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According to the latest report from Memoori – Occupancy Analytics & In-Building Location Based Services 2017 to 2022, “value-added services such as space utilization, indoor positioning, connected lighting and asset tracking are helping to drive the adoption of as-a-Service business models.”
“As-a-Service” is when 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. This shifts the investment off the building’s balance sheet, as the total service eliminates upfront capital expenditure. While operating expenses are calculated to be less than before and there are no further costs other than a single periodic service fee.
Throughout the commercial building space we are seeing the rise of the “as-a-service” approach:
The space itself can be provided as a service, especially for creators, entrepreneurs, as well as small and medium businesses – but even multinational companies are taking advantage of the benefits this brings. With the increasing popularity of remote working, freelancing and co-working, space-as-a-service is providing for a real and growing need in the workplace landscape.
“Workplace as a Service allows companies to lease office space not by the square metre but by the seat, with all of the IT and communications included. This solution enables companies of all sizes to enter and exit markets opportunistically, grow and shrink office footprints according to their needs, and pursue new business lines and ideas in a way that best suits their particular needs,” explains our report.
Once the space is a service, it begins to compete in a much more active way with other space-as-a-service providers, thereby improving the spaces as they try to differentiate themselves. Top of that tree currently is a New York start-up named WeWork, after strong years of growth the firm was rewarded with a $4.4 billion investment by Japan’s SoftBank to expand their concept around the world.
WeWork’s “space as a service” solution enables companies of all sizes to enter and exit markets opportunistically, grow and shrink office footprints according to their needs, and pursue new business lines and ideas in a way that best suits their particular needs. They deploy industry-leading software and technology to maximize the efficiency of its portfolio of workspace locations and its operations, and thereby increase member satisfaction. The company also uses data-driven analytics to better understand how people operate in the workplace and uses these insights to develop its product and create an even more compelling offering for its members.
SaaS solutions have been adopted quickly in the consumer electronics world and even on the enterprise level in workplaces, but they are still relatively new to the building management sector. With the introduction of cloud based solutions we have seen strong signs that SaaS has the potential to significantly disrupt the market.
However, “a potential barrier to cloud services being rolled out is the necessity to change business models,” the report highlights. Traditionally buildings, and other sectors, have become accustomed to free software, so it has proved challenging to sell a monthly or transaction based payment approach. However, the enhanced capabilities of the software and support provided by this approach is increasingly winning over building owners and managers.
“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,” explains our report. SaaS now appears to be the inevitable future of building management systems.
When sensing becomes a service it is immediately less about sensors and more about data. By subscribing to a sensing-as-a-service firm, 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.
Canadian startup, Relogix, is an IoT sensing-as-a-Service company that combines sensor technology with advanced analytics and visualization to provide insight into Commercial Real Estate (CRE) utilization. Their UtiLive system provides continuous data and actionable insight on workspace and furnishing use, ensuring effective utilization of commercial real estate investment.
The company, who recently signed partner agreements with two of the largest real estate management companies in North America, has designed mobile onboarding and provisioning tools that help reduce time-to-service to hours instead of days or weeks. Sensing is the basis for smart developments underway in our buildings, and by making it a service we are improving our ability to sense our environment, giving a boost to the entire sector.
Retrofitting buildings with LEDs can be an capitally expensive venture, which is a challenge for many cash-strapped start-ups and larger companies with bigger floor space. “As long as the LaaS service provider is able to charge less than the annual savings, the customer comes out ahead without exposure to high capital expenditure risks,” states our report.
LaaS has quickly gained popularity over the last 4 years. This is not so much for illumination itself but because we now have a better understanding of the impact of light on occupant health, wellbeing and productivity. Major connected lighting platform vendors such as Philips, Enlighted, Osram, Acuity Brands and Current powered by GE, have already developed LaaS services aimed specifically at commercial buildings.
“Our new system delivers instant energy savings and requires no upfront investment from customers who pay an easy monthly payment funded by the savings,” said Emmanuel Sabonnadiere, CEO of Philips Lighting’s Professional business. “However, energy savings are just the tip of the iceberg. Our ‘Light as a Service’ model frees customers to focus on their business, while information from sensors in the luminaires gives them unique insights into the use of energy and office space to enhance operational efficiencies.”
Building management is just one part of a much wider “as-a-service” approach which is sweeping across many parts of society. Ownership is quickly becoming old fashioned, and by passing responsibilities on to a third party we give someone the duty to ensure that these systems are up-to-date and working smoothly.
Using an “as-a-service” approach, outdated “tired” offices should become a thing of the past as service providers compete with one another for customers. It seems likely that buildings will start to differentiate themselves by showing off their portfolio of “as-a-service” providers. This is a whole new world, one where third parties are paid to continually improve the intelligence of a building. The “as-a-service” approach appears to be the smart approach for CRE.