The Business Value of an Innovative Building

Matthew Marson MEng (Hons) CEng MIMechE FRSA

Abstract

Smart buildings promise to deliver for businesses across a broad spectrum of value levers, but in many cases, the technology has been difficult to implement, so it has failed to meet expectations. By considering the trends affecting businesses, including consumer perceptions and the complex delivery process of a smart building, this paper shows how holistic designs can be – and have been – successfully deployed in both new builds and retrofits.

Key Words

Digital; smart; intelligent; sensor; data; analytics; business case; value

INTRODUCTION

The smart buildings world is rich in rhetoric around digital transformation and the business value associated with it. But the rhetoric often hides the fact that there are few real-life applications to demonstrate this. Many organisations are restricted by a ‘silo structure’ that prevents them from being able to deliver smart buildings. Buildings data must be integrated with the systems that are currently operating within the business to see if there is a material gain, and therefore a business case, to deploy smart technologies to the built environment.

Other failures in the adoption of smart buildings technology arise from blinkered views of business. Understanding the macro trends that are changing the fundamentals of a business can help move a conversation with the CFO from cost-cutting to one of investment.

This paper will discuss how the competitive digital landscape, and changing expectations, drive the business case to invest in smart building technology. Understanding the value levers and how they have been applied in real-world contexts demonstrate how to successfully engage with the issue.

THE MEGA TRENDS THAT ARE AFFECTING BUSINESSES

The way that most businesses operate has fundamentally changed due to the development and availability of new digital technologies. In fact, the impact has been so profound that some businesses that were on the Fortune 500 in 2010, no longer feature on the list.

There are six fundamental mega trends (Figure 1) that are changing how businesses operate and therefore the spaces that they need to work in.

Figure 1: The Megatrends

Today’s workforce is a flexible mix of permanent staff, freelancers, contractors and temporary workers. Businesses need to respond to how they deliver seamless working experiences in what has become known as ‘the gig economy’. A ‘gig’ describes a single project or task for which a worker is hired, often through a digital marketplace, to work on demand). Some gigs are a type of short-term job, and some workers pursue gigs as a self-employment option. Between 2015 and 2016, 8% of Americans were employed through an online gig economy platform (Smith, 2016). This is attractive to workers with 43% of employees saying they would choose flexible workhours over a pay increase (Unify, 2014). Delivering an environment that supports this type of working without technology is difficult.

The concept of work-life balance has changed. 56% of global professionals’ define career success as having a good work-life balance. People are clearly concerned with how they work, with over half of respondents saying they had turned down or not considered a job due to concerns about its impact on work-life balance (Accenture, 2013). In the future, it is expected that employees will blur their professional and private lives even more. As a result, working patterns will alter as jobs become outcome driven, rather than schedule driven. Employees will also expect flexibility and services to be provided to support them. This is a very different type of workplace design and service delivery.

The use of intelligent automation has been increasing significantly. It is expected that within the next few years governments will implement specific regulations to preserve human jobs in the face of increased automation. Robotic automation makes it possible to capture and interpret existing applications for processing a transaction, manipulating data, triggering responses and communicating with other digital system to reduce time taken to perform tasks and costs by 80-90% and 80% respectively (Accenture, 2018). The design of a workplace needs to respond to types of jobs that humans will be performing.

Analytics, a subset of intelligent automation, is the discovery, interpretation, and communication of meaningful patterns in data that can help a business transform into insight-powered, high performance enterprises. By 2020, 66% of enterprises will implement advanced classification solutions to automate access, retention, and disposition of unstructured content, making it more useful for analytics (IDC, 2016). This technology promises to help set out business cases that were once considered hard to quantify.

Furthermore, intelligent automation powers The Internet of Things (IoT) – a network of physical devices that collect and exchange data (Schoder & Hassan, 2018). The IoT permits communication amongst these devices to create a seamless environment-based experience for a user, blurring the lines between the cyber and physical worlds; delivering experiences and productivity gains. The IoT is ever growing, and the number of interconnected devices increased by 31% year-on-year to 8.4 Billion in 2017 (Köhn, 2018), and this figure is expected to increase to 30.7 billion by 2020 (Nordrum, 2016).

