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Why the Focus on Human Capital Is the Key to Digital Transformation in Commercial Buildings

Casey Talon
Jan 10, 2019

Smart Buildings

Open any business publication and you will hit a headline tackling how digital transformation is disrupting a traditional industry. Old ways yield to digital methods such as when software analytics are used to solve problems in new, more efficient ways. Digital transformation got an initial foothold in financial management and customer relationship management, but has since moved into core operational functions as well.

At Navigant Research, we have characterized the impact of digital transformation on the power sector as the development of the Energy Cloud. Commercial buildings have an important role to play in this emerging Energy Cloud framework of dynamic interchange between energy supply and demand. Facilities that have undergone digital transformation are poised to become an asset that can be activated as a source of either energy supply or demand management in the new grid construct as a building-to-grid platform. We are just beginning the journey toward the Energy Cloud promise. What is the biggest lever to shift commercial facilities into building-to-grid assets? People.

Decision-Making Siloes and Facility Management Industry Trends

The idea of IT/OT convergence is at the heart of the building-to-grid promise. An IT infrastructure creates the digital profile of a building and enables the analytics that provide data-driven operational and energy efficiency improvements. The technologies continue to evolve, but have reached a useful level of maturity. The outstanding issue is a lack of IT/OT convergence in terms of personnel.

In ongoing research on intelligent buildings, Navigant Research hears about the siloes in business processes between IT and OT teams within customer organizations and a lack of spillover in skill sets and a coming departure of institutional knowledge with an aging workforce. According to IFMA, the average facility manager is a 49-year old male with more than 15 years of experience in facilities management, and sits in a middle management role. These statistics point to a couple key challenges to the advancement of intelligent buildings: a significant brain drain is coming over the next decade, and potential misalignment between enterprise benefits of intelligent building solutions and mid-level decision-making power and influence.

A Three-Step Path Forward

The emergence of an ecosystem of partnerships and coopetition is another cornerstone of the intelligent buildings opportunity. The revenue potential, business benefits, sustainability impacts, and employee/consumer experience improvements drive technology and service provider interest from a wide range of legacy businesses to the intelligent buildings market. To achieve meaningful change, key stakeholders in this ecosystem have important roles to play including:

1. Implementation partners need to bridge the IT/OT gap.

As I highlighted in a recent Smart Cities Dive article, seamless integration of information technologies, building automation, and new Internet of Things infrastructure requires cross-discipline expertise. Today, however, less than 10% of respondents define their business as a smart buildings integrator. This gap was further explained when those surveyed were asked about their company’s domain knowledge: 68% chose building automation systems/building management systems; only 29% chose IT networking and communications.

2. Technology providers need to offer business-focused use cases.

For years, intelligent building technologies were pitched as solutions for energy cost containment. While such a clear ROI remains fundamental to the sales pitch, customers need to hear more about how their investments tackle their most strategic business challenges around employee and customer satisfaction, attraction, and retention. 

3. Executives need to bring business units together to make the best intelligent building investment decisions.

The IT leadership must be at the table to address cybersecurity, the facilities management team must evaluate the operational impacts, and executives need to assess the overall impact on the business’ bottom line. Bringing these groups together at the outset provides a stronger foundation for a successful intelligent building strategy and project implementation.