Emma Hendry: Proptech 3.0 – Factors for success
Author: Emma Hendry Sub-Author and Editor: Kieran Balmaceda
You’ll have noticed a significant increase in discussion around Proptech, both as a sector in its own right and an emerging technological resource enabling a new wave of operating models as the sector expands to play a fundamental role as a cornerstone in a wider digital transformation of the built-form.
There is ever-increasing investment in the field; 18 billion US dollars were invested worldwide between 2017 and 2018 as we seek not just the advancement of technology but in recognising the need to marry the outcomes of these technologies with innate human needs in an integrated and ecosystem driven approach.
Our attitudes too are changing; the built-form involves multiple complex, large scale responsibilities across multiple stakeholders over a long-term engagement. Antiquated practices and views of ROI are clashing with modern ecosystem demands, especially technological, impacting all levels of the built-form and its people.
Clearly our manner of thinking needs to change as we adopt a more strategically oriented mindset and agile work practices. A global report by KPMG found that 97 per cent of the property industry believe technological innovation will “impact their business”, with 73 per cent of respondents seeing this as an opportunity “In order to adapt to the changing global environment”, however only 14 per cent have an innovation strategy to date.
People across all roles are also suffering from data overload, compounded by their nature of entering and exiting the supply chain as required and affecting a greater disparity across shared data sets; inaccurate, difficult to change and costly to rectify.
This should logically point any stakeholder in the direction of Proptech and digital integration solutions, and only as of recent are we beginning to see an increase in uptake.
Capital restrictions and a lack of ability to penetrate markets thus far have caused adoption anxiety in the market. There is a polarising dichotomy that’s occurring between the first adopters and the rest. Proptech, to everyone, represents a practical model of managing and addressing the needs of the built-form in a modern and technologically intelligent way.
The industry is clearly aware of the present disruption to the landscape, but the KPMG report also found that 66 per cent “do not have a clear enterprise-wide vision and strategy” for innovation and implementation, a clear deficit when global real estate is valued at nearly $24 Trillion.
Applying Proptech in smart buildings.
Let’s be clear on what constitutes a Smart Building. To be “Smart” means to capture and process data intelligently to deliver key outcomes across performance, productivity, user experience and efficiency through technologies such as Machine Learning, Data Analytics and IoT enabled devices among others. In many ways this serves as the nexus between the platform, product and service, owing to a modular approach to integration and functionality.
Technological integration mandates a data-driven approach to leverage outcomes directly influenced by the needs of the people; owners, management, occupants and visitors alike. Smart Buildings inherently present improvements to the wellbeing of occupants through the ability to employ data in supporting increased productivity and wellness, reduced costs and improved resource usage and allocation.
Growth is strong in the Smart Building space, averaging an annual growth rate of 16.91 per cent, indicative of the fact that more organisations are recognising the inherent value of adopting a Smart Building model.
Shared systems such as these are imperative to achieve greater sustainability, efficiency and in creating value across the ecosystem. How would you measure the success of your Smart-Building? Through identifying KPIs categorised by distinct categories. Broadly speaking, KPIs for Smart Buildings consider:
- Environmental sustainability
- Maintenance & operational costs
- Improvements to occupant wellbeing
- Space utilisation and mobility
- Return on Investment
- User experience
- Expediency of delivery
Exploring the Digital Twin.
In physical terms, how do we see a Smart-Building come to life? Through the relationship with the Digital Twin, a separate conceptual model defined by IBM as the “virtual representation of a physical object or system across its life-cycle. It uses real-time data and other sources to enable learning, reasoning, and dynamically re-calibrating for improved decision making.”
Physical assets, processes, systems, infrastructure, devices and plans are all replicated digitally, working to establish an overview of asset conditions and operations throughout the asset lifecycle. As with each solution we’ve discussed, the Digital Twin should enable smarter decision making through the marriage of physical, digital and even virtual tools.
There are many offerings and solutions currently on the market, but do they all serve the same purpose? To answer this, we must realise that the Digital Twin concept is dependent on individual conditions, targets and requirements. Buildings, ownership and occupants each play a unique role in defining the applications and structure of a Digital Twin. What then are the desires of each stakeholder and how can you produce outcomes which fulfil each?
In later stages, Smart Buildings and Digital Twins can establish a reciprocal relationship; Digital Twins influence the development and operation of Smart Building infrastructure, while Smart Buildings provide a live overview of building conditions and usage data into the Digital Twin to enable greater asset management decisions.
Through this relationship, Smart Buildings pave the way for advanced technologies including IoT devices and advanced imagery to collect data and utilise this insight to influence the management of resources more efficiently. On a greater level, Smart-Buildings are a leading example influencing the development of public policy and regulations. This is an area in which governments are trailing behind. It should be a priority for governments to engage with industry bodies to inform proactive policy development.
Take for example the following observations for Returns on Investment where Digital Twins can be Implemented appropriately and thoughtfully:
- Enhance environmental quality by 70% by using automated environmental systems
- Reduce implementation costs by 20% for new devices and systems, resolving potential issues prior to installation and implementation.
- Increase productivity by 50% through a combination of enhanced collaborative abilities, accessibility, and automated services.
- Reduce operational costs by 30% for energy consumption, space requirements, and labour.
Beyond operational efficiencies, a Smart Building directly enables workplaces of the future, digitally enhanced spaces that provide for safer, more productive and environmentally friendly spaces for tenants and visitors.
Property managers and building owners will be subject to rising appetites for the digital capabilities which enable workplaces of the future.
Technology, like business, works best when not siloed and continually evolving.
Standardising data for greater control and security.
We are only as strong as our weakest link; data security is an increasing global concern, reflected in the introduction of national data security laws and global codes of conduct such as the United Nations’ General Data Protection Regulation (GDPR), emphasising the importance of protecting data at governmental, corporate and personal levels.
When the average cost of a corporate level malware attack is $2.4 million, investment in a secure system infrastructure seems a drop in the pond.
Establishing accessibility within a secure network of stakeholders means less reworking of disparate data, a benefit to time and cost. Standardised data management protocols allow for this scale of integration and the benefit of its multiplicative effect.
For the built-form, incorporating a Smart Building model and Digital Twin architecture ensure greater control over the flow of, and storage of, all data within the environment.
I think we can all agree that lagging in adoption of the principles and functions of Proptech, Smart Buildings and Digital Twins would be detrimental to the health of any organisation. In our experience, we have distilled three key learnings which demonstrate how to apply these principles for maximum effect:
Strategic Thinking: First and foremost, the adoption of technology should come as a result of clearly identified requirements. It is in the identification of a need that you will find the appropriate tool.
Prioritise your ecosystem: In the selection process, you should always remain outcome and collaboration oriented, not feature focussed. This will only lead to overcomplication and difficulties interfacing with new or existing infrastructure.
Facilitate consistency: This premise leads into the final necessity for maximal effectiveness: Data Standardisation. Difficulties arise from incompatible or inconsistent data. Ensuring in advance that systems are able to either work compatibly or interface through a central processing framework is paramount in establishing an efficient and successful system.
Hendry have been recognised internationally for our work in technological and digital advisory, having led discussions across the industry and defining effective applications for the built-form. Call us today or email email@example.com to discuss how you can enable your asset environment to become a smart-building space.