Building controls are vital for the efficient operation of facilities. Any significantly sized commercial building will have at least an HVAC control system, a lighting control system and elevators managed by software. Many large buildings also have access-control systems and likely have some data analysis solutions to monitor operations.
However, these systems are rarely integrated due to the cost and complexity of doing so. Such an engagement requires service contractors to manually connect systems.
Additionally, control technology found in buildings may not be modern. This is because most of the software control systems are sold with the hardware, such as the elevators, lights and HVAC system. This leads building owners to tend to upgrade the software only when they also upgrade the hardware.
Most hardware systems in buildings have long lifespans, but the software operating them can become obsolete quickly. Many of these systems run on-premise (rather than being cloud-based) and have been deployed in some form or another since the 1980s or '90s, before the internet age. This means they may be lacking in functionality or usability compared to what is expected today.
Many technology vendors see an opportunity: separate the hardware from the software. This enables a more robust technology product to control the hardware that already exists in buildings.
But this raises a key question: Where should the control system reside? Should it be separated from specific hardware systems, so it can act as a universal control platform?
To use an example from consumer electronics, buildings should work more like a computer and its peripherals. In personal computing, everything uses standards like USB or Bluetooth. Users can connect devices within seconds with no technical acumen.
As new technology and products are introduced, they can replace obsolete components quickly and easily. Unfortunately, this is not how buildings work. Even modern technology, such as the smart thermostat, is not “plug and play” with broader building systems.
Where should these capabilities reside? What type of vendor is best positioned to deliver such capabilities? These questions were explored recently at GTM's Grid Edge World Forum.
Service-driven or self-service offering model?
Many of today’s large building vendors are service providers. They sell hardware and the integrated software. Many traditional vendors also make a significant amount of money operating and fixing the products on behalf of their clients.
Some initial smart building startups focused on disrupting this model and letting the building owners themselves use data to maintain their buildings. While this model is less capital-intensive, it does mean that busy facility managers have to take on new responsibilities. All parties agree that data analytics can be a compelling offering; they just need to be packaged correctly.
Now traditional building vendors are delivering these data-driven capabilities, though they may be in the background and support existing service offerings. It’s unclear if building owners and operators will continue to prefer technology-enabled services or software they use on their own.
One-time cost or recurring software-as-a-service?
Most building software is purchased once with the hardware it operates. The main recurring cost is for maintenance service contracts. Many analytics companies with software-only services sell a recurring license fee, which typically is less expensive, but needs to be paid each year.
Recurring service contracts deliver an outcome, while recurring software licenses deliver information that can be used to achieve an outcome. While the recurring license fee model has been successful in many software markets (enterprise resource planning and customer relationship management software, for example), it has not yet disrupted the building management space.
For example, most lighting systems are purchased in full when the building is constructed. Smart lighting vendors typically offer a recurring software license for the lights, control system and analytics. It is not clear that building owners and operators are willing to pay a consistent fee each year for the lighting system when traditional vendors have an upfront one-time payment model.
On one hand, the data collected continuously does have value to building owners, operators and occupants and enables ongoing persistence or energy savings and reduced service costs. But most building owners are not used to paying for their lighting system each year, and this shift may be too significant to be widely adopted.
Integrated systems or not?
In most buildings, the critical systems are purchased from different vendors and maintained under separate service contracts. This is because most buildings are built with separate subcontracts for mechanical (HVAC), electrical (lighting), conveyance (elevators/escalators), and other systems. This means that each will be assessed and selected separately, with any type of integration to occur downstream -- if it occurs at all.
This may be the most cost-effective option to deliver all the specific features that the building seeks. But it makes it harder to realize a smart building that is operated as an integrated system.
On one hand, a smart lighting system can remain independent of the elevators and HVAC. However, the data being collected by the lighting system, such as detailed occupancy and location data of workers, can be used to optimize the elevators (turning some of them off during low occupancy to extend the time between scheduled maintenance) and dynamically change the temperature set points to optimize comfort and energy efficiency. Some buildings have integrated their systems to yield these benefits, but this is not the standard approach.
The open question is whether integration remains a custom engagement (which is costly and would limit the addressable market), or if most vendors will coalesce around industry standards (so that integration would be more efficient and cost-effective).
As an example, smart homes are becoming easier and cheaper to deploy, with the rise of self-service integration platforms from Amazon, Apple and others. Similar trends could drive standardized and user-friendly integration in commercial buildings. The market for systems integration in buildings is expected to grow to $971.3 million in 2025 from $89.9 million in 2016, but there still are some challenges to widespread adoption.
Vendor partnerships or not?
Internet pioneer Steve Case, in his book The Third Wave, highlights the need for companies focused on the “internet of everything” to partner with each other to deliver compelling and valuable offerings.
A single company likely will not develop a disruptive solution for an industry seeking technology solutions for physical things, especially when there already are many leading vendors serving these users. But technology “disruptors” could partner with these existing leaders to deliver compelling products to end users.
While there are many recent instances of legacy building vendors partnering with technology giants, building operators often have not yet realized the fruits of these partnerships. Similarly, will the large established building vendors continue to own the customer relationship, or will they be suppliers to new prime vendors with stronger technology?
Another open question includes the level of control and automation that is desired. Do owners and operators want the building to operate autonomously, or would they prefer to just seek incremental improvements to the status quo of human-defined set points and scenarios? The technology necessary for a truly autonomous building is approaching, but will it be widely adopted?
The future of building control is challenging because there are no simple answers to the questions above. Additionally, different vendors have their own views on how buildings of the future should run. Operators and facility managers are focused on running their buildings and may not want to make significant changes to their technology systems.
It’s unclear what will happen in the future. But with time, the future of building control will become less opaque.
Joseph Aamidor is a senior product management consultant focused on smart buildings, IOT and energy. He helps startups and established industry players understand the smart buildings market, develop competitive strategy and forge partnerships. He previously served in senior product management roles at Lucid and Johnson Controls.