Having just completed a series of 3 techno / commercial studies on the Building Internet of Things (BIoT) the objective to turn smart buildings into fully automated ones requiring little or no human intervention has the full support of building owners.
The technology to overcome the deficiencies of the present semi-automated Building Automation Services (BAS) is called BIoT and the companies that are pioneering this development and shaping its future, are not BAS suppliers, but are IT companies, Software companies and Chip manufacturers.
Between them they hold all the new technology to deliver the Internet of Things content of a fully automated building and currently BAS suppliers are for the most part only back seat drivers.
These 2 camps need to be brought together to combine their expertise if the full benefits of BIoT are to be realised and meet the customers buying proposition. The reason that the IT companies are attracted to sharing the business with them is that they lack knowledge and expertise in the building construction market and they have no direct contact with the buyers of building systems and real estate owners. BAS suppliers do; And more importantly they have enormous heritage estates that will eventually be retrofitted.
It should be understood that whilst full BIoT is arriving, it is currently restricted to a few applications where the BAS Systems are not too complex and the same “open communications protocol” is used across all of the devices within each BAS service. However connecting devices through IP Networks has been taken up and is growing fast in virtually all the 9 BAS services that we have analysed in our report – The Transformation of BAS into the Building Internet of Things 2015 to 2020 - Sharing an open protocol for all the services is for the moment unlikely to be practical. For this reason the full implementation of BIoT in commercial buildings is going to take much more than a decade before it gains a substantial share of the technical market potential.
In the meantime BAS suppliers are in a strong position to advise on what action needs to be taken to adapt solutions to overcome these limitations. They together with Energy Enterprise Management (EEM) software partners can also make a significant contribution to Big Data. Above all they are in a strong position to identify the most successful strategy to move forward fast by identifying where the current technical obstacles have least impact and the benefits are most likely to be realised. New construction projects and Retail buildings fall into this category.
BAS service companies and in particular the major conglomerates have been the most active group in moving towards a wider BIoT business and most have a strong balance sheet and plentiful reserves. This group of companies includes, amongst others Schneider Electric, ABB, Siemens, Johnson Controls and Honeywell.
Schneider Electric over the last 8 years has been a very active acquirer, particularly if we include acquisitions that interface Smart Buildings with Smart Grid. During the last 8 years they have focused on bringing together a group of companies that can deliver solutions right across the interface between Smart Buildings, Smart Grid and BIoT.
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ABB, Siemens, Honeywell and Johnson Controls have pursued similar strategies and all have spent north of a $Billion on acquiring software and hardware companies covering all aspects of BIoT in the last 10 years.
Most of the manufacturers of BAS hardware have over time stopped supplying systems and get their products to market through partnerships with specialist System Integrators (SI) or distributors. Again it’s unlikely that this will change and their enablement hardware products will be shipped through their system integrators. The largest of these companies may well look to SI’s from the IT industry to form alliances or merge and/or acquire such companies to enable them to bid on Contract 3 – Network Services & Related Hardware. But it’s more likely that Integrators from the IT industry will play a more influential role and acquire their BAS integrator counterparts.
Several larger building controls players have already established partnerships with IT and networking firms to ensure their offerings are appealing to a wide audience. This is particularly noticeable within the Big Data segment of BIoT where the IT giants with their global reach, sophisticated marketing, established customer base and industry credentials are often the first port of call for new projects.
The skills gap also has a part to play here. As in-house IT departments often lack the knowledge and skills of practical big data systems rollouts, they are more inclined to go with the “safe bet” of working with an established IT market brand with and end-to-end solution, rather than an emerging niche player who may only offer specialist services in a narrow band of the big data value chain.
All this being said, many new market entrants are well placed to adapt to the rapidly changing technology and market landscape, with their smaller size, innovative developer communities and plenty of venture capital backing, some will emerge as future giants of the Big Data world, but the majority are ultimately likely to be also-rans, or subject to take over from more established players over the coming 5 years.