Navigant Research Blog

Capitalizing on Data for Intelligent Buildings Market Expansion

— August 9, 2017

The intelligent buildings market continues to evolve, and an increasing focus on the value of data opens the door to inventive offerings that speak to critical pain points for commercial customers within the market. Energy efficiency remains an important value proposition for intelligent building solutions, but cost savings associated with utility bills is an insufficient driver for market transformation in facilities management. The push toward the Internet of Things (IoT) as the framework for digital transformation of commercial buildings and the next iteration of the intelligent building capitalizes on the multitude of nonenergy benefits derived from facility data. The next frontier is moving from energy efficiency to energy optimization and from data-driven improvements to the occupant experience.

Smarter Interactions with Energy

Building-to-Grid Integration, an upcoming Navigant Research report, presents big picture energy opportunities for intelligent buildings. Data, and the insights derived from it through analytics, elevate business opportunities for managing energy in commercial and industrial (C&I) buildings. A growing number of intelligent building solutions utilize data to direct an orchestration of systems to optimize energy use—the focus is on advancement and a more sophisticated use of technologies than simply using data to create dashboards that report on system performance.

Building-to-grid (B2G) is an emerging construct that creates an opportunity to generate new value streams with energy services as a foundation. The B2G platform is the framework for transactions around the energy supply and demand associated with the facilities and distributed energy resources of C&I sites. The bundling of advisory services, data communications, controls, and analytics will likely be the foundation of B2G solutions that enable the aggregation and coordination of C&I facilities to meet specific economic and corporate objectives. These objectives include power reliability, sustainability, and revenue growth.

Fundamental Shift in Enhancing the Occupant Experience

The Intelligent Building Technologies for Value-Added Services report from Navigant Research explores how utilities can leverage IoT as a platform for new offerings to improve customer engagement and satisfaction. The benefit of the focus on data creation and analysis showcases the many nonenergy benefits that align with shifting customer expectations around technology. The number of commercial customers already investing in IoT solutions should result in changes to the consumption and demand patterns utilities use for resource planning. Furthermore, rapid growth in IoT for intelligent buildings market represents a significant revenue opportunity for new offerings. At the same time, it represents a threat to existing revenue streams for traditional electric services as these technology-enabled customers reshape how their building operations and energy consumption align.

IoT value-added services can be designed around financial incentives and expert advisory that builds off the existing core capabilities of C&I demand-side management programs. IoT intelligent building advisory offerings can leverage existing core domain expertise around energy efficiency and domain management, but would be amplified by partnerships with IoT players currently in the market.

These new Navigant Research reports underscore the expansive opportunities associated with intelligent building data. Early solution provider adopters will need to develop strategic partnerships and revisit branding and positioning, but the upside to these challenges will far outweigh the costs.

 

IT-OT Collaboration for Optimizing Commercial Buildings

— July 13, 2017

This article was originally published by Intel and appeared in the Realcomm Advisory.

Smarter Applications for Building Management

The internet of things (IoT) is shifting the facilities management paradigm. Highly functional yet lower-cost devices can be deployed with minimal business disruption, broader acceptance of cloud-based software is supporting investment in intelligent building analytics, and the growing understanding of the importance of cyber security for networked building systems is affording IT departments to add value to traditional operational and line of business problem solving. These market forces underscore a bullish outlook for IoT in commercial buildings. In fact, Navigant Research’s recent report, IoT for Intelligent Buildings, forecasts the global IoT for intelligent buildings market to grow from $6.3 billion in 2017 to $22.2 billion in 2026.

The idea of convergence between information technology and operational technology systems (IT/OT) has been the cornerstone of intelligent buildings (and other operational areas of the enterprise) since the market’s inception. The reality is, however, most teams responsible for information technology and facilities operations and management work in isolation – following separate and distinct goals and mandates thereby losing the opportunity to capitalize on cross discipline capabilities essential to crafting strong IoT frameworks.