The rise of augmented reality further blurs the line between the digital and the physical. It provides a, view of a real-world environment which is supplemented by computer-generated sensory input such as sound, video, graphics or other data. By the end of 2018, it is predicted that 25% of enterprise IT organisations will be testing augmented reality business applications on smart phones (IDC, 2016). For instance, by using Google Glass, augmented reality eyewear, for wire harnessing, Boeing reduced production time for harnesses by 25% and cut error rates by half (Statt, 2016).

As demand grows for best-in-class experiences in our private lives, the same level of service can be expected in the workplace. Simply put, employees now expect tailored experiences, fast evolution and personal connection: 79% of Millennials think their environment is more important than their paycheque (Steuer, 2014). Corporations know this, and they are responding. Airbnb, for example, has created a ‘Chief Employee Experience Officer’. (Meister, 2015).

Healthy is regarded by many as the new wealthy. Consumers are using health monitoring for both leisure and preventative care. Technology innovation has cut the price of biometric monitoring significantly, leading to the rise in popularity of gadgets such as Fitbit, which had 25.4 million active users as of December 31, 2016 (Fitbit, 2018).

Overall, however, rising healthcare costs are an issue that many governments and firms are struggling to manage. In the US, the total annual costs of lost productivity due to employee absenteeism totalled $84 billion (Investopedia, 2013). Yet there is action that firms can take: it has been shown that creating and implementing well-being programmes can reduce employee ‘sick days’ by 26% (IWBI, 2016).

The office environment has a crucial role to play, with smart buildings showing strong potential to improve employee health and wellbeing. For instance, at one of its offices, the real estate agency firm Cundall, achieved WELL Gold certification for its focus on improved indoor air quality, including continuous monitoring of carbon dioxide (CO₂) and volatile organic compounds (VOCs)”. This is estimated to have saved the company £200,000 per year through a reduction of four sick days per year per employee and a 27% reduction in staff turnover (IWBI, 2018).

Smart lighting systems, which are designed in line with human circadian rhythms, can also be beneficial. Data from an employee survey after a smart lighting system was installed in a new office, revealed that 25% of employees attributed their enhanced sleep quality to the new lighting system. (Matos, 2018). Better sleep improves cognitive function (Medicine, 2009) and this can boost employees productivity at work.

SHIFTING PERCEPTIONS

With the ubiquitous digitisation of services, consumer expectations are blurring the lines between traditional barriers. In the past, companies only considered their like-for-like counterparts to be competitors.

Banking provides a good illustration of how digitisation has shifted perceptions. Traditionally, banks competed with each other to attract customers with the products, services and interest rates. Technology companies disrupted this model by creating new experiences: we can now pay for goods and services using our mobile devices, for example. Services such as ‘PayPal’ enable us to ‘email’ money to anyone around the world without the need for complex international account numbers. Monzo, the mobile banking app created in 2015, exploited a gap in the market to improve consumer experience, by making personal finance easier to track. These new competitors have moved the goal posts for traditional banking firms.

What are known as ‘perceptual competitors’ set out to shape experiences that create new expectations across sectors. And they pose a more acute competitive threat than many marketers may yet have understood. Take the speed of delivery mechanisms, for example. A customer who buys a household item such as new kettle for their kitchen can often have it delivered the same day. But it can take up to five working days to receive a new debit card from a bank. There is increasing misalignment between consumer expectations and the service they receive.

All of this means that people expect the same level of technological sophistication at work to that they experience regularly in their home lives. With Google and Amazon amongst the many firms developing smart home technologies, the rate of growth in such expectations can only increase.

COMPLEX DELIVERY PROCESS

Developing smart buildings in the corporate world may have been slow to take off because of the specialist skills required, even though the eventual benefits are so significant.

Very broadly, these are the process steps in a smart-building programme:

Kick-off
Vision
Experience design
Strategy
Business case modelling
Devices and machines
Connectivity
Edge processing and resilience
Platforms and big data
Application
Business systems integration
User interfaces
Deployment commissioning
Testing
Change management
Support models
Continuing operations

BUILDINGS AS A STRATEGIC DRIVER VALUE

Corporate Real Estate (CRE) functions are considered to be cost centres by most businesses. This is an outdated view because smart buildings mean that, workspaces can help to deliver the fundamental goals of increasing revenues and reducing costs.

