Article - January 2004
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What's in a Name?

The answer depends on the time frame you’re talking about. 
Let’s delve deeper.

Anto Budiardjo
President of Clasma, Inc.

What's in a Name?

Owners talk about facilities management. The HVAC industry talks about building automation. Energy specialists talk about energy management systems. Security professionals talk about security systems integration. And, the IT community talks about corporate IT networks. When it comes to buildings, what is the difference? Why are there so many terms? And, aren’t all these disciplines in fact the same thing? The answer depends on the time frame you’re talking about. Let’s delve deeper.

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The Past…

In the past the world saw all the different systems that go into buildings as separate things. This is not surprising since these systems were designed separately, specified separately, sourced separately and maintained separately. In fact, all these separate systems evolved from their particular industries, and each of these industries has matured over the past few decades, segregated in its own world with its own rules and expectations.

Thus, when talking about technologies, these systems are again very separate. The lack of available technology to truly bridge the gaps (and industries) plus the lack of reason to bridge them together have led to the development of numerous networks, standards, approaches, and of course, products in each industry. And, naturally within each industry there has often been competing solutions from technology vendors with justifiable objectives to dominate their market – and why not?

The past few decades have been a developmental phase for all these disparate systems; no more than 20 to 30 years ago systems within buildings were very minimal. Air-conditioning and heating was controlled by a time clock (if controlled at all), security was facilitated by lock and key, and the IT department didn’t even exist. Life was simple back then.

Time clock manufacturers started to see an opportunity to develop better methods of managing energy usage especially during the ‘70s and ‘80s when the world woke up to discover the fixed limit of energy resources and more importantly to most, the sky-rocketing cost. Thus grew up the energy and HVAC industries with opposing objectives to ensure occupant comfort and reduce energy costs. Meanwhile, lock and key manufacturers started to develop electronic access control systems, and TV component manufacturers saw an opportunity in video surveillance as a potential lucrative business.

The IT industry also had a rough ride through the ‘70s and ‘80s. I can recall when every year there was an expectation of it being “the year of the network”, and Novel, IBM, Microsoft, Banyan, Apple and many others were vying for dominance. This battle is thankfully over; the winner is TCP/IP, an open protocol that started life in the government and academic arenas. With the clarification of a standard came what can only be described as market explosion. Standards do that, they make the pie bigger.

The Present…

This brings us up to today where we find ourselves in the middle of a convergence. HVAC, security, lighting, energy, utilities and life safety are converging with IT in buildings. If you haven’t noticed it yet, then listen closer to the extensive discussion and debates about the subject, and jump on the bandwagon right now before it’s too late! If you don’t want to believe that it’s happening, I suggest you leave the industry and start a pizza delivery franchise.

What’s going on today can appear very confusing. Those who thought they were contractors are considering being integrators; wholesalers are thinking they should become distributors; some security dealers see they might fare better if they were a service company while many others are looking to obtain some level of software, network or IT expertise.

So this goes back to the original question of what should we call ourselves in this developing space? There is no simple answer right now. This is a process, and only time will resolve this. What we need to do is analyze and dissect the answers to a number of very telling questions on behalf of this evolving industry.

The Future…

Control Solutions, Inc Let’s break down the attributes of this industry’s future and see if it helps to answer our question.

What is this new industry called?

This is a key question. It is unlikely that the name will be any of the existing names at the beginning of this article. Each is too narrow in its scope simply because each was developed by only one of the many disciplines that make up the buildings industry.

Before we try and answer this question we need to know what the industry is all about. First and foremost, this industry is about buildings whether they are commercial, industrial, corporate, government or otherwise. We are not talking about homes, or what happens within the buildings, or even about things outside of the confines of buildings – although we should include the things that happen within the perimeter of a building.

Secondly, we are talking about systems. By definition, a system is a collection of components that work together in a coordinated matter. Coordination is the essence of our objective: to make everything associated with a building work together for the benefit of building owners and occupants. Those who think that components rule should remember that in the future all components will be part of a system.

So ignore systems at your peril.

Robert Metcalf, the inventor of the Ethernet has a law named after him. The Metcalf Law states that the value of a network equals the square of the number of nodes on the network. The value of a building system when networked thus increases with every added device, and value is, after all, what we’re seeking to deliver to the building owner and occupant. So, network is a key component of the description of this new industry.

Putting it all together we have Networked Building Systems (or NBS for those who demand an acronym): The networking of buildings-related systems for the betterment of the building owners and occupants.

Who are the leaders?

Every industry needs leaders, and this new one we’re carving is no exception. If I knew who the leaders are I’d be calling my broker to buy stock in those companies. In lieu of that knowledge, let’s just look at the qualities required for leaders.

The leaders of tomorrow will be those companies driving change, not dragged by change. Microsoft did not invent TCP/IP, but Bill Gates woke up one day and decided that this Internet thing will actually fly. (There is a famous email he sent to all Microsoft staff to this effect.) From that day onwards, Microsoft drove the industry and established a very significant leadership role for itself. Who is going to wake up and realize that NBS is happening and take a leadership position? Any takers?

There will be multiple leaders needed within the scope of NBS. We need technology leaders, component leaders, software leaders, tools leaders, distribution leaders as well as service leaders. We also need leaders in peripheral areas such as sensors, actuators, gateways, monitoring centers as well as in niche and vertical areas such as hospitals, schools and airports.

