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INTEL-SPONSORED WHITE PAPER

Intelligent Buildings: Energy Savings and Beyond with Smart Controls

Casey Talon

Principal Research Analyst Published 1Q 2016

1. Introduction

Intelligent building technologies are transforming the facilities industry. The market development is

fragmented, however, because of a broad array of infrastructure in the existing commercial building stock

and diverging expectations and demands from customers. Despite this fragmented landscape, Navigant

Research asserts that an information technology (IT) framework differentiates intelligent building solutions

from traditional offerings. These tools translate data into actionable information and, in some cases,

automated improvements that optimize the operations of building systems.

The marketplace for intelligent building technologies continues to grow, and the resulting impacts on the

facilities industry may be perceived as either evolutionary or disruptive depending on one’s point of view.

Technology companies such as Intel and startups like Lucid are just two categories of market entrants

introducing alternative approaches and solutions for energy and operational management.

The Internet of Things (IoT) is a technology construct that has begun to permeate the facilities industry as

it has in other sectors that leverage IT for business improvements. IoT for intelligent buildings constitutes

an architecture for data generation, communications, analytics, and services that deliver cost savings,

operations and maintenance (O&M) improvements, and energy efficiency gains. IoT deepens the value of

intelligent building technologies by delivering unprecedented connectivity of devices for greater visibility

into building performance. As a result, the business case for investment is strengthened with broader use

cases that are expanding from energy efficiency to include operational efficiency, occupant engagement

and satisfaction, workplace health and safety, and economically viable sustainability.

IoT-enabled intelligent building systems are secure, scalable, and interoperable. For large, existing

buildings, the integration of hardware and software with traditional building automation and controls can

generate deeper cost savings and efficiency. Solution providers are also installing network-secure

platforms that scale to support these same opportunities for cost savings and efficiency in smaller

buildings that lack traditional controls and automation. In this white paper, Navigant Research presents an

overview of how IoT-enabled intelligent building solutions are generating wide-reaching business benefits.

1.1 Defining the Intelligent Building

The facilities industry has relied a wide range of solutions to manage energy and operations of systems

including heating, ventilation, and air conditioning (HVAC) and lighting. Homegrown spreadsheets and

databases and sophisticated building automation systems (BASs) represent two ends of the spectrum for

the legacy technologies that led the market until around 2010. At that point, new software-centric

solutions were introduced as cost-effective and widely applicable alternatives to BASs, beginning the idea

of intelligent buildings. Navigant Research defines an intelligent building as a facility that utilizes

interoperable, IT-based technologies to optimize facility performance by translating system data into

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Intelligent Buildings: Energy Savings and Beyond with Smart Controls

actionable information. Figure 1 illustrates the general development of the intelligent buildings

marketplace and the outlook for continued innovation.

Figure 1 Roadmap to Intelligent Building Technology

(Source: Navigant Research)

Energy efficiency was the predominant use case for these investments when the market first emerged

because the association between reduced utility bills and better operations is straightforward and

transparent. As the market continues to evolve, vendors are showcasing additional business benefits,

including customer/occupant satisfaction, capital planning, and substance in sustainability. For example,

intelligent building technologies and services can help customers meet the requirements of green labeling

certification while also providing ongoing insight into systems improvements for the measurement and

verification (M&V) of efficiency enhancements that improve the bottom line.

In the longer term, intelligent building technologies will optimize more than just mechanical systems,

extending into resource use such as water and waste. Navigant Research also expects that as intelligent

building systems become fully integrated and automated, there will be a greater opportunity to leverage

the facilities for complete dynamic grid integration, siting distributed energy resources, and as smart city

assets.

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Intelligent Buildings: Energy Savings and Beyond with Smart Controls

1.2 Differentiating Intelligent Building Technologies

In existing commercial buildings today, customers can benefit from both traditional and intelligent

solutions for optimization. The different technologies can be integrated and coordinated to deliver

maximum benefits; in some cases, their functionality can benefit different stakeholders in an organization.

Figure 2 helps frame the conversation around building technologies and the directive of different systems.

Figure 2 Commercial Building Solution Mix

(Source: Navigant Research)

IoT and building energy management systems (BEMSs) are the intelligent building segments listed in

Figure 2. They are the means for creating data-rich facilities and thus, actionable insights. The result is

automated improvements, more accurate guidance for manual changes, and better action plans for

service providers. New market entrants are competing for major market share in the BEMS and IoT

segments. For example, Intel’s IoT for buildings solution leverages innovation from the broader IoT

landscape and helps its partners—including Lucid—focus on helping organizations make data-driven

decisions to improve the performance of commercial buildings. Lucid’s BuildingOS, for example,

centralizes building data in a single platform to unify manual, legacy, and advanced IoT sensor data to

give building owners and operators a simpler way to visualize operations. These types of platforms allow

building owners to see day-to day how their building investments are performing and make more-

informed capital decisions during planning cycles.

2. Energy Savings and More

Society has become reliant on technology and data in nearly all aspects of life. The consumerization of

technology, as this trend is commonly referenced, results in new expectations and demands on

commercial buildings. Occupants expect seamless access to their personal devices from their arrival to

their desk and expect even more personalization in the experience they have in an office. Refined

settings for HVAC and lighting are possible with intelligent building solutions, but the opportunity goes

beyond individual categories of building systems. The follow sections highlight how the emergence of the

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Intelligent Buildings: Energy Savings and Beyond with Smart Controls

intelligent buildings marketplace reflects significant changes on both the supply and demand side of the

facilities industry and the value and performance of commercial buildings.

2.1 Key Market Dynamics

The intelligent buildings market is characterized by a more diverse set of suppliers and investment

influencers than in the traditional facilities maintenance and management market.

