Buying smarter FM technology to get the intended results

As the demands of the workplace continue to shift, corporate real estate (CRE) leaders face challenges including ongoing needs for operational savings, portfolio compression, net-zero strategy execution and an enhanced employee experience. Smart-building technologies have, for the last decade, been touted as an all-encompassing solution to these challenges—and for good reason. The opportunities uncovered by building automation systems (BAS) and IoT sensor solutions are significant, and when used effectively can be a game changer for optimizing operations.

One of the biggest smart-building challenges is demonstrating achievement of the promised results. Software providers claim their platforms provide significant operational savings, and consultants recommend technology as the solution to daunting questions facing CRE leaders. But the underlying problem is execution and accountability.

Unpacking the problem

Most often, commercial real estate data exists in a siloed environment: data resides in different systems, or it’s all anchored on a property without any way of aggregating that property’s data with others. So it’s not a big-data problem; it’s a siloed-data problem.

Additionally, technologies are often installed without a clear end-goal in mind or alignment to the overarching real estate strategy. And, in many cases, building information systems are fragmented. They may have been sourced from a variety of industry providers and aren’t integrated in a way that allows end-users to draw meaningful conclusions.

Building controls technology providers claim their platforms provide significant operational savings and consultants recommend technology solutions to the daunting problems CRE leaders face, but without integration and analysis there can’t be effective execution and accountability.

Take the following scenario, for example:

Company A brings in a consultant to define their smart-buildings program.

The consultant advises the company to buy occupancy sensors to reduce cleaning costs, control HVAC based on occupancy and turn on workplace experience apps to do room bookings and hot desking to right-size the portfolio.

The company engages an occupancy-sensor provider and receives a quote for the purchase, installation and commissioning of occupancy sensors and ongoing license fees. The upfront cost is a large, six-figure capital expenditure, and the ongoing licensing is another six figures for three years.

The company has now invested nearly a million dollars, but according to the consultant’s report, savings are going to flood in, recouping expenses within two years and generating significant savings after that.

But it doesn’t happen. Why?

1. Their janitorial firm doesn’t have a smart-cleaning application, nor training materials for the janitorial custodians. Nor do they have a dynamic staffing model or relationship with the unions. They also had no incentive to help the company reduce their cleaning spend by the consultant’s indicated rate—that’s just lost revenue for the janitorial firm.
2. The building control systems don’t have the ability to ingest occupancy data, nor rules written to effect the changes needed. Of course, those capabilities could definitely be achieved...for an added fee.
3. Finally, the room-booking system doesn’t integrate with the chosen occupancy sensors or any of the other building systems.

In this scenario, without anyone accountable to the initial smart-building program, Company A is faced with the options of either paying for more consultation, integration, project management and change management or hiring a new internal team with the hope they can help the company break even.

However, the outcome of this scenario could have been avoided if the real estate team had taken the time to consider and address the following steps:

Figure 1: Key steps in establishing and executing CRE digital transformation

Source: CBRE, 2023.

1. Start with the end in mind.

The first question real estate professionals should ask when contemplating a smart-building strategy or program is, “What are we trying to achieve and how does it align with our overall real estate strategy?”

Many companies are seeking a digital transformation, but it’s critical to understand what that truly means. Does the firm want to lower costs or have better data to make portfolio decisions, make strides toward achieving sustainability goals or provide a more efficient and accurate way to manage capital? Transformation does not mean the same outcome for every business, and not everything can be accomplished at once. That’s why goal identification is so important.

Here are potential end goals to have in mind at the beginning:

Figure 2: End goals for CRE digital transformation

Source: CBRE, 2023.

The real estate technology landscape is constantly evolving. A good smart-building strategy will be adaptable, open and agnostic to accommodate and future-proof a program.

2. Have an end-to-end approach.

Simply selecting a technology or engaging a specialist consultant will not achieve outcomes. Having an end-to-end approach to the smart-building program is critical. An end-to-end approach should incorporate the technology solution and its implementation; service delivery and change management; and verification of the benefits realized. After identifying objectives and aligning them to the real estate strategy, ask the following questions:

Is my organization ready for this shift in operational delivery?

Before even considering technology options, all key stakeholders should be identified and aligned with the end goals. This includes understanding the firm’s overall appetite for digital transformation. Additionally, knowing which building data and systems are already in place and need to be integrated is also critical.

How connected is my portfolio today?

