Threats to the Building Automation and Control Systems Market – or Opportunities?

My smart technologies team within BSRIA’s Worldwide Market Intelligence division have been looking at the threats to the traditional building automation and control systems market. But of course, what is a threat to one is an opportunity to another and we are looking at both angles of the changes currently taking place. We will shortly be publishing our findings and conclusions in a new report to be launched later this month.

The global BACS market is currently worth more than $20 billion and is continuing to grow year on year, having pulled through a global recession quite robustly. Not surprisingly, this market has in recent years been attracting new entrants. Now, new technologies, innovations and novel business models are threatening to disrupt the traditional business.

New technologies that utilise the “Cloud”, developed by relative newcomers such as BuildingIQ and Mios, as well as established multinationals like Johnson Controls and Schneider Electric are providing energy management, self-diagnosis and adjustment functionality not previously available in a Building Automation and Control System (BACS). Suppliers are now faced with the reality “If I am not in the cloud, my competitors probably will be.” There is a growing assumption that all key services and solutions should be accessible via “the cloud” but there are concerns and these are explored in our report.

As building automation becomes more IT-based, software is growing in importance, within both targeted applications and in detailed analytics to identify areas where performance may be improved. BACS suppliers need to be proactive in this area or risk becoming more commoditised and marginalised.

Suppliers of variable refrigerant flow (VRF) and DX systems are also entering the BACS market with integrated controls and rudimentary energy management functions. The market for VRF based systems has overtaken chillers globally and VRF systems are gaining market share fastest where the markets are expanding most rapidly. We have looked at how the BACS equipped VRF systems in the $9bn VRF market are affecting the HVAC and BACS markets. We analyse whether they pose a great enough threat to change the BACS market altogether or whether they are a factor that could help the BACS market. Since VRF-based systems are becoming ever more ‘intelligent’ this changes the scope for building automation. Incumbents must be asking themselves, “how long until they start offering the same sort of capabilities as high level BACS?”

Residential smart home systems from the low-voltage electrical equipment suppliers such as Jung, Busch-Jaeger and Berker are being used in light commercial buildings; interestingly 60% of such systems sold in Germany are used in the light commercial market and demand is increasing. So here too, it is smart residential controls that are posing a threat to traditional commercial building solutions.

However, is the residential value add market at risk of be snatched away from the current players by the telecoms operators and utilities, bundling remote monitoring and energy management as just further services in their offerings? And could this be the way things will go in the non-residential market too?

Threats to BACS – or Opportunities?

Threats to BACS – or Opportunities?

However, opportunities exist in numerous areas, including in integration and convergence of diverse systems. BACS and in particular, building energy managements systems and services (BEMS) penetration in to the existing building stock is still very low and the opportunities for refurbishment are simply staggering. Perhaps the good news is that for the most part, these new markets remain highly fragmented. We are witnessing heightened activity in the areas of partnerships, mergers and acquisitions. This is enabling companies to broaden their scope of offering and to leverage their core skills and follow the rapid evolution of the market.

Our new report analyses these changes and provides information on how the BACS market is coping with the changes and the wider opportunity to expand “beyond BACS”. Supported by facts, figures and enlivened by charts and illustrations, it will be presented in an accessible PowerPoint format of some 60-70 slides. It draws on BSRIA’s long standing expertise in built environment.

Launching BSRIA Business

BSRIA open day, 1970

BSRIA membership open day, 1970

A resurgence of popular interest in the ’70s comes as no great surprise if you consider the ways in which the last double-dip recession resonates today. For example, deregulation and the boom in mortgage lending in the 1970s played no small part in the current volatile housing market.  

The BSRIA Statistics Bulletin has its roots in the 1970s, as we recognised at that time a need for better market intelligence to help businesses get the competitive edge. It’s still a tough market and members tell us that our data to inform future business strategy is valuable – but we’ve subsequently made many improvements to the publication. I’m pleased to say that this month we’re launching a new suite of business services for our members including the new Business Bulletin: 

Total consultants workload during last three months compared with the same period last year.

Total consultants workload during last three months compared with the same period last year.

New services:

  •  Business Bulletin (replacing the Statistics Bulletin) offering quarterly analysis and data on the economic outlook, construction market, M&E contracting and more. We also provide unique data from BSRIA’s Consultants’ Workload Survey. If you work for a consulting engineering  company and would like to contribute to our quarterly survey, please get in touch.
  • Business Network – register  for the launch of the first of a series of business networking opportunities on 11th September.
  • Monthly e-newsletter with the latest business information and technical resources – sign up here.
  • Online business resources on our members-only web pages www.bsria.co.uk/business.

The July issue of the Business Bulletin will be included in our quarterly members mailing (also look out for more information in the next issue of Delta T).

Do let me know if you have any further suggestions…and I’d like to hear a few stories about what it was like for your business in the ’70s…and some pictures please!

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