What Has Happened Over the Last 10 Years and What Can We Look Forward To?

As a new year approaches, it is always interesting to look back. 2019 has been an exciting and fast-paced year in terms of sensors and other "Proptech-driven" ventures. From talking about IoT (internet of things) and sensors over the past few years, this has now been given a name: "Proptech" (Property Technologies), or real estate technology if you prefer — and building owners took action in 2019.

But this time I want to look a bit further back, as the change we are now seeing has been going on for several years. Thinking back to 2010 when I was actively working with building automation — which was, and perhaps still is, the heart of a building, where all technical systems are controlled from — this was implemented in several different ways. The big discussion at the time was that I was also advocating for "open systems". Back then I was convinced that open systems meant a common BUS, which is the communication language the technical installations use. The industry had tried using LonWorks (local operating network) as the "open" protocol, but there were many licences, challenges, and some ownership interests that were larger than others. The major players such as Honeywell, Johnson and Schneider used their own protocols, while many in the industry tried to transition to a common one — at the time, BACnet.

I myself was an advocate for this, and took the BACnet certification from BACnet International in "German-English" and was convinced this was the future. The acronym was also very catchy: Building Automation and Control networks. This protocol dates from 1987, and at the time the industry liked what was "tried and tested" and did not really see the major challenges with this.

Larger projects were launched, and among them was the top system for Oslo School Buildings. I was project manager here and built up the department that worked on this from 2012 to 2014, and BACnet was agreed upon by 3 different large consultancy firms involved in this process. Here I learned a great deal that forms the basis for my view that BACnet is not the future — and that I was wrong.

What have we learned from BACnet? BACnet is not as open as one might think. It is permitted to create proprietary objects, thereby making it, in my opinion, "closed". It does not support routers (there were no IoT devices in 1987) and therefore requires a function in the device that repeats all messages (BBMD – BACnet Broadcast Management Device). This may not have been so noisy in the late 1990s, but today it is completely unacceptable.

Furthermore, in 2013/2014 it was quickly discovered that security was something we were not good at in building control. The newspaper Dagbladet "hacked" no fewer than 290 buildings, as I have written about previously.

What is interesting is that BACnet does not support either encryption or the cloud in a good way, and can at best be used as a field bus — not out on the internet or towards cloud. Advocates of the protocol can probably argue this is being worked on. But why? Why should we polish a protocol from 1987 that no one outside the industry communicates with — why not unite so that a temperature sensor installed can be spoken to by everyone, regardless of industry and trade?

In recent years the Proptech wave has come in full force. I am quite sure that many felt that irritating feeling of "if I see one more presentation about IoT, I'm leaving" at all the seminars between 2015 and 2018. Everyone talked about it, few acted. You read about exciting technology, but as a building owner you still had to order as you always had — with high costs and problematic logins dependent on JAVA, which browsers were cutting out one by one. In 2019, I personally feel it has really taken off. Proptech has found its place in the construction industry, and initiatives such as Proptech Innovation, Proptech Bergen, The Factory and Proptech Norway have grown. What Proptech also symbolises is openness — it is no longer acceptable to create systems that are not open, and building owners are standing firm when ordering. Powerhouse (Ref. https://www.powerhouse.no/smart-by-powerhouse/) came out with a "Smart by Powerhouse" guide that also highlights the importance of open APIs and interfaces if you are to have the opportunity to create a "smart cognitive" building.

But as with all major technological developments, I also have a warning. The explosion of proptech companies we have seen, I believe will subside in the coming years. Or let me rephrase — I believe many real estate technology startups will not succeed, but those that do, I believe will reach very far. There has been a "boom" of companies wanting to solve the same challenges. This was very clear when I attended Expo Real in Germany earlier this year.

If someone orders a building, new or refurbished, where there is no opportunity for an open API to have data available, they have not ordered a building for the future.

We are beginning to see a development where new and refurbished buildings are starting to have an open API that enables new companies to provide value — making the systems they deliver actually capable of controlling or influencing the building. But I am still shocked when I see someone building a new building based on a specification from 2010. If someone orders a building, new or refurbished, where there is no possibility of an open API to get data out, they have not ordered a building for the future.

When this becomes self-evident — something I am uncertain about the timing of — or when we manage to move building control to what is standard in the IT world, I believe this will accelerate enormously. The term "smart building", which is a worn-out phrase, I believe will simply become "a building". In the same way that I no longer call my phone a "smartphone" — I expect it to be smart. However, I am uncertain about the pace, as we see that new buildings today are still wired with kilometres of unnecessary cabling that hinders flexibility; all the large consultancy firms still describe BACnet, or even KNX (the old EIB standard, two-wire communication) — but there are of course exceptions, and there are extremely talented key individuals out there. The majority, however, still take the same path as in 2010. We tell ourselves it is "safer", even though few of us would order a fossil fuel car from 2010.

We see a trend where investments in technical systems are starting to transition to "SaaS" (Software as a Service), meaning you pay a fixed monthly or annual price for a service that provides value. I believe this will become more common and we will accept it as long as the services are good enough and develop well enough — just as we pay for Spotify, Netflix and TU.

