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Smart building technology promises to revolutionize our built environment but as yet it really only applies to the biggest buildings, the 10% of commercial real estate where return on investment (ROI) is attractive enough. For the vast majority of buildings, the small and medium sized commercial real estate, this revolution is yet to take shape – and there really is no revolution without this fundamental group.

Until recently, smart building technology, the kind that monitors and controls ventilation, heating cooling, lighting, power and others systems just didn’t make sense for buildings under 100,000 square feet. Smart building management technologies typically cost upwards of $2.50 per square foot, so it can take years to realize ROI for small to medium sized buildings. This price point means that nearly 90% of buildings contain little or no smart technology at all.

However, recent hardware and software developments are beginning to address this issue. A new generation of low-cost, easy-to-install internet of things (IoT) sensors, switches, and gateways are reducing initial capital investment to open up the smart buildings market. The cost of hardware has been steadily reducing since the inception of the IoT, what has allowed us to turn a corner is the ease of installation. By reducing installation costs, the ROI for IoT in small to medium sized buildings is now reaching feasible levels.

The other game changer for buildings with a budget lies in the cloud. The IoT is not just about sensors, it is about gathering data and then analysing that data for actionable intelligence. All this Big Data needs to be stored and processed, an expensive proposition for the smaller entities we are talking about. With the Cloud, the masses of data generated by IoT devices at the edge can be gathered into cloud-based management and analytics services, over existing networks. The cloud brings high level analytical capability to the average user.

The cloud also plays its part in reducing the cost of hardware. Even small buildings may have hundreds, thousands, or potentially millions of sensors across their facilities. With the cloud there is no need to use more expensive sensors embedded with computational power. Instead, data from these numerous sensors can be passed to the cloud from all these sensors and processed in aggregate, saving money on the sensors and on the energy they require.

This potential mass market shift has not gone unnoticed by the industry’s biggest players. The Intel Building Management Platform, for example, is now available off-the-shelf. While Google’s Cloud IoT Core and Microsoft’s Azure IoT Suite are on the frontline of normalizing IoT data, making it easy for any developer to create apps that can make use of the huge amounts of intelligence IoT data holds.

“Just look at how serious Intel is about this market. And when the big news is about hackers gaining access to traditional BMS, then the credibility conversation quickly shifts from VAV fault detection to critical network security,” says Steve Raschke, CEO, Candi Controls.

Meanwhile, Lucid, Altair, Losant, Leverege among others have begun to offer cost-effective, cloud-based smart building applications and easy to use enablement platforms in order to create value from IoT derived data.

We also increasingly see building controls firms like Schneider Electric, KMC and Tridium, developing their IoT and cloud offerings in reaction to this mass market shift.

“Don’t forget that these companies also have massive sales and distribution channels. They’re actively targeting IoT markets that show significant opportunity. Since IoT and cloud services are shifting building controls solutions from operational technologies (OT) toward information technology (IT), it’s important to understand that new solutions backed by these powerful players will not only wrap in the expertise, but also may carry higher credibility with customers’ IT departments,” highlights Raschke.

The sheer fact that companies like Google, Intel, Microsoft, Dell, and Amazon are putting so much emphasis on the building industry underlines the tremendous shift taking place. Facilitating technology for the biggest buildings is a market that would be of little interest to corporations of this size, but a market that includes buildings of all sizes is a revolution any corporation would want to be part of.

“The building controls industry is ripe for disruption. Systems integrators and value-added resellers that target smart buildings of 100,000 square feet or less are poised to take advantage of this tremendous new opportunity,” concludes Raschke.

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