IBcon 2017 presentations, panel discussions, and demonstrations on the show floor demonstrated how the internet of things (IoT) platform approach to building optimization offers a framework for collaboration that can bridge the gap between IT and OT. A successful IoT intelligent buildings strategy can even help the IT and OT teams align their efforts and more effectively reach their specific corporate objectives – cost savings, tenant satisfaction and retention, business continuity, and cyber security. Furthermore, IT departments can be valuable resources for operations teams looking to understand the technical specifications of IoT offerings and differentiate between ingredient, systems, and solutions options in the market.

IoT for Stronger Bottom Lines

Initially, energy management was the foundational application for the intelligent building technologies. The rationale is that estimating return on investment (ROI) through energy cost savings associated with equipment efficiency is straightforward and transparent. Today the configuration and use of IoT solutions can deliver energy efficiency while helping OT and IT teams meet goals in additional cost savings, business continuity, and cyber security by working together. As a result, OT and IT, the two key influencers on business operations, can find value by investing in IoT solutions.

Cost Savings

Energy management will continue to play a critical role in the business case for investing in IoT in intelligent building solutions because energy savings directly impact the bottom line and support corporate goals for sustainability, resilience, and climate change including a reduced carbon footprint. The data profile of the IoT-enabled intelligent building generates the information for the c-suite about how building performance is supporting or detracting from enterprise goals. This level of insight is critical to positioning IoT offerings as executive-level solutions. However, the success of an IoT deployment requires buy-in from and use by the business units running the facilities, namely operations and IT teams collectively. As a result, vendors are focusing on applications beyond energy management so that they can address the key objectives noted above.

Specific financial metrics have become the backbone of the investment proposition for IoT. Characterized as the 3:30:300 rule of thumb, this guideline was the topic of conversation several times at IBcon because it provides more depth to the analysis of cost savings – a paramount goal for operations teams. The rule explains that if energy costs average $3 per square foot, then real estate costs average $30 per square foot, and employee costs run up to $300 per square foot. IoT vendors aim to demonstrate how their solutions reduce the significantly more impactful costs of space and people.

Speaking to the $300 per square foot metric, occupant satisfaction has become an influential consideration for investment in IoT intelligent building solutions. With the insight IoT offers, building owners and operators can improve their occupants’ experiences in multiple ways, such as:

  • Streamlined customer service in retail
  • Data-driven “wayfinding” for hoteling or collaboration space in commercial offices
  • Optimized repairs, diagnostics, preventive, and even prescriptive equipment maintenance for occupant comfort

Regardless of which sector a facility supports, occupant satisfaction is a priority for building owners. In education, multi-family residential and commercial/corporate offices, owners want to attract and retain the best students, tenants, and employees. In retail, owners want to keep shoppers happy and in their stores, longer and more often. IoT intelligent building solutions provide the framework for ensuring owners meet these objectives. The argument is that improved customer satisfaction ties to employee cost. When wayfinding and faster support provide a more productive experience, “employee cost” per square foot drops.

Another idea that arose on several occasions at IBcon was healthy spaces as a use case for IoT intelligent building investment, another way to lower the $300 employee cost. The principal is that if IoT-intelligent building solutions can improve indoor air quality and maximize comfort – and lead to healthier environments – occupants can be more productive employees, more satisfied tenants, better students, or more efficient operations/facilities managers.

Business Continuity

A combination of IT hardware, middleware, communications/networks, cloud/datacenter, and domain specific applications & analytics is the set of ingredients for an IoT solution that can integrate building systems in new ways. These components can be deployed with minimal disruption in comparison to the rip and replace process for traditional automation and controls retrofits. It is important to note that integrating an IoT offering with existing automation and control systems should amplify the ability to optimize facilities and not just simply replace legacy investments. This approach ensures that building owners and manager are making strategic investments in the right technology to utilize and even enhance existing technologies instead of deploying more technology for the sake of more data. The objective should be to invest in the mix of hardware devices and communications infrastructure necessary to support the software analytics that deliver actionable insights with minimal impact on the business operations within the facility.

