This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.
In a challenging economy, customers will be demanding more value from their investments and will be less willing to commit to upfront capital expenditure; making Smart Buildings as a Service even more attractive than 6 months ago.
This business model is defined as one in which the customer purchases a service or subscription from a third-party service provider that then delivers the service through assets it owns, maintains and improves. "Servitization" replaces the single transaction for delivery of a product with continuous service while improving the customer experience throughout the lifecycle of an asset. This shifts the investment off the building’s balance sheet, as the total service eliminates upfront capital expenditure.
Software as a Service (SaaS) offers a cloud-based delivery model that makes it easier to implement, update, scale and maintain software platforms. Cloud centric companies are now increasingly seeing the market turning their way, as facilities management software firms and security vendors lead the way in adopting this approach. Enabled by the Internet of Things (IoT), building technology firms are introducing services based on this more affordable subscription-based business model.
Value-added services such as space utilization, indoor positioning, connected lighting and asset tracking are helping to drive the adoption of the as-a-Service approach. Customer options can include the flexibility to pay based on per building per month or per building, per year, making it less capital intensive. And in the post-COVID era, IoT-driven remote monitoring and real-time occupancy analytics are now even more appropriate than ever with uncertainties over how offices will be re-occupied in the future.
Sensor as a Service platforms, such as those provided by VergeSense and Relogix, enable clients to deploy "stick and forget" sensors in their commercial real estate. The service is based on sensor data and not a specific product. When sensing becomes a service, it is immediately less about sensors and more about data. Building owners and managers have no need to concern themselves with how many sensors to purchase or where to put them. Instead, demands are defined by the desired data and what actionable intelligence can be derived from it.
Access Control as a Service and Video Surveillance as a Service companies, such as Brivo, Openpath and Camio have been quick to demonstrate the value of their access control and video surveillance technology by showing the drop in building occupancy numbers and how to implement social distancing compliance.
An Energy Efficiency as a Service approach manages all aspects of a building upgrade, covers all costs, and the client is billed for actual metered energy savings after project completion. Implementing portfolio-wide efficiency upgrades that include energy, HVAC, LED Lighting, and more can take significant resources and involve a lengthy and uncertain capital budgeting process, making it difficult to deploy in a traditional upfront financing approach, despite compelling benefits. Startup companies who have developed alternative financing approaches to funding retrofits and upgrades include Carbon Lighthouse, Redaptive, Budderfly and UrbanVolt.
Energy Data as a Service enables various industry players to focus on the core offerings and let a third party provide the foundation energy data that enables them to deliver their products and services. Two key sources, utility bill and smart meter data, can be used to enable better decision making, which makes it easier to baseline current energy usage and model potential scenarios to reduce it.
Dublin, Ireland based startup, Ziggytec uses Internet of Things (IoT) technology to provide Green Reit, Savills, Hines Real Estate and other commercial property owners with live data on their energy usage to provide certifying bodies with data to prove the energy sustainability credentials of their buildings – a growing investor-led demand. Electricity, water, gas, heat, temperature, humidity and CO2 readings can all be recorded in digital form and moved into the cloud for remote access.
US utility data aggregator, Urjanet delivers data from thousands of utility, telecom and cable providers across 47 countries. Their cloud-based platform and suite of APIs provide a secure and scalable way for businesses to access permissioned data to automate and digitize manual, paper-based processes.
Robots as a Service (RaaS) enables clients to lease robotic devices through a cloud-based subscription service rather than purchasing the equipment outright. The headaches of ownership, such as paying off an expensive piece of equipment plus handling maintenance issues that spring up, are avoided with RaaS. The spread of COVID-19 has rapidly introduced new threats to public spaces such as shopping malls and entertainment facilities.
Guards have been acting as the first line of defence for these threats; however, they are unnecessarily put in harm’s way during this crisis. Robots are a direct security guard replacement. In addition, some robots have been repurposed to support the implementation of workplace safety policies, such as temperature screening and disinfection of surfaces while patrolling buildings. Services, such as that offered by Cobalt Robotics, include robots, software, 24/7 support and same-day service and maintenance all for one flat hourly rate.
These examples of the As a Service business model demonstrate the diversity of use cases in the smart buildings space. In this context, the asset can be software, sensors, data, hardware or even outcomes such as energy efficiency. The trend towards this model is accelerating as software and value-added services have increasingly taken a larger share of the market.