August 2005
  
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Organizing Our Industry - What Next Part 3

    Anto Budiardjo
President & CEO,
Clasma Events Inc.

Contributing Editor

In this four part article on the future of Building-IT Convergence, I will cover the driving forces, trends and predictions on how our lives will change as convergence will take root globally. In part 1, we look at the true impact of the Internet, in part 2 we look at the change Convergence will bring to the stakeholders of our industry. Part 3 will explore what needs to change in the route to market of building system solutions and part 4 will tie it all together with some predictions and suggested action for those interested in playing a role in the future of buildings.

By this point it is important that we agree upon some key assumptions before we talk about what needs to change. The most important assumption is that if you have read this far, you have accepted the fact that the buildings industry is changing and that you will need to change in order to participate in tomorrow’s world of building-IT convergence.

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We can safely assume that we understand new technology is all around us, but the impact of this must not be underestimated, especially in this case because we’re not talking about an incremental change, but a whole revolution of new products, services, tools and practices. These new technologies require a completely different approach in many cases.

Another assumption we should accept is that new players, new products and new services will come into the future of buildings. Your future competition will thus not likely to be your old foes; they will not compete with you based on any constraints in which you have operated before – Beware!

I would like to talk about change from a number of angles.

Perspective

Lyrics from a Paul Simon song reverberate in my mind when talking about perspectives: “One man’s ceiling is another man’s floor”.

There are many areas where this is relevant in this discussion:

  • One man’s problem is another man’s opportunity

  • One man’s new technology is another man’s old technology

  • One man’s core business is another man’s peripheral [uninteresting] business

One of the most significant challenges I see is bridging the gap, the gap between the buildings systems industry and the new building owner, specifically including IT/enterprise-minded folks. The significance of this gap cannot be underestimated, not if building owners are going to benefit from what many understand can be implemented today.

So, some could wonder who’s job is it to make all of this work? Is it the building systems industry or the other side—the IT industry or enterprise or owners? When I talk with many in the building systems industry, there seems to be an expectation that building controls and automation is something that IT-centric owners need to care about, and it is in their best interest to understand the challenges, technologies and benefits of all these wonderful advances we are making to operate smarter and safer buildings.

While the early adopter owners would make the real effort to understand what lies behind all of these changes and advancements, we need to accept that early adopters are a unique breed of people and that they are in the minority. Not only are early adopters different from the mass market, they are the exact opposite in terms of their behavior, expectations, risk adverseness and general buying process. This is one of the classic challenges in marketing new technology; vendors get good traction with early adopters and simply ramp up their business expecting there to be 100 times the opportunity based on the same behavior shown by the early adopters.

EasyIO While there may be 100 times (or more) the opportunity with the mass market, we must adjust how we go about getting business from the mass market, and be sensitive to the way they make their buying decisions. This is where perspective comes in—we have to turn things upside-down in order to speak to this new, more pragmatic customer.

The principles of doing this are easy: don’t talk about what you have to offer, instead talk to the customers about their problems. When you understand their problems, you can adjust your offering to solve them. Then communicate your offering as a way to solve their problems-- NOT because of any other reason, however cool or wizzy your technology offering may be.

Rick LeBlanc from Siemens, at his keynote at BuilConn in Dallas this March, made a point to support this. He imagined a board meeting of a school district and asked what the likelihood is that they would have a debate on LON, BACnet or XML on their agenda? The answer is not very likely; the board members care about educating their students, budgets, teacher performance, competing with their neighborhood district and so on. They may have an agenda item on facilities, maybe their running costs, security concerns, energy savings and maybe sustainability initiatives, but they are unlikely to care about how these are executed. And as a tax payer I have to say that this is right; I want my dollars to work toward better educating my children.

In part IV of this article next month, I will detail specific actions that you can take to change your perspective. In the meantime, as you go about your business try to do one thing--listen and observe different perspectives seen in circumstances around you when you visit your customers, your partners and also your vendors. In all of these cases try to understand their problems, for if you can identify their problems, you are half way to changing your perspective.

Information Technology

Unless you’ve been on Mars the past few years, you know that Internet technology is now the only standard around as far as managing and distributing information. When I first heard the term “Information Technology” in the late 80s, I must admit I didn’t get it. But now it is imperative to fully understand what IT is all about and why it is going to play a central role in your future.