Cyber Security

IoT is enabling a transformation of the approach to facilities management through networked controls and automation. The ubiquitous connectivity of the IoT intelligent building approach requires that corporate real estate (CRE) make cyber security a top priority. Any breach in security through the IoT solution will impact the other business objectives of cost savings and business continuity. CRE customers, therefore, need to understand the security of the solutions they choose to invest in to protect devices, data, and company IP using a layered security model. IT teams can further support the operations teams through their cyber security expertise rooted in their core responsibilities supervising and maintaining data centers, networks, and devices. The rules, best practices, and metrics IT departments have established can be extended to secure new IoT platforms designed to optimize commercial buildings.

Identifying the Right IoT Intelligent Buildings Solution

IBcon also showcased how investing in the right IoT solution can deliver cost savings, and ensure business continuity and cyber security. In fact, the right solution will be offered by technology partners that bring domain, technology, and service expertise to deliver these integrated OT/IT customer objectives. Furthermore, an IoT approach provides flexibility to deploy applications that meet customer expectations today and can evolve with users over time. IoT intelligent building solutions future proof the automation and controls infrastructure by allowing for enhanced analytics, applications specific to customer challenges, and greater computing power.

At IBcon, Intel was one of the high-profile vendors from the IT industry presenting partnerships that bring market-ready solutions to CRE or offer the critical ingredients to IoT offering development such as networking hardware, middleware, or niche intelligent building software applications. The table below provides links to video snapshots of the partner offerings including the full solutions from Prescriptive Data, Daintree (Current by GE), and Yanzi Networks.

Benefits of Representative IoT Partnerships, Intel Ecosystem at IBcon

Category Value Illustrative Partner
Distribution Market Adoption Arrow Electronics
Middleware Ease of Deployment with Device Provisioning and Data Collection CANDI Controls
Hardware Enabling Data Collection and Edge Analytics with Scalability Dell
Hardware and Software Monitoring and Analytics plus Ease of Deployment Yanzi Networks
Software Platform Ease of Integration plus Analytics Kodaro
Software Platform Ease of Integration plus Analytics Daintree (Current by GE)
Software Actionable Analytics Prescriptive Data
Services Integration and Deployment Volteo

(Source: Navigant Research)

CRE customers are looking for solutions that demonstrate domain expertise around facilities management, technical specifications that ensure ease of deployment and security, and services capabilities to support implementation and deployment. There is a wide range of technical skills in CRE organizations that may require deeper support from a IoT provider, and if IT and OT departments collaborate on the investment process, the likelihood of success for the project grows.

Siloes that once managed specific aspects of operating commercial buildings can now be broken down into a holistic and cohesive approach to facilities optimization. IT incumbents, including Intel, offer technical solutions—and specifically cyber secure solutions—that translate data into action, which can continuously improve facility operations for bottom-line benefits. These technology players can find a bigger seat in the facilities management market as they partner with other technology and channel partners to showcase market-ready IoT solutions. This year’s IBcon demonstrated the market momentum and the many opportunities customers can leverage through IoT partner platforms for building optimization.

 

Are Intelligent Buildings the Automated Vehicles of Real Estate?

— July 11, 2017

An interesting point-counterpoint discussion erupted during a recent panel discussion at the IBcon conference. The topic was intelligent buildings, and I was moderator. One of the vendor panelists drew the analogy between intelligent buildings and automated vehicles, which became quick-start fodder for a counter idea that increased intelligence may drive buildings, but where? This banter stuck with me. I see two reasons why we need to keep focused on the drivers of commercial buildings to realize the full benefits of the intelligent technology opportunity.

#1: Investment in Technology Must Direct Action

Forget about connecting everything—that is not what this is about. Instead, understand the business pain points, leverage what is already there and invest wisely. As the Internet of Things (IoT) retains its buzz, there is a tendency to focus on how to connect everything. But the biggest bang for the buck won’t come from connected toasters and refrigerators in office kitchens. It is important to stay focused on the customer’s perspective—what are they trying to improve in their facility operations, and how can intelligent building solutions drive cost-effective change? In my ongoing research and throughout conversations at events such as IBcon, I have heard the importance of delivering actionable information, not just more data. Solutions that deliver concise, actionable insight will be the winners in the race for leadership in the intelligent buildings market.