Leaders will also be required in completely new areas of businesses. We need to look out for an eBay or of NBS. We need companies that can create new business models enabled by the new dimensions of the Internet as well as technology convergence and market segment convergence. So let this be a call to action and a contribution to your strategic business planning sessions. Is your company aspiring to become a leader in this new market? If you’re not, someone else (your competition) probably is!

How do these solutions get to market?

If there is one thing for sure it’s that the future route to market will be different from the past. How can one be so sure of this? There are a number of major reasons.

Firstly, as industries and technologies converge, the delivery method for the solutions will converge. In the future, building owners will not purchase a security system or an HVAC system because the two (and many others) will be converged. Building owners will be looking to purchase a system that will embrace all the disciplines involved with NBS. You don’t have to look far to find examples of this, the convergence of digital electronics with computers is a blatant example. In days past you would go to a camera store to purchase a camera, an electronic store to purchase a television and a computer supplier to purchase a computer. Look at the marketing that Dell and Gateway are doing today; they are providing a single source for all of the converged technologies.

Reliable Controls Secondly, the technologies involved in NBS will separate the integration element from the functional element. Integration – which includes IT network design, user interface consideration as well as consideration of the links between applications – is a different from knowing how to install HVAC, security and lighting systems. In the new world of NBS there will still be a need to deal with PID loops and air balancing, security risk management, illumination strategies and all the discipline-specific skills exclusive to the various systems that go into buildings. The main difference is that each of these disciplines will have to be aware of an integration role within the IT infrastructure. Maybe these tasks can be done by the same organization, maybe they cannot; it all depends on how organizations evolve in the next few years.

Thirdly, the impact of the Internet will force a change in the route to market; we have seen the Internet do this almost everywhere we look. The most obvious change is the user interface to buildings. Whether you call it HMI or GUI, the old model of an operator station sitting in the security or energy manager room will be replaced by some form of web-based solution. But the change does not stop there. The Internet allows for a completely different model where servers can be distributed and hosted off site providing very significant maintenance, cost and security benefits to the building owner and operator. So look out for building portal type of solutions.

Lastly and probably the most dramatic potential change is that commoditization will drive many of the components required for NBS to be channeled through distribution and wholesalers. Distributors are best able to provide choice to contractors and building owners when it comes to commodity products. Look out for the emergence of existing or new distributors that will start to carry all product lines required for NBS. As with any distribution model, they could carry multiple and often competing product lines. Also keep your eyes peeled for distributors who will provide added value such as technical support and engineering services.

What are the opportunities?

As with any change, opportunities abound for those who embrace the change or at least understand what impact the change is likely to have. Opportunities lie in a number of areas:

Established, well-known companies have the opportunity to re-establish their brand in the new world of NBS but only if they accept that the future requires a different approach from the past. Attempting to force the old paradigm in a new environment guarantees they will go the way of Wang, Digital, Banyan and many others.

New roles that will be required in the future realm of NBS such as distribution are open for companies that are either established or already know how to conduct themselves in these new areas. Additionally, contractors, integrators, dealers, consultants and other specialists also have enormous potential as long as they understand the new way. Smaller companies are best suited to explore new ways of delivering value in the route to market of tomorrow.

Clearly new technologies are one opportunity, but beware that the industry will not accept technology for its own sake. Technology has to be marketed and presented for the purpose of delivering tangible value to building owners as well as to the distribution channels tasked with delivering this value.

The most significant opportunities are in the types of businesses that do not exist today. Here we’re looking for the eBay and of buildings. We need visionaries, people who understand what can be done with technology and who have a deep understanding of the problems and business nature of tomorrow’s NBS industry. Foremost among these opportunities are Internet-based hosted businesses, those providing highly scalable solutions delivering immense value that require little or no investment on the part of the building owner – what a combination!

What are the challenges?

contemporary The biggest challenge is the temptation to fight the change and try to maintain the status quo of the past. The IT and electronics world is littered with these: Wang, Digital, Banyan and Zenith to name a few.

Other challenges can be dealt with normally. Learning new technologies only requires training and education, and competition can be dealt with by re-evaluating your company’s plan of delivering value to your customers. One challenge could be that you have the wrong customers—well change your business to suit your customers, or fire them and get new customers! Selling the wrong product is the easiest challenge to deal with; in the coming years there will be a plethora of old and new players vying for your business.

In the how-you-run-your-business area, a very big challenge is trying to do everything yourself. The world of tomorrow is very complex. You need partners, networks of expertise and familiarity with that wonderful new word “coopetition”—a strategy in which businesses cooperate with their competition. The tricky part of coopetition is that someone may be your ally in one area but your competition in others; the line can get pretty fuzzy. Get used to it; it’s a way of life.

Then, there are some challenges outside your area of influence. One glaring example is the way the construction industry works in the midst of decades of deeply rooted habits such as the building specification structure and the manner in which contracts are awarded. The advice on these types of challenges is to communicate that there is a better way, and if the resistance is too strong, maneuver around them and find something more productive on which to spend your time. Entropy will deal with them!

So, now what?

We started with the question, “What’s in a name?” It’s subtle question, but as we change the name of what we do, with it should come a new approach and certain liberation from the limitations of the past. So, go gather your management team, wipe the whiteboard clean and write NBS in big letters.

Then, just let creative juices flow…

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