May 2011
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AutomatedBuildings.com

Innovations in Comfort, Efficiency, and Safety Solutions.
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BMS 2.0
Monetizing building services
Nino Kurtalj
Nino Kurtalj, President,
Elma Kurtalj Ltd

Contributing Editor

The true value of Building Management Systems is represented as an intangible asset by almost 95% of our industry.  Each of us, in our industry, must have someone who can recognize the actual system value. In most cases, that will mean that they can see through the balance sheet beyond the value of the components!  If they truly understand the concept and what is achievable by today's connected and integrated BMS, the road towards fast monetization will open instantly as a real perspective of making the intangible capital visible, instead of leaving it hidden within our facilities. 

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Therefore, it will offer a lot of benefits to users and professionals, by changing the business model from the typical industrial economy to a knowledge economy model.

Truly, the real question is how to make this value visible. How to monetize? For example, there was a time when food was just food, not organic, GMO free, locally grown, grass feed... Today we are trying to monetize food through labeling, and what really we are trying to do is to make the invisible visible. BMS 2.0 will do the same for the Building Management System market. It will create a different business and technological model than the classical BMS systems.  Therefore, it will offer a lot of benefits to users and professionals, by changing the business model from the typical industrial economy model to a economic model.

We all are perfectly aware that the investors and banks like only what is possible to be monetized instantly. However, it is known that the companies and enterprises that are able to recognize larger systems can create a business opportunity by that recognition. If we assume that money is a social relationship not a technology, and anticipate that money represents productivity, your productivity and my productivity, and that there is for sure a certain conversion factor, we are really near to a BMS 2.0 eco system.

We are bombed with information
by all media providers basically saying that we have passed our carrying capacity as a civilization. Another side of the coin is that the general public feels absolutely helpless to find a way out. Human production and consumption patterns are no longer sustainable. The earth is overheating! The whole eco system is in danger, and we just do not know where to start. Numerous examples around the world prove that we can imitate nature's designs within a production model. Nature perfected it over millions of years by using the waste of one product as the input for another. This kind of behavior will revolutionize industries.  Consumption of such products will be a positive action towards sustainability.  The critical change happens when we understand that we have to think about the earth as a conceptual model which as an entity consists of systems and cycles. Establishing our living environment as a set of global metabolite profiles – we will actually start the 3rd industrial revolution!

We can see rating systems like Leadership in Energy & Environmental Design, legislation directives like Energy Performance of Buildings Directive (EPBD) which, in essence, force engineers to think about the design of buildings in a very extended way. Among the buildings, they have to count on the environment too. They have to make our interventions into the eco system sustainable.

BrightCore was created following all these ideas. It is the sustainability and monetizing what really makes it different from most of the other BMS tools and frameworks today in the market. So, what is sustainability within BrightCore? It is the  possibility to use various engineering products and the systems manufactured by different vendors with different protocols as one entity without gateways, sustaining the lowest possible financial entropy of the system as a whole. That really changes the way we do the modernization of the systems, as well as how we perform the speed of the process upgrades and changes. 

Figure 1

How the BMS 2.0 could help in monetizing? 

By destroying the boundaries between unreal and real we are creating the value. So what is real? It is data point values from the field as well as services that we have to perform. What is unreal? It is the ability to interact seamlessly with the systems and experts from the internet infrastructure. Typically, monetization could be shown by savings achieved through optimization of maintenance through usage of secure, manageable and reliable remote infrastructure.

In the integration of, for example 100 buildings, which are as an illustration, sized around 20000 ft2 into one manageable system. We will be able to achieve significant labor-hour cost reductions and in the same time we will be able to have managed and monitored building behavior by the experts who will be able to offer professional quality
never before achieved for a fraction of the price to the building owners .  We can say that we will for every $1000 spent for maintenance-labor save at least $2000 per annum. That will give us a maximum of two-year returns of investment. In the larger multi-building structures there will be a lot of possible services that could be offered to the users that will additionally extend our profitability matrix.  

Figure 2

Engineers and Managers for years have been educated to fit into little slots designed by the industrial age, called jobs. We are no longer in the industrial age. We are living in a hybrid world to which we must adapt. The challenge that lies before us is that we were trained to follow instructions. Now, we must rewrite the instructions themselves. So, what will we do?  Will we write the instructions for the world we are living in, or we will follow ones written for the twentieth century?  Therefore, the real issue is in understanding that the old rule book no longer applies. 

