I attended the recent annual Schneider Electric Analyst event co-located with the DC Xperience Efficiency 2013 customer conference. The message was clear: Schneider wants to be defined as a tech company with a cohesive vision for sustainability and innovation so, what does this mean?
Through a rapid fire delivery of eleven presentations on Wednesday it was clear there is a solidified marketing message emitting from each business unit - Schneider aims to offer solutions to the global challenges of urbanisation, digitisation and industrialisation. The company defined by acquisitions and controls is reframing its offering with unified solution architecture.
Each of the business unit leaders echoed the message shaping their group's offering in a message of efficiency technology that answers the business demands "from the shop floor to the top floor." From Professional Services to Enterprise Efficiency, Schneider hammered home a message of the solution design from the bottom up controls to operations to the enterprise. Fundamental to this message is the platform approach for integration through Ecostruxure.
This new company vision is particularly aligned with business trends in the smart buildings market. The transformation of the building management industry has been shaped by the evolution of technology through the convergence of building automation and information. As businesses have evolved the focus on sustainability to energy efficiency, they have also sharpened a demand for solutions that are economically viable and generate core corporate benefits.
The smart building technologies that integrate advanced controls and automation with analytics enable cohesive and comprehensive energy management. These solutions are gaining momentum because they not only improve the environmental footprint of a facility and generate energy efficiency, but also deliver significant operational efficiencies that appeal to a broader set of business stakeholders to generate interest and budget for technology investment.
Schneider clearly sees this transformation and understands that information technology is core to delivering this new level of sophistication in energy management. Schneider has formalised their vision by presenting each business unit's objectives and the overall corporate strategy to deliver a suite of solutions through the Ecostruxure platform. This platform approach leverages the IT business benefits of flexibility, scalability and cost effectiveness. Platform solution design is a distinct departure from the traditional product-based building efficiency business. There is a concerted effort to approach new and existing clients with an offering that brings the products and services under a cohesive umbrella.
The idea of the platform, solution language and approach parallels the market evolution in building efficiency that utilises information technology and the financial focus of managing operational expenses over capital expenses.
Schneider's biggest competition is similarly re-defining their business approach. Johnson Controls has honed the message that they are also a platform tech player through their Panopix solution; and, last year Honeywell announced its cloud-based, SaaS offering, Attune. But the question remains can building efficiency giants transform their business engagements for mass market penetration of these smart building solutions.
Our Smart Building Strategies' research suggests the market is gaining momentum. Building owners are increasingly adopting smart building solutions because they do speak to a much broader set of stakeholders than traditional building automation, and generate a new set of business benefits that boosts bottom lines in a time of slow economic recovery. So, how will each of these giants fair in this growing market?
Schneider announced a new focus at the Analyst Summit - an appeal to the mid-market. They have put a stake in the ground and see big opportunity in retail chains and portfolios of small buildings. Schneider is positioned to bring a cloud-based energy management solution to owners of large chains of fast serve restaurants and other smaller facilities to help these business owners gain an enterprise view of their operations and energy consumption.
The challenge ahead is gaining marketing traction and penetration. While JCI and Honeywell focus a great deal of time on the largest buildings in the US building stock Schneider will join Siemens and a host of start-ups tackling the mid-market.
We recently published a report on Smart Building solutions for the smaller facility. There is opportunity in this segment because in the aggregate these buildings represent a huge portion of the US building stock. This study also demonstrated that a focus on the owners of portfolios of these facilities including retail fast serve restaurant chains present a viable market opportunity.
The challenge is positioning the right business case and solution design. Schneider's energy efficiency and sustainability message may or may not resonate here; however, demonstrating the operational efficiencies these solutions generate to efficiencies that improve the bottom line have real opportunity to make the mid-market a huge opportunity for smart building solutions.
Schneider will have to navigate a new segment of competition; and, also find a role in supporting the change management of organisations implementing smart building strategies. While the technology has matured and is defined by the convergence of building automation and information technology, the end user roles and responsibilities are still evolving. The reliance on information technology and focus on capex is a shift in the business paradigm and professional skills of key decision-makers.
Schneider will have to develop clear value propositions to a cross section of executives, communicate the costs and benefits in metrics that speak to different business units, and support the transition of core capabilities to leverage the full functionality of the Ecostruxure platform.
Posted by Casey Talon, Research Analyst