The advantages are many, and scalability is one of the important ones — not just upwards, but also downwards. It is a known fact that we have not managed to offer top-level management in our smaller commercial buildings, and it is said that only 2 in 10 buildings have a BMS (Building Management System). It is quite remarkable to think that our holiday cottages are smarter than 8 in 10 commercial buildings out there, which account for an extremely large share of our CO2 emissions.

What is particularly exciting about SaaS is that hardware can live longer. Looking at the sensors introduced into buildings, they support updates via the system — meaning that in just one year we have had automatic updates of sensors from Disruptive Technologies, Airthings and Pointgrab that have increased range, received more sensor values and much greater value — without changing any hardware. This is the same way Tesla suddenly got better acceleration with just a software update.

Becoming data-driven has been on many presentations, and we have started to see this journey, but only at the surface. I believe most industries working with a physical building as a customer — FM and all those with a service agreement on a building — will sell services rather than hours in the future. In this service, a large portion will be technology. Because why take routine rounds instead of basing them on data? Or why service on an annual cycle versus messages from technical installations when the system updates itself? We do not need to use so many human hours. It may not always be about delaying service — perhaps the pump filter needs cleaning three times a year, but then it may last five times as long.

What I am uncertain about, but truly hope for, is a revolution driven by the big three: Google, Amazon and Apple. What is going to happen here? Combined with 5G technology, these could take over all the technology in a better and cheaper way if they choose. The question is whether they only do this in the private market, and are content with "smaller" companies collecting data for them in their cloud environment — then they still have a foot in the door. Because the actual potential of data, we have not yet seen. We have started to collect data, stored it, but we have not yet extracted the great value — and this is what I look forward to most going forward.

But let's think about the opportunities this would give us. I have previously written an article in TU where I discuss how the actual control of buildings has changed significantly and how you see more stand-alone applications around.

This means the big task now is to collect data properly and add rules (what is called AI on fancy PowerPoints).

The first step I think would happen is that the price of "smartness" in the form of sensors, speakers and thermostats would represent an incredibly low cost and an extremely high value. This industry builds based on what users need and is "customer obsessed". This means you would actually see how you change the setpoint in your office, and it would learn your unique usage pattern and preferences. We have already seen this with Google Nest Learning Thermostat, but the value this could have — if you gave Google access to your phone's GPS, your search results and the data you generate — could become so accurate that it might cross a line that becomes somewhat unsettling. Our buildings are unique data generators; there is an enormous amount of data we can extract. Both Google and Amazon are investing heavily in their Cloud services — we see that several modern systems are based on these cloud services. So they are already in this market. But if they chose to do this themselves, many companies would be "disrupted". The word "disruptive" implies radical change, often removing a link in the supply chain, as we have seen through several previous changes. On the other hand, you could write a book about security, data processing and what it means if one of the big players gains access to all our private data through services we use today, at the same time as all the data we generate at work.

In the same way we got the "smartphone", we now have the "smart building", and what I think will really accelerate proptech is when we get "App Store" or "Google Play" stores for our buildings. When I mentioned earlier that proptech companies will subside, it is because I believe it is overdue that we get some negative "front page" articles — as always happens when there is a "boom". We have many extremely exciting companies with great technology, but the challenge I see is, first and foremost, that everyone thinks they are going to solve the problem without understanding the complexity of buildings, and several have assumed communication was open. Our buildings have gone from having long contracts of 8-11 years to much shorter contracts. The usage pattern of buildings has also changed — we see a tendency to use the building more. There is also a significant clash with the business model of many new companies that take a share of energy savings. Saving energy is, in my view, the wrong way to frame the challenge — we must use energy correctly! This means we may actually need to use more energy in a building if we have poor indoor climate, off-gassing, or similar. It may also be that we manage to utilise the building more instead of expanding, which means it uses more energy — but we must use it correctly.

If we achieve this, there is much to look forward to. I am betting that when data is open and available it will truly be a joy to be a building owner or to be part of the building. Imagine when we can actually choose all the services we could wish for in a building. Yes, we will still need to add hardware for a long time, but if someone could offer me a function that meant I could know how my building was performing on sustainability, energy and utilisation by simply activating a feature at a low cost, I would do it immediately — or be able to rent out vacant spaces effectively over the Christmas holidays so those who need a workplace can have one while everyone is on holiday.

Furthermore, data will be available in a completely new way from traditional suppliers. Elhub will offer energy data via open API. WasteIQ (waste data) has started in Bergen with waste data via API, while the City of Bergen is opening up its data lake for those who need sensor data for the city.

We also have other public data — companies such as Create-Solutions give you a lot of useful information about how many people are in the building, which tenants are there, when contracts are most likely to expire — and this comes only from open data sets available out there, offered as a service.

There will be many opportunities ahead, and the future is now. Remember to have an open and transparent mindset in 2020, and I wish everyone a very happy new year!

‍