#2: Technical Advisors Should Be Program Partners

The intelligent building requires a new information technology skill set for operators defined by their mechanical expertise. The intelligent buildings market has developed around the idea of IT/IoT convergence, but there are still silos in most organizations. Opportunities exist for technical advisors to form partnerships to help managers implement programs that transform a commercial facility, campus, or portfolio into more intelligent buildings.

Platform Builds Partnerships

At IBcon, the conference floor was chock full of technology partners demonstrating intelligent buildings offerings. The IoT platform approach to optimizing commercial buildings requires partnerships in today’s market. There is no single vendor that can provide an end-to-end solution with the technical, service, and domain expertise necessary to support commercial buildings customers. Ideal partners bring together cybersecurity, integration, energy management, and facilities maintenance expertise alongside customer services, which can support the customer journey. Navigant Research found that, as commercial building owners and operators begin investing in IoT solutions, they look for partners that can scale solutions over time, offer longevity and pragmatism to utilize existing infrastructure and technology, and direct strategic ongoing investments.

The future is bright for IoT in the commercial buildings market because the infrastructure of data and connectivity is delivering the kind of insights customers demand to redefine the experiences in their facilities. Navigant Research suggests that, as the market matures, those vendors offering cost-effective solutions that are secure, scalable, and deliver actionable insight will win the leadership position in this rapidly evolving marketplace. For more on Navigant Research’s outlook on the market, read its recently published report, IoT for Intelligent Buildings.

 

Online to Brick-and-Mortar and Back Again

— July 5, 2017

As I strolled down Pearl Street, the center of local commerce, it was hard not to notice the shifting face of a small city undergoing an economic boom. Storefront overhauls and new construction flank the street from the east to west end. One newcomer caught my eye this week and made me think again about the debate of the potential death of brick-and-mortar retail. Warby Parker, the online eyeglass retailer, is setting up to open its doors on Pearl Street, bringing its cult following from cell phones to the door. This store is part of the company’s seemingly aggressive 2017 expansion to 70 storefronts nationwide.

So, what is happening? Amazon, the online retail giant, bought Whole Foods for $13.7 billion. Walmart is set to buy Bonobos Menswear for a reported $310 million. Do the big companies see online or in-person shopping as the future? I’d argue that the future is choice and technology-enabled convenience.

Smart Technologies to Redefine the Shopping Experience

Seamless access to products from our cell phones to the store counter plus technology-enabled in-store experience: this is the future of retail. The mobile/online access to goods has been the threat to the storefront for a few years at this point. What the recent moves by the retail giants tell us is that choice is critical. Taking a deeper look into the future of in-store shopping, the winners will offer a tech-enabled experience for convenience and fun.

Intelligent building technologies were long touted as solutions for cost savings via energy efficiency. While this foundational benefit remains important, the framing of solutions around the Internet of Things (IoT) changes the value proposition. Once a facility—in this context, a storefront—has been equipped with a backbone of sensors, gateways, and controllers to feed analytics and services, the IoT applications can offer wide business insight. Store managers can suddenly track shopper movements to optimize product placement and speed up checkout times, yet ultimately make the experience more enjoyable for their customers to keep them in the store as long as possible.

Evolving IoT Retail

This IoT approach to facility optimization has many energy and operational benefits, but the change in the experience for the customer is key for retailers. A few recent examples of IoT for retail showcase a new tech-enabled experience and provide a spotlight on what the future of shopping may look like for the stores that survive.

There has been a lot of speculation on the integration of Amazon Go and Whole Foods. As one article explained, “Amazon Go is clearly a new benchmark for IoT retail. With its system, a store can at once know the real-time status of every item, attribute these items to individuals, and then instantly bill them for it. The behavioral analytics potential of linking all stages of the supply and purchasing funnel is immense, allowing Amazon to pursue a more agile and responsive brick and mortar retail strategy. Customers might even be able to get real-time suggestions based on their shopping lists, or even get coupons for items they’re mulling over—all because of identity.”

What we know is major investments are shaking up retail. Any major retailer that fails to embrace technology faces real threats to its long-term viability.

 

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