Despite the rising adoption of the “as-a-service” approach among building management system (BMS) providers, the transactional revenue model, i.e., selling hardware and software with a margin through different channels, is expected to remain the main source of income for these companies.
Some BMS platform manufacturers are working as solution providers, which tend to go more directly to the market than others by conducting the integration work for projects. Other BMS companies primarily use the value-added partner (VAP) channel, working with system integrators.
In recent years, the VAP channel approach has been gaining momentum in the smart building industry thanks to the complexity of use cases, which require more and more expertise in both operational technology (OT) and information technology (IT).
In parallel, the master system integrator, which involves integrating systems across multiple domains, is also emerging. IHS Markit | Technology anticipates this channel to continue gaining traction during the forecast period.
The trend towards the “as-a-service” model should intensify during the projected period as BMS platform vendors attempt to introduce more software and remote service offerings to the market to ensure future revenue growth. For now, these services only represent a small share of the BMS platform providers’ revenues, as vendors work to redefine their individual strategies from a go-to-market point of view.
At this stage, it’s mostly value-added services and subordinate domains in BMSes that are offered through a subscription model. IHS Markit | Technologydoes not expect BMS platforms themselves to be offered as-a-service in the near future.
Finally, the increasing trend towards partnerships and consolidation observed in recent years should also continue, as these strategies are key for vendors intending to expand their offerings in the smart-building sphere. Acquisition strategies enable acquirers to support their internal innovation efforts, while permitting the diversification of products, services and long-term prospects.
The most noticeable example of a recent investment model was Siemens, which acquired three different companies during the first part of 2018. The Siemens Building Technologies divisions acquired smart building tech startups Enlighted, J2 Innovations and Building Robotic Inc.
When adopting a partnership mindset, companies aim to integrate and leverage emerging technology to create new customer experiences and offer superior software and hardware to the market. For instance, Microsoft has cultivated numerous partners that leverage its Cloud-based Azure IoT infrastructure to support many unique BMS platforms.
IHS Markit | Technology Smart Building Business Models Market Brief
The Smart Buildings Business Models Market Brief – 2019 provides an assessment of the current size and forecast growth in smart building devices, key trends in the smart building space, strategic issues such as the role of open protocols and standardization, the role of the edge and the cloud and the potential for LPWA and smart devices.