Digitization is driving the transformation of our modern economies. That is the view of many experts who see the potential gains from the masses of data now streaming in from all manner of connected objects.

Needless to say, digitization from computers, the Internet and smartphones have and will continue to make a huge impact on economies worldwide. However, the emergence of the Building Internet of Things (BIoT) will help take digitization, data generation and the subsequent economic transformation to an unprecedented level. This is one of the central findings from our new report The Internet of Things in Smart Commercial Buildings 2016 to 2021.

According to German technology giant and smart building innovator Siemens, there are already 3.8 billion objects connected to the IoT at present, with the figure expected to surge to as many 26 billion by the end of the decade. These developments will be imperative to economic growth, given that the demographics, especially in industrialised nations, mean we will depend on efficiency gains as opposed to expanding labour numbers.

“Over the next 50 years there will be basically zero increase in labour… we have a complete gap,” said Dr. Roland Busch, executive member of the Managing Board of Siemens. “The Chinese labour market peaked a year or two ago, so there’s not so much labour coming onto the market. If we want to maintain our growth rate at roughly the same level, we have to compensate for the productivity gap.”

Busch goes further to suggest that digitalization is “levelling the playing field” in the manufacturing sector. He expects that efficiency and productivity gains from the IoT to enable mature countries with high labour costs to compete in the manufacturing arena against emerging economies with strong growth and lower labour costs.

Digitisation will be especially significant in the architecture, engineering & construction (AEC) sectors. Software such as building information modelling (BIM), for example, is being described as a game-changing information and communications technology (ICT) and even a cultural shift for the construction and smart buildings sector.

Computer-aided design (CAD) techniques have been in use by the construction industry since the early 1980s. Now BIM represents the next paradigm shift in the AEC sectors. “With BIM, we are putting information at the heart of the project, Everyone who consumes that information within the project environment is changing the way they work,” according to Paul Hill, BIM lead, UK, Middle East and Africa at civil engineering professional services firm Arup.

The emergence of BIM is supporting the continued increase of smart buildings in countless cities around the world. The fundamental nature of buildings within almost every element of our daily lives means that smarter buildings will have a profound impact on our societies and economies. In fact buildings make up 40% of total energy consumption, meaning efficiency gains alone can be incredibly transformative.

“Talking about smart buildings already implies digitalization,” said Stefan Schwab, head of Siemens Building Technologies. “There is so much data about buildings already, and we can use that data to gain productivity and energy efficiency.”

Furthermore, unrelenting urbanisation is putting a huge strain on our urban infrastructure. Today, 54% of the world’s population lives in urban areas, a proportion that is expected to increase to 66% by 2050, according to the United Nations report on World Urbanization.

“Every week there is a new Munich, and every quarter the equivalent of a new Netherlands moves into the cities,” said Busch. “It puts huge pressure on the infrastructure of our cities, and one of the solutions is digitalisation.”

Our urban centres currently occupy less than 5% of the world’s landmass, but account for around 70% of both global energy consumption and greenhouse gas emissions. What happens in our cities directly affects our society but also our fragile environment, and what happens in our buildings shapes our cities. Meaning the continued development and deployment of smarter and smarter buildings is having a profound impact on our plant, our society and our modern economy.

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