April 2006

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EMAIL INTERVIEW  Allan McHale & Ken Sinclair

Allan McHale, Director, i&i Ltd

IT-Convergence – Have we crossed the chasm?

Not quite; for the last three years techies and visionaries have taken the plunge and have invested in IT-Convergence solutions, but the pragmatists still have to be convinced of the business case.

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Sinclair:  We have been deluged with information on this subject over the last two years but have yet to receive hard facts about the current state of the business; have we crossed the chasm with connected real estate?

McHale:  Not quite; for the last three years techies and visionaries have taken the plunge and have invested in IT-Convergence solutions, but the pragmatists still have to be convinced of the business case.  We met a number of these companies during our investigation and they were able to demonstrate that their investment had increased the performance and value of their buildings and had fully met the value propositions that they set. However, the pragmatists still have to be convinced of the business case and that there is minimal risk in fully embracing this technology. Many are sceptical that the suppliers of IT-Convergence have got the capability to bring together the IT Business enterprise with the Technical Infrastructures into a robust solution. However, the scene is now set for the chasm to be crossed and the early majority, provided they are delivered with the facts and information from credible financial and technically strong suppliers will go ahead and invest and grow this market exponentially.

Sinclair:  So the market is in the embryo stages and we are about to witness some exponential growth.  What is the technical and commercial potential that IT-Convergence offers over the next five years?

McHale:  We have in our report* identified two distinctly separate markets. The first estimates the technical market potential for retrofitting existing buildings and the second, new construction projects with systems that have full XML and web service capability. Today the vast majority of business for bringing together technical infrastructures with the business enterprise is in existing buildings. If we look at just the retrofit of energy management and environmental control systems we estimate that in 2004/5 the value of installed systems that could connect directly to the business enterprise was worth $150 million. The total commercial market potential for retrofitting existing building stock with web enabled systems that can directly connect to the business enterprise is worth $4 billion in North America.

The new construction market is taking longer to penetrate but it could be worth some $2 billion by 2010 and that only includes the value of the revenues that “super-integrators” will achieve for “glueing” all the technical services together and interfacing with the business enterprise.

Sinclair:  There must be some roadblocks that we have to overcome to convert the technical potential into a reality?

McHale:  Yes there are. In Europe the IT experts operating the business enterprise functions are concerned that they will become more vulnerable to security risks by sharing their networks with the technical infrastructures in buildings. However, this is not holding back business in North America. The main roadblock in North America, according to building owners is that the suppliers are just not proving the business case to their satisfaction; they are not asking or listening to what they want to get out of IT-Convergence solutions and benchmarking against their value propositions.

contemporary Sinclair:  Where is the evidence that shows that building owners can improve the performance and value of their buildings?

McHale:  During our investigation we visited a number of buildings that had installed full IT-Convergence solutions and with data that the building owners supplied we have compiled a series of case studies that prove the business case that IT-Convergence can improve the performance and value of buildings across different vertical markets.

Sinclair:  Finally, what are the key factors that will determine how fast we can grow this business?

McHale:  If suppliers spend more time with their clients, engaging with the CEO, CFO, CIO and Facilities Manager, establishing how they can meet the clients value propositions, then they will convert opportunity into business. The market at this time is not limited by demand but by the supply side’s ability to form partnerships and alliances and prove the business case. This report has developed a tool to help the supply and demand side to investigate the factors that will determine performance and then evaluate the value derived.

* “IT-Convergence in Buildings" – for more information click here http://www.proplan.co.uk/pdf/US-IT-flyer.pdf

i&i limited - Building Intelligence & Innovation
We are Europe’s leading research and consultancy company specialising in Intelligent Buildings. Using consistent and robust methodologies, we provide professional services to building users, managers, suppliers, government bodies and industrial organisations throughout the world. These services encompass three key areas - building solutions, market intelligence, and systems strategy.

Through its Proplan division, i&i provide global market research and market intelligence focused on intelligent infrastructures in buildings. We have to date analysed markets and technology in over 40 different countries and have researched and published reports in our ‘Intelligent Controls in Buildings’ series in 11 regions and four different subjects. We also analyse all intelligent infrastructures within vertical markets, to establish the demand for integrated and holistic solutions by buildings type such as hotels, retail and health care.


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