SPARK16 Presentation from David Metcalfe, CEO - Verdantix.

1. Connecting Facilities Performance
Data With Your Real Estate
Investment Strategy
David Metcalfe
CEO
Verdantix

2. Connecting Facilities Performance
Data With Your Real Estate
Investment Strategy
September 15, 2016David Metcalfe, CEO at Verdantix

3. 3
Verdantix is an independent research
and consulting firm with expertise in
emerging technologies for EHSQ,
real estate, facilities and energy
Through our research and advisory services we help
corporate managers, investors, technology executives
and services firm leaders to make robust, fact-based
decisions. We are committed to delivering objective,
timely, and accurate analysis to help our clients
succeed.

4. 4
Theme
You need an information
management strategy that
integrates energy data with
other facility-level
performance data

5. 5
Agenda
• Why do you need an information strategy that
integrates energy data with other facility data?
• Who is implementing strategies that take
advantage of multi-dimensional facility-level
data?
• How will the market for facilities optimization
management software evolve over the next 5
years?

6. 6
Energy Efficiency Software Propositions Run Into Four
Financial And Organizational Barriers
Spend on electricity not increasing in aggregate
Energy spend small as % firm-wide opex
Energy programs are complex to implement
Owner/tenant split incentives

7. 7
Two Thirds Of Energy Managers Expect Spend To Stay
Flat Or Decline In 2017
67% no
change or
reducing
Source: Verdantix “Global Energy Leaders Survey 2016: Budgets And Priorities”, June 2016
N =250

8. 8
The Facilities View Of Energy Costs Is Not in Tune With
The CFO’s View
Source: American Iron & Steel Institute, BOMA, Capgemini, EPA, National Grid
EnergySpendAs%TotalOperatingCostsOrAssetOperatingCosts
Facilities View
Energy spend as
% asset opex
CFO View
Energy spend as %
firm-wide opex

9. 9
Build A Business Case On Total Facilities Opex Including
Space Costs Not Just Utilities
Source: BOMA, thesquarefoot.com, RMI
Assumption
$7.50 / sq ft on
operating expenses
6% on
utilities
5%
5%
Assumption
$1.65 / sq ft on
utilities

10. 10
Build A Business Case On Total Facilities Opex Including
Space Costs Not Just Utilities
Source: thesquarefoot.com
3%
3%
5%
2%

11. 11
Delivering Energy Efficiency Programs Is Complex
Source: Verdantix “Global Energy Leaders Survey 2016: Budgets And Priorities”, June 2016
N =250

12. 12
Onsite Generation Makes Energy Programs Even More
Complex
Source: Verdantix “Global Energy Leaders Survey 2016: Budgets And Priorities”, June 2016
N =250

13. 13
Building Owner / Tenant Split Incentives
10-30 years 3-10 yearsTime perspective
Cost BenefitCapital upgrades
Low relevance Varied relevance
GHG emissions &
sustainability
Maximize yield
Minimize cost per sq ft or
per employee
Financial concept
Building Owner Tenant

14. 14
Building Energy Management Software Market Is
Fragmented With Vendors Struggling To Get Critical Mass
Source: Verdantix “Green Quadrant Building Energy Management Software”, October 2015

15. 15
Problems For Information Management Strategies
Focused Exclusively On Energy
• Flat or falling electricity prices which undermine the rationale for
energy efficiency programs
• Insufficient energy experts to generate value from complex
analytics and project tools
• Energy and facilities services firms acting as a barrier to stand
alone software implementation
• Problems establishing brand awareness and relationships with
diverse owners of energy management
• Low barriers to entry impacting profit margins and the potential
to grow the business
• Dwindling investor interest in the sector requiring growth
through cash flow
Source: Verdantix “The Future Of Building Energy Management Software”

16. 16
The Value Of Energy Data Alone Will Not Get This
Ecosystem Over The Chasm
Source: Geoffrey Moore “Crossing The Chasm”
BEMS

17. 17
Agenda
• Why do you need an information strategy that
integrates energy data with other facility data?
• Who is implementing strategies that take
advantage of multi-dimensional facility-level
data?
• How will the market for facilities optimization
management software evolve over the next 5
years?

18. 18
Broader Facility Level Factors Already Influence Energy-
Centric Facility Optimization Plans
Source: Verdantix “Global Energy Leaders Survey 2016: Budgets And Priorities”, June 2016
N =250

19. 19
A Broad Facilities Optimization Software Offering
Overcomes The Challenges Facing BEMS Vendors
Undermines business case Minor impact on ROIFlat electricity prices
Energy Software Offering
Facilities, Energy &
Maintenance Offering
ROI hard to achieve
Proposition focuses on
ubiquitous facilities directors
Lack of energy experts
Block direct sales of energy
software / sell own
Provide systems integration
and act as channel partners
Role of facilities firms
Scattergun, complex sales
processes
Sales focus on facilities and
maintenance directors
Varied job titles
responsible for energy
Very low due to hosted apps
and cheap sensors
Moderate due to complex
data sets and analytics
Barriers to entry for
software
Close to zero due to lack of
success story after 15 years
Growing due to multiple
success stories
Investor interest

