Does the core competence of real-estate owners lie in owning the properties or in providing premises needed by the customer and the associated service experience to the user of the premises? If the answer is the latter one, giving up ownership of buildings would enable enhanced energy efficiency.
In relation to property, energy efficiency is defined by the ratio between the service level provided and the amount of energy consumed for providing it. Traditionally, we are used to measuring energy efficiency in terms of specific consumption per floor area, expressed in kWh/m2 or kWh/m3. Alongside this, indoor conditions achieved with the energy consumed have also been discussed for quite a while. For example, 10% saving in energy consumption is hardly profitable if it, at the same time, means an increase of even one per cent in salary costs due to, say, increased absences due to sickness. Being 100 times higher than the energy costs, the salary costs are of a totally different order of magnitude. The matter has been debated a lot, but people still tend to forget it. The reason may be that we lack such easy indicators as kWh/m2 that would observe indoor conditions.
The conception of energy efficiency shaped by the reporting of specific consumption per floor area is deeply rooted. When discussing indoor conditions, in principle, we focus on people and their well-being, but we still examine the matter using square metres. The next step would be to consider whether we need those square metres in the first place. This would shift the focus of energy efficiency to how much energy is needed for performing specific duties. Information is needed not only on system efficiency, but on the room occupancy and utilisation rates, and methods of managing them. These matters have been studied in the Virpa-C project as part of the impact of digitalisation and IoT (Internet of Things, https://fi.wikipedia.org/wiki/Esineiden_internet) on the real estate business.
Developmental stages of digitalisation
In his webinar IoT from Strategy to Practice, Frank Gillett from Forrester research company presented three scenarios for using IoT in the various stages of digitalisation: design, operate and consume. In the design phase, IoT is integrated into finished products, thus providing additional value for the product user. In the operate phase, on the other hand, IoT focuses on enhancing process efficiency with the help of digitalisation. The service provided by the company is developed instead of the product itself. As for the consume phase, the focus of IoT shifts to combining data from various operators for the purpose of creating a totally new kind of service.
Correspondingly, Granlund summarises the development of the real-estate sector in his IoT market review into the figure below. There the development advances first from operational productivity to a service model, then to platforms, and finally to the autonomous economy.
The monitoring of the room occupancy and utilisation rates serves as a good example of the impact of digitalisation and IoT. At first, the temperature and carbon dioxide content of indoor air were monitored and, based on these, it was possible report to the organisations using the property what kind of conditions can be arranged in the premises. The reporting also shows the problem situations, where the systems, for one reason or another, fail to provide high-quality conditions. When the actual realised conditions are known, it is possible to address them.
In the Virpa-C project, data produced by various parties was combined to produce a reliable estimate of the use of the premises. To establish, for example, the utilisation rate, occupancy data from building automation systems was combined with the data transmitted by occupancy sensors of the lighting system. Each one of the systems has its own original purpose of use, for which reason they provide slightly different data. When this data is further combined with a camera-based visitor counter at the door, we get a good picture of the use of the premises. The monitoring of the room occupancy and utilisation rates enables the users to utilise the premises efficiently, but it also enables a shift to a use-based pricing. Precise information on the use and conditions would also enable provision of different service packages for the users of the premises. The new Virpa-D project will continue to study these issues.
From platform economy to autonomous economy
As part of the collection of data, Virpa-C has also taken steps towards the platform economy. In the pilot project in Tampere, University Properties of Finland Ltd decided to develop its own platform, where all data collected in the pilot building is stored and made available to various users. Most producers of measurement data do have their own platforms, but different technical solutions and the lacking contract and cooperation models make joining the platform difficult for new and small operators. VTT has also made efforts to lower the threshold by providing its own platform as an easy-to-use alternative, where information can be collected and where it can be shared in the trial stage before the commercial platform to be established in the actual project site is completed. A similar approach was partially used in Virpa-C as well.
The next phase on the development path of IoT is the autonomous economy, where the system can, for example, autonomously conclude the premises needed for each situation and book them automatically. What would it feel like if you were writing an invitation to a meeting and your messaging software recognised the situation and automatically suggested a suitable room and some corrections needed in the proposed service level. The software could also request offers from the hotels and other operators in the near area if there were no suitable premises available in your own company.
In his presentation, Gillett asks whether you should give up the product you have been selling so far. In other words, should the current real-estate owners give up their own properties and start providing premises owned by others as a service