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Building IoT: Should You Choose a Horizontal or Vertical Solution?
OTHER PARTS OF THIS ARTICLEPt. 1: Understanding Your Building Internet of Things OptionsPt. 2: This PagePt. 3: INFOGRAPHIC: Elements of a Building Internet of Things Platform
When embarking on a technology procurement effort, a good first step for any facility manager is to determine if a new vertical solution should be acquired, or if supplemental horizontal solutions can be acquired and plugged into existing technology. Vertical solutions typically aim to replace or “sit on top” of existing systems like BAS and lighting control, adding new features and capabilities. This can be compelling to building owners who have older legacy technology and are in need of an upgrade. It also may resonate with facility managers who manage smaller facilities, for example, that historically have not been able to justify the expense of a BAS.
Many of the well-known enterprise energy management products that have been heavily marketed over the past few years are vertical solutions. The companies making these products include startups, some of which have been acquired; large traditional BAS vendors; and other energy industry service providers. These vertical, enterprise energy management solutions typically use some other horizontal solutions as point components — especially off-the-shelf metering and gateway hardware — but they have built a variety of components across the technology stack internally, such as application programming interfaces (APIs) to connect to existing on-premise hardware and software, data storage and validation, analysis, visualization, and even services offered using the technology.
Promising vertical solutions
There are some promising types of vertical solutions. These solutions typically focus on building types that have been underserved, or solve emerging problems that require outsourced expertise. Examples include solutions that enable compliance with local benchmarking and de-facto standards organization reporting requirements. The Institute for Market Transformation reports that more than 20 municipalities in the United States, almost all large cities, currently require commercial buildings to get an Energy Star score each year and report the score to the local government. Similarly, many in the commercial real estate industry look to the Global Real Estate Sustainability Benchmark (GRESB) as another set of performance metrics. Vendors have built vertical solutions to simplify the data collection and reporting process to these standards bodies.
Utility billing is another focused offering that has attracted firms to deliver vertical solutions: Multiple vendors have historically focused on utility bill pay, aiming to minimize late fees and identify errors and overages. Other vendors help building owners track energy use in tenant office spaces and generate monthly utility bills within the building based on consumption. Additionally, there is a new software ecosystem being created around technology-enabled facility management capabilities, which allow geographically distributed sites (for example, national retailers) to manage all facility services, from landscaping and trash pickup to HVAC maintenance, with a single software application that can request service, monitor progress, pay, and monitor overall performance metrics. All of these solutions fit the definition of a vertical solution, but are focused on a specific problem or a specific type of building.
Horizontal solutions are easier to integrate and use with existing systems — new hardware devices could be integrated with existing software. Or a provider of bill or rate/tariff data could be used to supplement the existing on-premise systems to help the accounting team pay utility bills. Outside of the hardware vendors (meters, gateways, other control devices), only recently have horizontal solutions become more common in the building technology market.
Entrepreneurs and investors are starting to recognize how compelling stand-alone horizontal solutions can be because they utilize existing channels to market and have fewer competitors within this fragmented market. Instead of competing with every other vertical solution that is sold to facility managers, many horizontal solutions sell to the vendors and help simplify a challenging, but non-core problem. Facility managers are less likely to instantly recognize the names of these firms, but will be able to utilize this technology via relationships with existing vendors that most likely will have a good sense of the various horizontal solutions.
Data acquisition is one type of horizontal solution that has been successful in the market over the past few years. There now are solution providers that can acquire utility bill data or rate tariffs electronically. This allows facility managers to worry less about getting data from many different utilities across different geographies, and focus more on using this information to identify anomalies and support internal and external reporting. It also helps vendors deliver a more compelling visualization or analysis solution since they don’t have to figure out the data acquisition challenge internally. There are a few emerging energy-data-as-a-service offerings that have been successful. There also are a variety of innovative hardware devices that acquire energy-use data at the breaker or other comparable level of granularity.
Questions to ask before buying
There are a variety of questions that facility managers should consider when evaluating these solutions. In addition to determining if a vertical or a horizontal offering can best address the problem at hand, facility managers should also think about:
• How much time does the in-house facilities team have to help set up and learn the system? This is especially true for vertical solutions. That said, some vendors offer managed services in which their own staff will use the technology on a facility manager’s behalf.
• How much time and money is required to keep such solutions operating? One advantage to modern building technologies is that many use open and well-known protocols, which reduces the chance of “vendor lock-in” and makes incremental growth and expansion easy and cost-effective.
• What are the data analysis time and training requirements? In some cases, new systems drastically increase the amount of data a facilities team can use, but require that the team has the time to and knowledge of how to use it. Of course, managed service contracts will provide all of these capabilities without requiring much facility management staff time.
• How widely can the data from these systems be shared? Some software platforms are directed at operators while others have role-based views and modules tailored to various levels of the organization. If your organization is planning to show high-level metrics and scorecards to senior executives and even customers or investors, a solution with flexibility and different roles will be advantageous.
Both vertical and horizontal solutions will continue to proliferate in the market, but facility managers should decide which is right for the given problem they are trying to solve.
Joseph Aamidor, managing director of Aamidor Consulting, is a senior product management consultant focused on smart buildings, IoT, and energy. He helps startups and established industry players understand the smart buildings market and forge partnerships. He can be reached at Joe@aamidorconsulting.com.
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Building IoT: Should You Choose a Horizontal or Vertical Solution?