20. 20
Facility Optimization Strategies Create Data Cubes Which
Offer More Valuable Insights
Source: IBM
Site-by-site
variances in
back charging
for space
usage
Upper quartile
electricity costs
per sq ft
normalized for
location and
external
temperature
Benchmark of
retail store
lifecycle costs
from acquisition to
disposition
Correlation
between
maintenance work
order completion
time and space
occupancy
Multi-dimensional
benchmark of
facilities services
agility
Utility costs
and non-utility
costs as % of
lease costs and
per employee

21. 21
University of Central Florida
Source: AssetWorks, UCF
Vital Stats
Founded 1963
60,000 students
10,700 employees
1,500 acre site
186 buildings
12m sq ft
Challenges
• Legacy CMMS no longer fit for purpose
• Unable to run maintenance reports
• Political pressure to be more efficient
Key Project Insight
Data structure of the AssetWorks AiM
system was far more comprehensive
than CMMS point solutions enabling more
powerful analysis

22. 22
Telefonica
Source: Archibus, Telefonica
Vital Stats
120,000 employees
$60bn revenues
7,500 buildings in
Spain
40 million sq ft
Challenges
• Property data in Access database
• 12,500 CAD drawings in different systems
• Internal resistance to changes
• 1 work request every 2 minutes
Key Project Insight
Large-scale data standardization,
aggregation and systems integration
project delivered cumulative EUR 968
million in savings in 3 years from space
rationalization

23. 23
Ball Aerospace
Source: Archibus, Telefonica
Vital Stats
Subsid of Ball Corp
$15bn revenues
15,000 employees
34 leased and owned
buildings in US
1.4 million sq ft
Challenges
• Leases on paper and in financials in Excel
• Utilities costs in separate systems
• Space management data logged in Excel
• Very slow turnaround time on reporting
Key Project Insight
Data standardization and aggregation
increased space and utilities data
accuracy from 70% to 99%. Big savings
from linking utilities data to lease
records in a single report.

24. 24
Danfoss
Source: Planon, Danfoss
Vital Stats
Founded 1933
EUR 5bn revenues
24,000 employees
300 locations
16.1 million sq ft
Challenges
• Global Services: 15 real estate systems
• Slow to respond to internal stakeholders
• Lack of comparability for FM costs
• Meeting real estate compliance needs
Key Project Insight
Consistent, high quality repository of
worldwide real estate master data has
enabled Danfoss Global Services to
implement a charge back model based
on pay per use.

25. 25
Real Estate & Facilities Information Management
Landscape
Centralized Maintenance
Management Systems
Building Energy
Management Software
Computer Aided
Facilities Management
Integrated Workplace
Management System
Facilities Optimization
Management System
Lease Management
Software
BreadthofFunctionality

26. 26
Agenda
• Why do you need an information strategy that
integrates energy data with other facility data?
• Who is implementing strategies that take
advantage of multi-dimensional facility-level
data?
• How will the market for facilities optimization
management software evolve over the next 5
years?

27. 27
Five Predictions For The Next Five years
#1 IWMS will be the convergence platform
#2 Energy software will fragment into
customer specific niches
#3 Private equity investment in IWMS
will ramp up
#4 Systems integrators and real estate
consultants will turbocharge the market
#5 Social media platforms will become a
essential element of IWMS platforms

28. 28
#1 IWMS Platforms Will Consolidate All Facilities And Real
Estate Information Management Functionality
Energy
Asset
Management
Maintenance
Lease
Management
Space &
Occupancy

29. 29
#2 Energy Software Will Fragment And Get Subsumed
Energy Management
Software
Building
Energy
SMB Energy
Reporting
Energy Use,
Generation &
Storage
Industrial
Energy
Efficiency
Carbon
Emissions
Reporting
IWMS Utility CRM
Decentralized
Generation
Asset Mgt
Manufacturing
Execution
Systems
EHS Platform

30. 30
#3 Private Equity Investors Will Boost The IWMS Market
As It Has Crossed The Chasm
Source: Geoffrey Moore “Crossing The Chasm”
IWMS

31. 31
#4 Systems Integrators Will Turbocharge The IWMS
Market
Complex IWMS
software
platforms
Real estate
consultants and
systems
integrators
CFO, CIO, VP
Real Estate
convinced of
value prop
$5m to $10m
software and
services deals
Growth
investors and
large tech firms
fund product
dev

32. 32
#5 Social Media Functionality Will Differentiate IWMS
Platforms
• Founded in 2008. Valued at $16bn
• Social media firm that runs real estate assets
• 77 locations, 300 planned for 2017 and 2018

33. 33
Real Estate & Facilities Information Management
Research Solution
MARKET COVERAGE DELIVERABLES
• Integrated Workplace Management Systems
(IWMS)
• Building energy management software
• Computerized Maintenance Management
Systems (CMMS)
• Smarter buildings and Internet of Things
(IoT)
• Real estate and facilities management
technologies
• Integrated facility management software
• 20 new real estate and facilities information
management reports published per
calendar year
• Analyst Inquiry service to discuss real estate
and facilities software topics with Verdantix
analysts
• Quarterly webinar focused on real estate
and facilities software market trends and
regulatory issues
• Where appropriate, inclusion in Verdantix
reports, email newsletters, blog posts and
press releases

34. Thank you!
David Metcalfe
dmetcalfe@verdantix.com