In this Research Note, we examine what’s behind Johnson Controls’ acquisition of FM:Systems, a Raleigh, North Carolina-based digital workplace management and Internet of Things (IoT) solutions provider for facilities and real estate professionals.
Since 2015, when Johnson Controls divested its Global Workplace Solutions business to CBRE, the HVAC and building controls giant has been missing workplace solutions from its portfolio. This gap has now been filled with the acquisition of FM:Systems.
Founded in 1984, FM:Systems is a leading provider of Integrated Workplace Management Systems (IWMS) and space management and digital workplace services software. With over 1,200 customers across more than 80 countries worldwide, the company addresses a diverse range of industries, including healthcare, higher education, technology, manufacturing, retail, banking and the public sector. The base purchase price for the transaction is $455 million, plus additional payments to be made subject to the achievement of post-closing earnout milestones.
Johnson Controls will have noted that vendors of legacy Integrated Workplace Management Systems (IWMS), such as FM:Systems have evolved into broader solutions with near real-time data from building equipment, IoT solutions and advanced analytics, enabling smarter workflows and greater automation.
It would also not escape JCI’s notice that one of their building automation competitors, Schneider Electric completed a strategic minority investment in Planon, a leading European IWMS player, in December 2020.
As our recent Occupancy Analytics report highlights, space utilization data is now at the forefront of occupancy planning, and having a technology to track space and occupancy data remains core to portfolio management and space chargebacks and allocations for commercial real estate owners and operators.
The impact of hybrid work models and an evolving workforce has meant that shifting space requirements also need to be addressed by corporate real estate portfolio managers in shorter lifecycles. We are also seeing digital workplace experience innovations being addressed by mobile apps in IWMS offerings.
Following a growth equity investment by Accel-KKR in 2017, FM:Systems was able to grow its leadership position in the IWMS market and augment its portfolio with occupancy analytics software, IoT sensors for digital workspace management and visitor management software.
- In July 2019, FM:Systems announced the acquisition of Rifiniti, a small startup providing advanced analytics and dashboarding for workspace optimization.
- In December 2019, Asure Software divested its Workspace Management software and technology business unit to FM:Systems in an asset and equity transaction valued at $120 million.
- In June 2021, FM:Systems acquired WizzPass, a South African startup founded in 2015 in the visitor management market. WizzPass is deployed by blue-chip companies at over 300 locations, across 4 continents.
The acquisition of FM:Systems also complements the strategic investment made by Johnson Controls in July 2022 in XY Sense. The Australian digital workplace analytics provider raised a US$10M Pre-Series A round, in which JCI Ventures participated. XY Sense’s anonymous occupancy sensor technology can also be integrated into JCI’s OpenBlue digital offering.
As we noted in November 2022, JCI is still very much an equipment company, with installation and service accounting for the vast majority of revenue. Like many of their competitors, they are trying to accelerate the development of high-growth Software-as-a-Service business via their OpenBlue platform. This acquisition will add significantly to its software revenues.
This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.