In a way, much of technology is about management, distribution and information analysis. The carrier pigeons used in years past are essentially a technology to carry information from one locale to another. The Guttenberg press was a critical technology for the distribution of information, so are the semaphores used in the past and the earliest data process systems that have dominated most of the 20th century.

While you may think that building automation is about controlling comfort and security (among other things), the electronic systems that we now use are systems that manage information about comfort, security and other systems that we have in our buildings.

This is the change you need to consider with respect to technology. And in this change, you will quickly realize the value of this information has a potentially far greater benefit to owners at large compared to the value of the information in actually controlling comfort and security. Here we have to talk about that wonderful word used more and more in business: value.

Control Solutions, Inc So far to date, when you put a sensor in a building, you would consider the value as being the sensor’s ability to control some piece of heating or cooling equipment. That may have a value of $x per point (or per sq ft), because someone would have placed a value on the comfort of the occupants in the building.

When you now use that same sensor as one of many sensors contributing to an energy management system, all of a sudden the same point is worth more, let’s say $2x because to the building owner, that sensor can contribute to energy cost savings. The incremental value was gained purely by the information flowing out of the sensor – what I would call the Information Value.

Now imagine if that same piece of information can be supplied to an enterprise system, one that can correlate the temperature in the facility to the performance, efficiency or risk mitigation aspect of the business. These (performance, efficiency and risk) are very valuable commodities to organizations in the 21st century, and if that sensor can contribute some critical value, the worth of that lowly sensor can now be argued to be $4x.

Now here is the crux of all of this: When you sold the sensor as a building automation component you may have had to value engineer that sensor because you were selling to the person who valued it as $x, maybe at 20% margin. Would you not rather be selling the true value of that sensor (at the same cost to you) at $4x, which by my calculation increases your margin to 400%?

All of this came about by a change in how you look at the value of information, something that Information Technology allows you to do.

Hands up those who want to increase their margin from 20% to 400%.

What you sell

Stop reading for a moment and look around your office or business. What is it that you sell?

For most readers of AutomatedBuildings.com, the answer should be two things: first, some combination of electro-mechanical products and second, some array of smarts, networks and an interface to people running their facilities.

Let me tell you something about the IT world. IT systems available today can store, manage, analyze, report and make sense of an amazing amount of information to achieve a variety of business benefits. Just consider the huge data warehouses that marketing firms have, databases that Wal-Mart has, not to mention huge government databases that store more personal information about us than I would care to discuss. These systems work on a premise that the more data they have—assuming it is stored and well structured—the more valuable that information becomes. So much of the information stored to date is information about people, 250 million if you just take the USA.

Reliable Controls These systems devour data, they seek out data and turn data into usable and actionable information to improve business and reduce risk.

Now look around your office again, and I propose that every single sensor, actuator or device you install in your customer’s facilities represent a piece of information that could be beneficial to the building owner (the financial / business guys, not your engineer).

And guess what? You install the source of all that information and you have “control” of that information; you are delivering that new Information Value.

And the number of information points in buildings is growing. As an example, the new Terminal 5 facility at London’s Heathrow airport is reportedly to have 1.3 million points of information in its building automation system. Yes 1.3 million in one building!

As a side note, the reason why proprietary systems are bad is that it is very difficult to gain the benefit of information if you cannot easily gain access to it. Open systems, especially IP-centric technologies such as XML and Web Services, instantly enable the extended value of all information in buildings.

So, what you are actually selling in the new age of Building-IT convergence is information about your customers’ buildings. Information about how it is operating, how it is running, how the occupants are being productive, how risk factors are potentially affecting their business and so on. You shouldn’t worry about how that information is to be used; your role to play is to liberate all of that valuable information in addition to providing the previously defined values of comfort and security.

If the data warehouse and analyst people are having a field day extracting information value from 250 million human “points” in the U.S., imagine how much fun (and thus value) they will have with the hundreds of millions, or perhaps even billions more points that exist in buildings.

To quote Benjamin Disraeli, the famous 19th century British politician, “As a general rule the most successful man in life is the man who has the best information”.

I have news for you: You are in the information business.

Action stations…

Next month’s concluding part of this article will outline specific actions that I feel different sectors of the building systems industry should focus on to gain some benefit of this Building-IT convergence.

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