October 2012

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Energy Efficiency Cleantech Solutions

What Happened? - Part 2
Chip Pieper

Chip Pieper,
VP Business Development
Ezenics, Inc.

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In our discussion last month, Energy Efficiency Cleantech Solutions - PART 1, we had the opportunity to explore some of the leading constraints that influenced the decision-making process for cleantech solutions.  Using a similar approach as we did in the first discussion, we asked 15+ producers of technology-based solutions, “What are the top three issues or objections you observe when attempting to position an energy efficiency solution to a customer?”  Here in Part 2 we will focus our attention on the top responses provided by producers, then attempt to tie together what we hope will be a more effective alignment of decision-making between buyers and sellers. 

The sample group of “producers” was comprised of cleantech software companies, venture capital firms, established controls/hardware manufacturers, utilities, integration companies, enterprise software companies, and commissioning/services firms. Again, this was a qualitative study not quantitative. As in the Part 1, we will not be providing the names (all were at executive management level) of the individuals we interviewed nor the organizations they represent. The discussions that were conducted were completely off the record.

If we reflect back to the leading issues or constraints that consumers provided us last month, you’ll see some interesting parallels surface throughout our discussion. Here were the top seven issues that consumers identified from our Part 1 discussion:

  1. Lack of “qualified people” to either hire or outsource the business to
  1. Experienced and qualified employees were seen as the difference maker in maximizing energy efficiency solution success. However, they need to be continuously skilled up/trained on these new solutions/technologies and this was viewed as a constraint
  1. Some employees fear being displaced by technology and in certain cases, end up circumventing the solution and severely impacting its success
  1. Energy costs are flat in most geographies
  1. Lack of 3rd party validation or “case studies” supporting the proposed solution. Where has the solution worked and what were the results
  1. The inability to deliver on promised results i.e. 20% Energy Savings! The perception was that much of what is being “sold” is just hype
  1. Finally to my surprise, Life Cycle Costs were deemed more relevant in making the final decision than a 2 year ROI

Prior to listing out what thought were the most recurring issues impacting the sales cycle in our industry (specifically). It is important to acknowledge that virtually ALL interviewed felt that the following issues were playing a role in the apparent slow down in consumer decision-making as it relates to cleantech solution adoption.

Coupled with the leading seven issues producers observed impacting consumer decision-making, you can see how the sales cycle for cleantech solution adoption would typically be over 12 months (according to producers) in this climate. Here are the top seven issues producers identified:

  1. Technology is ahead of the market. Facilities, equipment and people are not completely “ready" to assimilate cleantech solutions. “We’re still in the early adoption phase”
  1. Experienced and qualified employees need to be skilled up/trained on these new cleantech solutions/technologies. “Yet another new tool”
  1. Fear factor – software exposes problems
  1. Cleantech’s impact has been oversold, i.e. 20%-30% Energy Savings!
  1. Energy projects always seem to be an “evaluation” or “trial” to adopt. There’s an enormous dependency on risk mitigation
  1. Lack of commercial validation or “case studies” supporting the proposed solution. Where has the solution worked and what were the results
  1. Energy costs are flat in most geographies

For most cleantech solutions to be effective in surfacing their proposed value, there typically needs to be a “newer” building automation/management system in place, as well as some type of network and protocol interface to gain access to all the relevant data to be analyzed from a particular facility. In addition, a knowledgeable and experienced staff is often relied upon for successful adoption as well. Although in some instances this is indeed the case, however, in the vast majority of facilities this is not an easy task to realize.  Antiquated BMSs that are configured improperly, closed controls’ protocols, asset-naming conventions that don’t match up, numerous sensors that don’t work (just to name a few), seem to be more of the norm says the majority of producers.

chocolatesAn old colleague of mine would always say, “buildings are like a box of chocolates, you never know what you’re going to get.” In other words, extreme variances make normalizing data inputs a challenge for “leading-edge” cleantech software solutions. According to producers, technology has outpaced a market whose systems are significantly more antiquated, when compared to their IT counterparts.