2.1.1 Supply-Side Changes

The market for intelligent buildings is fast growing and dynamic. A much broader set of industry players

are entering the market to seize different opportunities. Figure 3highlights categories of technology and

service providers helping to develop the intelligent building landscape.

Figure 3 New Competitive Landscape for Intelligent Buildings

(Source: Navigant Research)

This diverse competitive landscape represents real opportunity for innovative companies. Large,

incumbent players that have supported facilities can bring domain expertise to partnerships that leverage

cutting-edge technologies from new entrants. Traditional manufacturers can expand their position with

customers by introducing new intelligent building service offerings or platform approaches rather than

component sales models. The bottom line is that the intelligent buildings market is moved by devices,

equipment, software, and services, and new deployment models such as software as a service (SaaS)

can deepen customer engagement. Vendors have the opportunity to transform their market position from

a point solution provider to a trusted advisor for energy management and operational excellence. The

differences in company culture and technology perspective between these groups are not insignificant,

however. There are examples of acquisition failures and partnerships gone awry, but the market is still

young and the outlook positive as the demand for intelligent building solutions continues to grow.

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Intelligent Buildings: Energy Savings and Beyond with Smart Controls

2.1.2 Demand-Side Changes

Customer expectations are changing. The decisions around managing commercial facilities are no longer

influenced by just one stakeholder in an organization. Navigant Research suggests there are four main

stakeholder groups that have an increasing sphere of influence over investment decisions, and this

dynamic is expected to continue to evolve with the development of the intelligent buildings market. There

are market forces that align with each stakeholder group and that explain the increasing influence of

different groups, such as occupants or IT departments. Finally, customers are expecting expansive

business impacts from investment in intelligent building solutions, beyond just energy efficiency. Figure 4

illustrates these demand-side changes.

Figure 4 Influencers, Market Drivers, and Expectations

(Source: Navigant Research)

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Intelligent Buildings: Energy Savings and Beyond with Smart Controls

2.2 Key Market Challenges

The intelligent buildings market is still in the early adoption stage, and substantial hurdles to broader

adoption remain. These challenges can be generally presented in two categories: integration and change

management. Fundamentally, these obstacles still need to be overcome to help the market continue to

mature, as illustrated in Figure 5.

Figure 5 Key Market Barriers to Investment in Intelligent Building Solutions

(Source: Navigant Research)

The promise of optimization through the deployment of intelligent building technologies relies on the

seamless integration of data collection devices, controls, automation, and software. In existing buildings,

this kind of integration may require the redesign and reuse of existing infrastructure in addition to

investment in new technology. In order to make this transition, vendors must demonstrate specific

technological capabilities, and customers must institute change management. The major challenges

include the following:

Proprietary protocols and standards creating complexity for system integration

Acceptability of new deployment models such as SaaS to incorporate incremental improvements

in new applications

Demonstration of cyber security for integrated solutions over internal IT networks

Buy-in and utilization of new solutions by various business divisions within an organization

Scalability of technology deployments to balance solution capabilities and changing customer

expectations

These challenges reflect the relative newness of the market and the need for continued market education.

The diversity of solutions in the market can create confusion for customers navigating the different

options for improving energy and operational efficiency.

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Intelligent Buildings: Energy Savings and Beyond with Smart Controls

3. Market Outlook

As illustrated in the analysis presented in the preceding sections, there are several individual

technologies that enable the transformation of a commercial facility into an intelligent building. Navigant

Research assesses individual technology markets that fall under the umbrella of intelligent buildings.

Chart 1illustrates the outlook for three key technology segments: BEMS software and services, advanced

sensors, and electricity submeters. The global revenue for these three segments is expected to grow from

$4.7 billion in 2016 to $8.5 billion in 2020, a compound annual growth rate (CAGR) of 15.9%.

Chart 1 Key Intelligent Building Technologies Revenue by Segment, World Markets: 2016-2020

(Source: Navigant Research)

4. Conclusions and Recommendations

The facilities industry has a new outlook, as IoT permeates the market and translates building data into

actionable information. Navigant Research provides the following recommendations to intelligent building

solution providers to help accelerate the adoption of intelligent building solutions:

Help customers understand the multidimensional benefits of intelligent building solutions including

energy efficiency, occupant satisfaction, strategic O&M, and enhanced service offerings.

Communicate the benefits of better information, not just more data. Customers may be

overwhelmed by the idea investing in more devices to generate more data and must understand

how IoT and intelligent building solutions will make their jobs easier and improve their bottom

lines.

Demonstrate domain expertise. Customers have different pain points that reflect industry-specific

challenges. Intelligent building solutions deliver crosscutting benefits, but customers need to

understand how these solutions can mitigate their biggest pain points.

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

2016 2017 2018 2019 2020

($ M

illio

ns)

BEMS Software & Services

Advanced Sensors

Electricity Submeters

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Intelligent Buildings: Energy Savings and Beyond with Smart Controls

IoT-enabled intelligent buildings utilize devices, communications, software analytics, and services for

data-driven decision-making on system performance. The result is three-fold improvements in energy,

operations, and collaboration by using better data for actionable information. Navigant Research expects

that the market for intelligent buildings will continue to grow at a rapid pace as more customers realize the

energy and non-energy benefits of technology-enabled facility optimization.

©2016 Navigant Consulting, Inc. Notice: No material in this publication may be reproduced, stored in a retrieval system, or transmitted by any means, in whole or in part, without the express written permission of Navigant Consulting, Inc.

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Intelligent Buildings: Energy Savings and Beyond with Smart Controls

Published 1Q 2016

©2016 Navigant Consulting, Inc.

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Note: Editing of this report was closed on February 26, 2016.