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Incendium’s White Paper Series – ‘Smart Buildings – exploring the challenges’ by Partner Jonathan Cameron

Nov 29, 2017

Incendium’s White Paper Series – 'Smart Buildings – exploring the challenges of technology, cost and resourcing' by Partner Jonathan Cameron

Smart Buildings are being requested globally by corporate tenants and building owners alike, and new designs and technologies have significantly increased the performance and efficiency of these buildings. However, with this advancement come challenges, including cost, how to maintain a Smart Building and how to find the talent pool of individuals to maintain them.

We hear much these days about the latest in Smart Building design, which is heavily influenced by technology, and find ourselves in a period of transition. We are likely to stay in this constant state of change, with technology improvements continually influencing the design of our workplace and habits.

What is a Smart Building?

Smart Buildings are well managed, integrated physical and digital infrastructures that provide optimal occupancy services in a reliable, cost effective and sustainable manner. They achieve reliability, efficiency and environmental responsibility; provide visibility, control and automation; and communicate in real-time to supporting infrastructure.

Smart Buildings will help provide the solution for an overall ‘smarter building’ strategy. Systems will improve our ability to provide portfolio management, track energy and carbon use and (particularly) to reduce cost.

Smart solutions for every building

It is clear that there is a need for progress in the industry; corporate real estate and integrated facilities management are becoming increasingly more important, sophisticated and demanding.

Smart Building design and the associated technology is being requested by occupiers and owners alike and this welcome advancement brings valuable benefits in terms of performance and efficiency. However, it presents new challenges to maintenance, management and (particularly) how the industry will attract and develop talent in line with the development of the technology.

As players within the corporate real estate world, we continue to see a focus on cost saving and a drive for outsourcing. This has an impact on our ability to introduce new systems and invest in talent.

The challenge we consequently see unfolding is a shortfall in skilled talent and the subsequent need to ‘up-skill’ existing resources to manage the increasingly complex technology based solutions. We expect there will be a need to look outside of the industry to attract talent from different labour markets. Whilst not suggesting that the individuals managing buildings and systems today are under qualified (far from it), we believe that in the near future we will see a convergence of applications and technology experts and the creation of a different skill-set to implement and manage these new systems and technologies.

We believe that, in the near future, there will no longer be a requirement for large ‘on-site’ teams of engineers; instead, there will be leaner teams, more reliant on support and direction from remote, highly trained individuals who are likely to be IT specialists with backgrounds in maths, physics and data analysis. The evolution of these roles will place a focus on data interpretation to support the delivery of business outcomes.

A question to then consider is: why aren’t we applying the same approach to any expensive asset in a building?

We can see trends emerging that help to illustrate this point. McLaren is an example of a company who has invested heavily in technology and the talent to support it. Today, a McLaren car, wherever in the world, will be ‘supported’ remotely from the McLaren Technology Centre in Woking, UK, where there are teams of ‘technical support managers’ on call 24/7.

In order to succeed in a competitive environment, McLaren developed cutting edge technology and recognised the need to invest in talent, to complement their existing teams, who they could train and develop to provide rapid diagnosis and client support, wherever they may be. To do this, McLaren developed diagnostic processes that are able to determine whether or not a car has a fault – messages containing vehicle values and error codes can be sent from the car’s on-board computer to the Technology Centre and within minutes the customer can expect a return call from a technical specialist to confirm whether the car has a genuine technical issue and advise on the best course of action.

These innovative systems enabled McLaren to provide a totally different experience for the end user, as they acknowledged that their world is all about the client experience, efficiency and communication. The central Technology Centre also allowed McLaren to set up a relatively small retailer and local support network, ultimately saving the cost of expensive retail/maintenance outlets.

So how does this relate back to the property industry? I believe that with the introduction of smart technologies we will see local support teams significantly reduced in head-count as central teams are used to analyse data and manage remote control systems. It is clear that change is definitely upon us and that it will not be limited to service providers/consultants. Corporate real estate teams will have more meaningful data at hand that will aid their decision-making process and decisions will be measurable and intelligently concluded based on ‘facts’.

