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As the Internet of Things expands into the Buildings venue, connected devices and systems are creating opportunities to radically transform customer service, resource allocation and systems efficiencies. Connectivity is enabling the emergence of “Smart Systems” in which manufactured objects, general infrastructure, people and businesses will connect and communicate constantly.

Smart Building Systems provide a distributed control and information system that enables the control and maintenance of a building environment, leveraging a network of intelligent devices to monitor and control the mechanical and related systems in a building. A dominant trend in the Buildings venue is the increased end user expectation of personalized services that leverage historical data to create user-specific value with minimal direct user input. Meanwhile, continued interest in energy management among building operators is driven by socioeconomic pressures as well as the availability of interoperable solutions arising from the proliferation of available networked products. These factors are driving operators to adopt solutions that prioritize device and data interoperability to enable offerings to collaborate to meet user needs in the background of operations.

The Smart Building Systems market is poised to enter a new period of transformation based on the availability of low-cost, wireless IoT technologies and new services offered through innovative business models. Throughout the industry’s history, technology has brought new layers of complexity and functionality to building systems. We believe that the combination of available technology with business architectures designed to support these new offerings has the potential to unleash a significant wave of disruptions in this evolving arena.


To date, the Smart Systems opportunity has mostly been compromised of “simple”  monitoring applications and related tracking services. Although the convergence of collaborative systems and machine communications will enable entirely new modes of  service delivery and customer interactions, players seem completely stuck in this “simple” application phase.

There are two root causes for this: a failure on the part of OEMs to envision what true value  means for the customer, and an inability to organize themselves to deliver that value. OEMs are focusing too much attention on reducing the costs of supplying and supporting  customers with existing services rather than developing new value.

Apple and some of its peers in the consumer space present an interesting case for how connected product business models are evolving. Apple’s model is based on a Smart System solution and platform that pulls together technologies from multiple domains and packages the solution in a way that wins buyer acceptance. But more importantly, the platform model enables extensive third party collaboration and contributions through a well-established developer community.

Looking beyond Apple, players like Google, Amazon, Facebook, Salesforce and others are  also driving platform models in the evolving mobile Internet arena. Salesforce and Amazon have many thousands of developers building applications and businesses. Google, with its  Android platform, has created a phenomenal market position. What these models all have in common is that they are not traditional product-focused approaches; they are based on collaboration, participative product development and smart services innovation, and they are organized and leveraged with a common business and technical platform.

Unlike the B2C world, Smart Systems applications have evolved in a  context where applications such as remote monitoring and support for equipment have been tied closely to equipment services contracts.

To date, remote services and M2M systems have largely been focused on simple remote diagnostics and simple tracking and location services, in large part because of technical complexities and business model challenges.

Return from simple applications, while extremely valuable, is limited to the manufacturer’s service delivery efficiency. Contrary to what current market offerings depict, however, the value of connectivity does not have to end with just simple applications focused on a single  class of device or machine.

As technologies mature and open standards become the norm, applications based on deeper, peer-to-peer interactions among devices, systems and people will drive more compound and dynamic value streams. This opens up new collaborative business model  opportunities that have the potential to drive much greater value for the customer.

These new business model opportunities are much closer in many respects to the consumer-driven models described earlier and can provide many lessons for the “cloistered” equipment  manufacturers in B2B arenas. The business benefits of large-scale open collaboration in the B2B arena are just beginning to be recognized.

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