This is amply demonstrated by The Edge, an office complex designed and built for the consultancy firm Deloitte in Zuidas, Amsterdam’s business centre, The Edge is currently regarded as one of the world’s most smart buildings and it is credited with helping Deloitte to attract new talent and reframe its brand.

Studies of similar spaces have demonstrated that workspace quality can help increase job satisfaction by more than 20%. (CABE & BCO, 2015). Improved innovation and better collaborative outcomes (Gensler, 2016), together with increased productivity (Stoddart, 2016) have also been reported. Other benefits include the reduced cost of absenteeism (up to 28% fewer days lost according to IWBI 2016), a reduction in the actual amount of space required for a workforce (up to 29% according to Citrix 2016) and reduced spend on HVAC (heating, ventilation and air conditioning) through improved analytics (up to 25% according to Accenture Digital, 2017).

JLL has modelled that, in the USA, most organisations spend $3 for utilities, $30 for rent and $300 for payroll per square foot, per year (JLL, 2018). These varying orders of magnitude illustrate the importance of acting on people-related issues before energy (Figure 2).

Until now, the focus for cost reduction has been on energy usage is because it has been comparatively easy monitor energy consumption through expenditure. Now that building sensors are coming down in price and cloud computing is more affordable, it is possible to capture more detailed data on some of the other overheads that cost businesses money, however. Some examples follow.

Figure 2: Technologies aligned to the 3/30/300 model

HVAC Analytics

Most buildings with heating, ventilation and air conditioning (HVAC) systems are controlled using a building management system (BMS). These computers are often rudimentary in their capability, storing on/off times, temperature setpoints and showing alarms when there is a problem with a machine. Given that it collects data about each and every machine connected, the capability of a BMS can often be enhanced. By uploading the data continually to a cloud server, organisations can generate advanced analytics to help improve energy performance.

In the majority of HVAC systems most individual machine elements report back to the BMS. Trending performance over time allows the system to spot deviations from the operational design intent and, in some cases, adapt in real time. Logging data over time allows the system to detect faults before they happen, enabling facilities mangers to respond before they reach alarm status in the BMS. This can save money by improving operational efficiency and removing the need to pay for emergency call-out rates for specialist engineers. Accenture estimates that deployments of this type of analytics results in 10-25% energy savings and 5-15% in maintenance savings. In one example (Figure 3), a leading technology company was able to save $2m USD within just 18 months of its improved analytics system going live.

Figure 3: HVAC Analytics Example Dashboard

Lighting Sensors

Placing banks of sensors within lighting systems is rapidly becoming the sensor deployment method of choice. This is because the ceiling provides a structured grid to place the sensors, and provides easy access to both power and data infrastructure. Given that lighting covers all parts of a workplace floor, there are synergies with the aims of data capture from sensor deployments. Multisensory banks are deployed within the individual luminaire, and capability goes beyond the lighting control. For example, a Bluetooth beacon can be deployed to enable a mesh of location services across the floor plate.

When lighting control is also part of the sensor bank, it means that in most cases ‘by the minute’ adjustments to light levels are possible are a result of UVA/UVB detection. This is known as ‘daylight harvesting’ and it usually results in a 30% reduction in energy consumption when the LED is controlled in such a way that only synthetic light is used as a top up to natural daylight. Additionally, ambient light sensors can also be used for task adjustment and this can result in energy savings of around 15%.

Also, occupancy sensors mean that each luminaire can be controlled by presence. This results in an additional 30% saving (to check things from the business case deck) (Ersules, 2016). In addition, the occupancy sensors are also being used as part of more complex space utilisation analytics services (Figure 4) to enable and 10% increase in space utilisation. Locating these within the ceiling means that there is full coverage of a floorplate.

Figure 4: Space Utilisation Example

Virtual Reality

Increasingly, organisations responsible for the operation of buildings are now using virtual reality alongside BIM models to further understand the root cause of issues within a space. By using the live data available from centres across the building and rendering 3D space, it is possible to understand the complexities of how the space is being used, and how the building is operating in use (Figure 5).