Solutions for an overall ‘smarter building’ strategy

Therefore, we are potentially talking about significant investments being made in the latest systems and new technologies, either by the developers or by end users. Either way, the initial investment may equate to a premium being paid compared to other property options.

Cost, as ever, is high on the corporate agenda and it is acknowledged that real estate is one of the largest expenses – the challenge, consequently, is that the market may restrict the ability to invest. The recent recession and period of volatility across the markets, particularly in the financial sector, resulted in a significant change in share prices and businesses continue to be under pressure to reduce cost. At the same time, energy and carbon use and the need for sustainability are widely recognised as being key priorities; corporate real estate teams therefore face the challenge to simultaneously improve services and demonstrate environmentally responsible practices.

Cost savings and out-sourcing strategies

The focus to drive down cost has resulted in an increase in the market for out-sourcing as companies focus on sustainable cost reductions. Cost-saving strategies have accelerated a change in the way in which organisations procure services and there has been a focus to those who can deliver integrated services on a global scale. As a result, models are changing and we have seen an increasing focus on models that provide guaranteed savings to remove performance risk.

Competition is fierce for the global ‘integrated’ contracts and we have seen recent rationalisation of service providers to create global integrated platforms, leveraging scale.

Corporate real estate teams (and in turn their service partners) are expected to deliver savings at pace and the resultant problem is that this drive for cost savings has squeezed margins – as a consequence, it is likely to further hinder the ability to invest in talent and systems and drive continuous improvement.

Technology

The office of the future, and the technology it will implement, is difficult to predict. There are many options but adoption is slow. As stated at the beginning of this article, we believe we are very much in a period of transition and must focus on how we use advancing technology to plan flexibly, knowing that we can’t really foresee what widget is going to be available next.

The challenge is that advances in technology happen very quickly; certainly a lot quicker than change in the physical workplace environment. The development in technology is happening at such a pace that the market is struggling to provide the resource to manage its deployment and on-going maintenance. In terms of the resource to manage the latest systems, we may need to accept that we will always be one step behind the latest developments.

The implementation of technology requires change management; it requires people to learn how to use the systems, to see the value and benefits. The industry needs to be in a position to accept and embrace the technology – therefore, the limitation isn’t what technology is going to be available in the future, it’s how we embrace it.

Perhaps the solution is to have a strategic plan that is not just about the technology itself but also about the team to support it, the processes and the business outcomes required – why spend huge sums on the technology if you don’t have a plan to use it to its full capability to improve your business?

In summary…

Smart buildings require smart people.

With the points discussed throughout this article in mind, we need to address, as an industry, how we attract and develop talent. Companies talk about developing progressive HR policies and continuing to recruit and invest in training for the ‘best’ people, but how can this happen while the economy is fragile and margins are squeezed?

This is a broad subject that could be discussed at length, but I believe we need to do more as an industry to convince young people, at graduate level, that the real estate industry has the diversity and sophistication to attract and provide top talent with a challenging career. Support in this endeavour is vital from the professional organisations that support the industry.

In terms of finding ‘skilled labour’ to manage the systems I have discussed here, we are likely to focus to the IT and technology markets and the business schools that feed those sectors. Over the last few years we’ve seen several IT companies reach out towards innovations including building systems, energy management, smart meters etc. However, many of these IT companies found it hard to gain credibility when it came to the technical details of building and energy systems. Corporate real estate personnel, on the other hand, often saw the IT infrastructure penetrate the daily operations of building systems and at times felt threatened that they need to rely on and involve the IT department.

Positively, we are now beginning to see cohesion and an understanding of the need to have a good relationship between facility personnel and IT groups. What we hope to see in the future is not only better relationships but a possible realignment of IT and FM organisations – perhaps we will even see something akin to a ‘Department of Systems Engineering’.

As a whole, the corporate real estate industry is becoming increasingly more sophisticated and demanding. It has taken great strides to progress in recent years and I am certain it is capable of embracing the challenge the advancement in technology brings.

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