Companies have been deploying smart capabilities for years. Often they’re limited to pilot programs and single-point solutions with some type of building automation systems.

Historically, less than 5% of CRE portfolios have BMS systems. That means the rest of the portfolio, which is primarily smaller buildings, has not been addressed. This leaves a significant portion of building data untapped and unavailable. Understanding what actions are needed to connect these disparate systems is key.

Figure 3: Real case study example of a financial services institution showing scalability and connectivity across previously disparate building systems

Source: CBRE, 2023.

Does the company have the right financial model in place to execute a smart-building program?

An optimized commercial model enables all involved parties to win. For any smart-building strategy to be successful, everyone from supplier and technology partners to facilities management (FM) leadership and implementation teams should experience tangible, positive financial outcomes. This will ensure all parties are properly incentivized to support and execute the program.

3. Determine the technology approach.

The technology chosen for a smart-building program should directly align to the objectives identified. For example, consider the following objectives and corresponding technology solutions:

Figure 4: Example objectives for a technology approach

Source: CBRE, 2023.

Once the objectives for the technology have been identified, select an approach: Will the technology be built in-house? Purchased? Or will a partner/provider be required?

If considering buying or partnering, start with the following questions:

• How qualified is the new partner/technology?
• How does the new partnership and technology fit into the current ecosystem and provide control over the data?
• How does the cost compare to the business case?
• Have cybersecurity implications and/or alignment been considered?

After selecting the right technology solutions, ensure the implementation and subsequent service delivery are set up to succeed. That will depend not on the technology and data, but rather on the people supporting the smart-building program.

4. Invest in change management.

Change management is perhaps one of the most critical components of a smart-building program’s success. Without proper stakeholder engagement and alignment, bringing a strategy from opportunities to verified results will be nearly impossible.

First, identify key stakeholder groups, their interests and their ideal involvement, including what responsibility and accountability look like for them.

Figure 5: Example stakeholder groups and their areas of accountability

Source: CBRE, 2023.

Second, examine the organization for operational silos that may keep stakeholders from being properly engaged. It is important to examine how often stakeholders engage with one another and implement a comprehensive communications plan that keeps them informed, triggers action regarding specific responsibilities, regularly shares progress and success and implements incentives to drive change.

Finally, once stakeholders have been identified, including how they will be engaged and what their roles and responsibilities will be, implementing the insights gleaned from the technology with on-the-ground action is the next step.

5. Measure and verify that the intended results are achieved.

Measuring and verifying intended results will help real estate teams as they refine and improve their smart-building strategies. To ensure success, start with the following steps:

• Establish baselines for each objective and outline a plan to measure results after a set amount of time (e.g., 3-6 months).
• Identify roadblocks to measuring/verifying desired results and take action to adjust as needed. For example, if a team is implementing building optimization solutions that deliver sustainability benefits, then they need to install energy meters.
• Be aware of variables that are out of the team’s control, including potential leadership pushback or personnel changes, and identify ways to mitigate. For example, know whether building occupancy fluctuations will impact benefits realization.
• Learn lessons from failures. Not everything is going to be successful on the first attempt. But if an organization can learn and apply those lessons for continuous improvement, the long-term strategy will be effective.

When implemented correctly, a smart-building program can have significant impacts. In CBRE’s experience, providing property and facilities management services across 7.3 billion square feet globally, implementing smart FM solutions has generated significant results for clients including:

Figure 6: Verified outcomes of CBRE’s Smart FM Solutions

Source: CBRE, 2023.

Ultimately, what does the word ‘smart’ mean in commercial real estate?

“Smart” as it relates to buildings and the CRE industry has multiple meanings. “Smart” can refer to anything from building technologies that automate certain functions (e.g., movement-triggered lights, timed-temperature controls, etc.) to building technology that’s equipped with machine learning.

However, a truly “smart” building program will take a firm from strategy and solution to insights and action to verifiable results.

Figure 7: What “smart” looks like in CRE digital transformation

Source: CBRE, 2023.

The world has changed, and the future of FM is already here.

Real estate leaders’ top priorities – portfolio strategy, cost optimization, decarbonization, and employee experience – will not be realized without digital transformation. Through data-driven intelligence and analysis, companies make better decisions and create better outcomes for their business and people.

Now is the time to start this digital transformation journey.

¹ Executive Roundtable Survey, CBRE, 2023
Strengthening Value Through ESG, CBRE Viewpoint, 2022