Transforming an Old, $1T Industry with IoT

The buildings we work and live in are old. Most buildings remain energy inefficient, hard to maintain, and not comfortable for their occupants. Not to mention, the energy used to run our building infrastructure accounts for 40% of global GHG emissions. The facilities management industry is worth over $1.12 Trillion yet for all the opportunity and incentives for improvement, the industry has moved slowly, if at all, towards innovative approaches to facility operation.

With so much potential, will IoT be the catalyst to using a data-driven approach to managing facility operations?

A recent article by Derek Russell got me thinking about how the facility management industry is not that different from many others, just further behind on the path to digitization.

"In many of my conversations with CTO’s and CIO’s, throughout a breadth of business verticals, the most common themes I have been taking away sound something like: “our organization is behind and we need to revitalize — we now want to become a data driven business”. If this sounds familiar, know that you are not alone, and there are plenty of great resources you can partner with to provide a platform for which to drive towards this transformation (think Microsoft, IBM, Amazon, and Google), and a breadth of smart systems integrators (PWC, Accenture, etc.) to help deploy"
Pour Another Coffee! - Why ALL Businesses Will Become Data Businesses by Derek Russell

Most facility managers and building operators cringe at the idea of consultants. They imagine someone with no idea of how their building/campus operates telling them what mistakes they are making, while only providing a vague path towards a better outcome. That misconception may be occasionally accurate but is mostly based on a fear to change. The job of a maintenance technician or building manager has not changed much in the last 10 years.

But the digital technology that runs buildings certainly has. For example in 2006, Windows XP had been on a roll and gathered over 80% market share. Building automation professionals used it to host their state-of-the-art servers in new buildings during the pre-recession construction boom across the country.

Market Share of Operating Systems

Flash forward to 2017, if you wanted to find a computer currently performing a business critical function that is running Windows XP, where would you look first? It would be hard considering less than 6% of PCs currently do.

I would find the nearest large building that is over 10 years old and find the building automation system server. If you are in a large office building now, it’s surprisingly likely your air conditioning is provided in part thanks to Windows XP.

While the market share of the general public has decreased significantly, the buildings built between 2001 and 2010 have not upgraded, let alone the ones even older.

To be clear, I don’t have a bone to pick with XP or any technology in particular, but I am curious as to why the building operations industry as a whole has stayed so far behind the innovation curve.

The main reason is that the subsystems of a new building (mechanical/electrical) are designed for 20–30 year lifetimes. The automation devices that control these systems can survive that long and typically do.

Another reason sits with how facility operations are structured. The saying, “if it ain’t broke don’t fix it” was probably invented in the facility maintenance industry. The building automation system (including servers and networks) is still categorized as a facilities asset, like the boilers, fans, and pumps. All of which are typically run until failure, with occasionally maintenance.

If you work in the automation and controls industry, you’ve seen your fair share of dusty PCs in corners of mechanical room offices. Controllers, routers, and switches in filthy basements are standard.

Think about if that logic was applied to any other business function or Applications? Use your email server until is breaks. Replace your computer every 15 years, on the same schedule as replacing your car.

I firmly believe that the process of operating facilities can get 10x better, resulting in better occupant comfort, better energy efficiency, and better organized maintenance.

But the message is clear. To do this, building operations needs to become more data driven. And to do that, the IT and controls equipment that operates buildings needs to be upgraded and managed like other IT equipment. Upgraded regularly to take advantage of the latest tech advances. Building operation staff and IT folks need to work together in ways they haven’t before.

Building automation systems produce an enormous amount of data, which can be processed and used to inform the efficient and transparent operation of a building. The value in IoT for buildings will likely not be in the addition of millions of new internet connected sensors, but in new internet-enabled or hosted software applications that use existing data from existing equipment to make buildings operate better.

A great primer on using data to improve building efficiency is from John Petze, CEO of Skyspark, in Using Data to Improve Facility Operations.

So how do you digitize your buildings operations? Organizational change has to be championed from within, however even the most savvy businesses need help bringing a complicated vision to life. Executing the vision relies on building partnerships and trying new platforms.

The typical “management consultants” haven’t moved into this space in a big way yet, but there certainly are entities that focus on transforming facility operations as well as many great platforms on the market today.

The inaugural report from the DoE on using analytics in facilities operation names a few standout partners/platforms:

1. MGM Resorts, Altura, SkySpark
2. Sprint Headquarters, CBRE|ESI
3. Emory University, CopperTree

And there are many more examples of past successful projects, partners, and software.

It seems that the building operation industry is nearing closer to understanding the value of using data to inform decision making. Maybe it will take another 10 years for the market to make a significant move, but I doubt it. Some of the largest entities (university campuses, the GSA, telecoms, some REITs) have already implemented these strategies.

As more of the smart people that operate and maintain buildings realize the missed opportunity of using data (currently sitting unused) to help them make better decisions and yield better outcomes, the tide will turn.