The BMS 2.0 frameworks should act as an organism with a possibility of harboring another organism within itself. Such an approach could be used to support new, sustainable intelligent facility market growth. The key model approach within BMS 2.0 frameworks has to be an open, networked ontologically designed platform, with the ability to talk seamlessly to most adopted building management protocols as well as  to generally accepted ICT services. For example, Identity Management could use and communicate for instance, with LDAP and Radius services. This could help to share information streams with other building management service providers and to sustain an interaction with end-users in more scalable and efficient ways than we can imagine.

BMS 2.0 could be understood as a two-sided business model, delivering value to and generating revenue from 3rd party service providers as well as end-users. The two-sided business model will have significant consequences for the design of existing building management services. Buildings will be able to sell their behavior information to the service providers and the providers will be able to sell management services to the buildings.  All that will create opportunities for new revenues as well as new Platform Services. We are sure that in coming years this new type of business model will deliver significant growth in annual revenues to a new breed of service operators and in the same time dramatically enhance the value of the industry as part of the wider digital economy. To realize this ambition re-thinking of our organizational and technology structures will be a must. Furthermore, we will have to re-think how we will collaborate across the boundaries of a wider ecosystem. For the very beginning we have to establish a social currency which includes among others things, energy efficiency as well as energy sustainability as an important part of  the corporate management ecosystem.

J2 Innovations BMS 2.0: A new vision

To resolve current BMS issues, learning from the structural changes taken in other industries where vertical integration was weakened, will be our first assessment. We will have to change priorities. We will have to shift to revenue growth via wholesale and business-to-business services, rather than just pushing the end user BMS system installation revenue. We will have to establish a conduit for business to customer (the buildings) interaction, rather than just selling hardware and BMS software to the end users then leaving them, until they decide to reconstruct the system. We will have to treat customer data as a valuable by-product, not a form of digital waste. And at the end, creation of  a universal service process platform performed across many industries, will exchange competition between vertical services (e.g. Facilty management, Security's management, Maintenance services,...) to collaboration with the universal environment.

Figure 3  

A new business model

The future BMS industry structure comprises the following functions:

1.    Infrastructure services.
In the long term BMS passive infrastructure will become part of a completely different contracting business, and not part of the BMS industry at all. Rather than building duplicative networks, we have to free up the owner of the capital to invest in ‘BMS network edge’ assets. BMS providers should aggressively pursue network sharing among building services and outsourcing initiatives.

2.    A service retail arm.
Business Model for offering of the packaged digital lifestyle products and services. For example, a wireless smart phone application as the console for BMS local functionality. Today, we see that innovation is centered around personal communications products, and mostly applications are integrated closely with the online services. The service retail arm should invest in home and office network applications, and these assets will form part of the network interaction capabilities that the wholesale division can re-package. It will also spread the range of virtual goods and services available through integrated e-commerce, identity, billing, operations and support building infrastructure.

3.    A wholesale delivery platform.
Compared to today, this platform will address a much broader range of problems. It will turn competitors into customers, rather than create threats to our revenue.

4.    A business process platform
Organized for creation of BMS value-added services (BMS -VAS) will help to extract more value from the customer data assets through collaboration with a BMS service provider, and open the exchange process from invisible to visible. This service model will help in the monetizing of a wide range of cost efficiency and effectiveness problems shifting our intangible assets to tangibles by the simple concept of treating customer data as a valuable by-product, not a form of digital waste.

BMS 2.0 could be enclosed within five cores as value-added services:

•    Identity, Authentication & Security;
•    BMS usage beyond building professional staff through BMS end user personalization;
•    Customer data as a product & Biz Intelligence;
•    BMS Service Sales;
•    Customer Care & Servicing

Within the BMS 2.0 business model, we can assume that we will have upstream and downstream customers. For the upstream customers, we are assuming Developers, Governments, Media's companies, Telos, ASP-s. As downstream customers we are assuming buildings, employees and building owners. Most of the needed BMS 2.0 infrastructure are already built into the BrightCore framework, and the rest is coming through in chunks by facilitations through multi-building installations. 



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