2Grid. Watch for more on this big-picture idea for the intelligent building in the coming months.

Interested in learning more about Navigant Research’s IoT research? Check out our new IoT research service here.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Electric Vehicles, Finance & Investing, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Smart Transportation Program, Transportation Efficiencies, Utility Innovations

By Author


{"userID":"","pageName":"Internet of Things","path":"\/tag\/internet-of-things","date":"12\/2\/2016"}