Figure 5: Virtual Reality with Real-Time Sensor Data

Productivity & Data Integration

Many applications of smart buildings technology promise to offer increased productivity in the workplace. However, simply collecting information about the workplace alone is often not sufficiently valuable without developing a platform that orchestrates the relevant IoT data and can add this into the existing organisational data lake or other databases for analytical comparisons to be made.

Consider the example of the FinTech accelerator business that compared the movements of an individual (captured by using location triangulation on Wi-Fi access points) to the number of patents filed. The client aimed to demonstrate that there would be a positive correlation between collaboration (in this instance physical movement within the space) and innovation – and the supposition. was proven to hold true. It also helped to justify to the business case (previously difficult to demonstrate) that employees whose work was less collaborative, should work from home more often to complete tasks on which they needed to work alone. This would allow the client to increase the desk and sharing ratio based on recorded behaviour, an example of data driven decisions.

Constantly Temporary

The demands of a fluid workforce, bringing different skills to the workplace, together with increasing project work in many industries makes the design of workspace challenging. Providing a work setting that is the same for everyone leads to high levels of dissatisfaction because it is not perfect for anyone.

A leading international management consultancy, facing this challenge responded with a workplace design that used an architectural paradigm called “constantly temporary”. Essentially, this meant that everything was movable, and often mounted on wheels: regular work desks, display screens for collaboration, or even temporary installations (such as virtual reality demonstration space).

In order to achieve this, the building needed to be designed with an entirely smooth floor area to enable ease of movement of all items of furniture. To supply power and wired data connections to the desks and other pieces of technology, “ninjas” (black cables from the ceiling) were installed over some of the building services to allow for complete flexibility of the space. This also meant that users could customise their immediate vicinity with a high degree of flexibility.

When a new project comes into the workplace, the team is given an area for a ‘structural bay’ to accommodate the size of the team. The team selects the furniture that they require, and it is provided for them. The flexible mechanical and electrical services mean that the space can be rapidly commissioned to meet the changing needs of new projects.

One of the drawbacks is that when an entire workplace is in constant flux, it can be difficult to locate people and things.

To address this issue, the client developed a workplace mobile app and placed a set of internal location services to allow users to find what they were looking for quickly.

Find A Skill

Knowledge-based firms often struggle to deliver effective collaboration because there is no easy way to find out what skills are available amongst the individuals in the an organisation and where those individuals are is based (Figure 6). In order to make is possible to find skills that a firm already has, a set of location services can be installed across the workplace. In one example, Bluetooth beacons were used as part of a workplace mobile application to match the corporate ‘people directory’, the skills database and locations (derived from the Bluetooth beacons) into a searchable user interface.

Figure 6: Find a skill mobile application

From the user testing at the client organisation, it was demonstrated that this technology reduced productivity leakage by 15% from most users (Accenture Strategy, 2016). In 2016 Sodexo claims that most white-collar industry workers were susceptible to around two hours of productivity leakage per day (Sodexo, 2016). Productivity leakage is the result of poor management, timings and services within the workplace that prevent an employee from doing something that adds value to the firm. Examples include the cleaning the toilets during their busiest operation, Wi-Fi connections dropping, lifts being out of order due to maintenance during peak traffic hours. Where productivity from innovative technology can manifest itself best, is through enabling increasing opportunities to being productive. Given the fact that productivity is considered differently between organisations and even departments, productivity is difficult to define. It is measured using IoT and cloud computing and acted upon accordingly. In some cases, the IoT and cloud computing used to measure, can also automate responses to observed poor performance.

Find Me A Place to Meet

As human resources department push the workforce towards increased collaboration, the workplace struggles to physically accommodate meetings in the short-term. A leading technology company deployed a set of occupancy sensors that were located in individual meeting rooms. The data from the sensors was then integrated to a room booking system. This meant that planned versus actual attendance in meeting rooms could be compared for accuracy. In addition to this, live centre data meant the client was able to render live space usage, using a colour-coded system, on both an employee mobile application and public display screens. Spaces that were identified as available, were then bookable immediately for teams to collaborate at short notice (Figure 7).

Figure 7: Find a place mobile app

This technology enabled 10% increase in space utilisation (Ersules, 2016), reducing the demand for additional space from the users realising an annual rental saving.

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