As in the case of consumers, producers would prefer to work with talented customer teams, who understand where the market is trending, and who have staffed accordingly. A mismatch between ill prepared consumers with a demanding cleantech integration requirement (technology and people) can really slow the process down for adoption.

To complicate matters more, producers identified experiences in which the consumer has been fearful of cleantech solutions. This could be a fear that the “new technology’ could expose facility-based problems that cause embarrassment for the decision-maker or possibly a maintenance staff that may circumvent the cleantech solution for fear of being displaced. There’s also a recognized fear of betting on a cleantech solution that has been “over sold” with unreachable promises (20%-30% SAVINGS!!), and then the fear of being the decision-maker, who pays the consequences for the making the wrong decision.

As so often is the case, mitigating risk is a critical component in the decision-making process.  One of the key tools IT used to mitigate risk was commercial validation in the form of comprehensive case studies, in which similar companies realized the business value associated with the adoption of leading-edge solutions.  As you may recall, consumers were also desperately looking for verification that cleantech solutions have been successful in surfacing results in other deployments.  Obviously, the impact a case study can have on the decision making process varies from consumer to consumer. Nevertheless, we can’t overlook the fact that our industry has very few publically available “detailed” success stories in which to project a potential outcome on. 

Buying ObstaclesThe cumulative effect of these “buying obstacles” can be difficult for “procurement” to get “their arms around as well.” According to many of the cleantech producers I spoke with, a sizable amount of their deals slow or even die at this point in the process. Why is that the case? Maybe, the answer lies in the box of chocolates? “You never know what you’re going to get.” If that is the point that we are left with, then what is the purpose of this 2 part series? What do we hope to gain from exploring the obstacles and the issues that both consumers and producers face when attempting to do business?

As a final step, let’s take a look at the most recurring shared “issues,” and see if we can make some suggestions that may help the decision-making process for both consumers and producers. 

Circle Chart

First, let’s address the current “universal market constraints” of the election, economy, and decreased cleantech incentives. Face it; we can’t impact these market issues, we can only factor them into our approach. So, we move on!

People, fear, validation, and energy costs represent a classic pattern in response to inevitable change.  For the past several years, we have experienced a desire to innovate one of the last bastions in the enterprise, the “facility business.” The infusion of investment monies spurring cleantech solution development, a green revolution advocating sustainability and energy efficiency, corporate PR motives, new job requirements and skills, retrofits, and many more “disruptive” circumstances in which our industry has had to face, have forced us to adapt to these changes faster than any other segment of the market. The net effect has only made us stronger as a result.  

EmpathyWhen faced with uncertainty, fight, flight or freeze are typically the responses to fear. Hopefully, by knowing this we can all empathize with stakeholders on both sides of the fence, thereby working to raise the level of understanding each of our “mutual” needs to succeed when making the right decision. Empathy appears to be a very common thread that both producers and consumers share. When asked about empathy, the overwhelming response on both fronts was to use this awareness when aligning needs with a solution.  The result:  both sides win.

We know that eventually cleantech solutions will move from its current “early adoption” phase to a mature industry. One could predict with great accuracy that valid cleantech results/impact will be readily available in the form of case studies and testimonial support in the near future.  What this industry needs is repeatable success. Both consumers and producers suggest that this will lead to less risk up and down the decision-making process. From IT to procurement, and then eventually the c-suite, we will witness far less uncertainty and far less fear.

As successful adoptions of cleantech solutions become the standard, we’ll most likely see additional investment dollars pumped in to the industry to stimulate further innovation, growth, and “convergence.” According to many that were interviewed, this will intensify the interdependence of IT and facilities, thus creating an inseparable bond (people, process, technology) that will lead to a transformation in our industry.  

Even though much of what we discussed and emphasized as constraints that impacted the adoption of cleantech solutions could be perceived as negative, I don’t look at the state of our industry in such a way. Rather, I think getting the issues out to debate is the best way to shape an industry which has yet to fully mature. I for one am very encouraged about what the future has in store for cleantech.


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