Building Internet of Things: Boon to As-A-Service Model
Beyond software, the as-a-service model has struggled to take off. But the Building Internet of Things is changing that.
Building and energy management SaaS applications continue to gain adoption in the industry. But, despite the fact that these firms have attracted significant venture capital, relatively few have had successful exits (that is, by making initial public offering or being purchased by an existing company), suggesting that the market may be more limited than projected. Other data-driven as-a-service models, like data-as-a-service, also have struggled in the past. One foundational piece of the Internet of Things (IoT) age is that low-cost sensors will be deployed widely. The data collected will be analyzed and provide significant value to all parties. Some firms within the building and energy space have experimented with a “data-as-a-service” model; instead of buying and deploying sensors, a facility pays an ongoing data charge which funds the deployment and operation of a sensor network. This is most applicable to energy meters (especially submeters for each tenant). Rather than acquiring dozens or even hundreds of energy meters, a building can instead pay an ongoing fee for the data that they provide. This model, like building and energy management software applications, has been mildly successful, but shares some of the same issues. The data provided, on its own, is of limited value to building owners and facility managers.
There are new applications of this same as-a-service model that are more outcome-driven. Instead of just providing a new stream of data, or a new way to analyze existing data, these approaches lead to an appreciable benefit in the building. With these newer as-a-service models, building owners and facility managers will benefit from more budget predictability: they will know what they owe for building and facility services. They also will reduce their risk, as they will pay for outcomes, rather than simply acquiring equipment and technology. For example, a facility may pay an ongoing fee to reduce energy spend using retrofits. But the building owner only pays a service fee, rather than taking responsibility (and risk) to actually reduce the energy spend.
The use of as-a-service models in buildings is relatively new, but it is growing in popularity. Unlike software-as-a-service, the building management applications are technology-enabled, but not exclusively software solutions that are accessed online. For example, an as-a-service vendor may install technology onsite to remotely collect data, but those costs typically are included in the budget. And any outages, however rare, will not cause the building to cease to function. Such an outage may just require the service provider to send someone onsite to replace the monitoring hardware or collect some data manually. As-a-service models are likely to permeate the building management space in a variety of ways.