Tapping the billion-dollar smart building services market

Smart building technologies are raising the bar for what's possible in energy savings and efficiency improvements for managing commercial buildings.

Look no further than the newly constructed San Francisco Public Utility Commission (SFPUC) headquarters. The 13-floor, $190-million design includes state-of-the-art smart building technologies using 55 percent less energy and consumes 32 percent less electrical demand than the ASHRAE baseline standard.

Not to be outdone, the U.S. General Services Administration recently awarded a contract to IBM to install and develop building-monitoring systems in 50 to 100 of the fed’s highest-energy-consuming buildings. Those systems -- expected to improve building energy efficiencies and save up to $15 million in taxpayer dollars annually -- would connect to a central facility using a cloud-based platform.

While smart building systems can indeed provide significant efficiency gains, their sophistication can prove to be challenging to a building’s operating or maintenance staff, said Eric Bloom, a senior analyst with Pike Research. As companies increasingly adopt next-generation building technologies for commercial energy management, the market to manage those building solutions will soon overtake investment in the technologies themselves.

As such, according to a new study by Pike Research, the need for managing services in automated building management systems is on pace to almost quadruple by the end of the decade, growing from $291 million this year to $1.1 billion by 2020.

The report calculates current spending on all smart building services, including data acquisition and analytics, as well as building maintenance contracts.

“Smart building managed services allow building owners to outsource their energy management needs to experts who continuously monitor their facilities, searching for opportunities to reduce energy costs and improve operations," said Bloom.

Bloom writes that very few players in the current smart building market could be considered purely managed service providers. But the usual suspects of building equipment manufacturers -- including Johnson Controls, Siemens, and Schneider Electric -- are all well positioned to provide products and services in this market.

Relative newcomers Ecova and Pacific Controls are noted as potential competitors, as each have developed significant technology for managed services.

As with the GSA contract, large, traditional IT companies such as IBM have a compelling argument to make in showing off their core expertise in systems integration and cloud-based building management. Data, of course, is the key enabler for smart building energy efficiency programs and those who have the tools to the job should do well in this market.

The report touched on the lagging economy as incentive for market growth. Indeed, Kirsten Jack, with the non-profit advocacy organization The Climate Group, commented: "As the recession continues, building owners are installing smart managed services to lower costs and counteract the inefficiencies of more traditional systems that were previously used, so demand is soaring."