In this Research Note, we examine the Buildings business of Schneider Electric, based on their 2021 Results, Capital Markets Day presentations and building automation strategy throughout 2021.
Buildings is one of four end markets that Schneider Electric addresses with a complete portfolio of products, solutions and services for residential and non-residential buildings. Residential buildings remained one of the Group’s strongest growth areas across most major economies. The Group’s offerings in non-residential buildings focus on healthcare and life science facilities, retail stores, hotels and commercial offices. Data Centers are treated as a separate end market, given the specialized nature of the hardware, software and services required for this vertical.
The Buildings end market of Schneider Electric is addressed by a portfolio of products, systems, software and services offered by the Energy Management (EM) division, including:
- Medium and low voltage products – eg. wiring devices, circuit breakers, busways.
- Building Automation – EcoStruxure Building IoT platform, building control products, home automation products and solutions.
- Grid Automation – DERMS, Microgrid software.
- Critical Power Distribution – Power metering and monitoring equipment.
- Lifecycle software from design and build to operate and maintain.
- Energy and sustainability services.
The Energy Management division (77% of 2021 Group revenues) reported €22.2 billion revenues for 2021, a 13.3% organic growth versus prior year. While Schneider Electric does not report the business mix for its EM division, Memoori estimates that electrical and power distribution products and systems account for the majority of revenues in this division.
The building automation portfolio of Schneider Electric is estimated to generate revenues in the range of $1.75 – $2.25 billion.
Schneider Electric’s group strategy is to increase the proportion of software and services in its overall portfolio. Software and services represent 18% of 2021 revenue. The overall goal is to grow this proportion by at least 5 percentage points by 2025.
In the commercial real estate sector, Schneider Electric made a strategic software investment through a 25% minority stake in Planon Beheer BV. completed in December 2020 to digitise the operations and maintenance activities in the building lifecycle through the integration of both EcoStruxure and Planon’s enterprise scale solutions. The consideration paid amounts to EUR 113 million in cash.
This transaction highlights the importance of workplace technology and CRE-focused software to providers of building automation systems.
This partnership extends their previous alliance in March 2019 to create a joint solution combining key building data from EcoStruxure Building Advisor and provide it to the Planon Universe Integrated Workplace Management platform to enable swift business responses to building infrastructure events. The collaboration significantly enhances the convergence of OT and IT systems in buildings with workflows that leverage real-time analytics to improve building sustainability, efficiency and resiliency, and the workplace experience.
At the 2021 Capital Markets Day event, one example of a joint deployment was described at a large fragrance company. The workplace experience project was originally based on Schneider Electric’s EcoStruxure Engage Enterprise App; this was expanded in scope to include an entire ecosystem of solutions around workplace management based on Planon’s IWMS software in 60 buildings across 40 countries for 60,000 users.
Another example is Coventry University which has partnered with Schneider Electric and Planon to upgrade its Engineering and Computing Building. The solution involves the integration of Planon’s IWMS software with Schneider Electric’s EcoStruxure Building Advisor, a suite of analytic building monitoring services. The IWMS software automatically processes smart building diagnostics from Building Advisor to determine whether an action is needed. It can initiate a standardised workflow or highlight an issue for a manual decision by the facilities team by scheduling and dispatching the work to the field engineers’ mobile phones for execution.
Schneider Electric’s partnership with Planon enables both players to leverage the benefits of integrated workplace software for commercial real estate encompassing building operations, space management, lease administration, work order management, energy and sustainability management and workplace mobile apps.
This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.