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Untapped Cost Savings: Why Smart Building Management Systems are a Finance Department Priority

Untapped Cost Savings: Why Smart Building Management Systems are a Finance Department Priority 38

By Kas Mohammed, VP of Digital Energy at Schneider Electric

The priority for any finance team is keeping costs to a minimum while driving growth and productivity. Traditionally, this has focused on the company’s greatest asset, its employees. Assessing pay, incentivising performance, ensuring KPIs are met, and managing expenditure have been fundamental to internal finance departments for decades.

While they remain the gatekeepers for spending, as our implementation and understanding of technology has grown, so too has the scope of the finance department. Today, they must be capable of making informed decisions on a range of factors that could drive growth and profitability in the company more widely.

Until recently the energy, productivity and security implications, of smart building management systems were only of interest to facility managers and electrical contractors. Its importance is now more widely appreciated, improving the comfort and productivity of employees, and reducing expenditure through enhanced energy efficiency.

Measuring, benchmarking, and reducing energy costs

A staggering 36% of all energy used today globally is consumed within our buildings, representing a huge potential cost saving. To drive this number down in commercial environments, we first need the means to measure our current energy use. At Schneider Electric, we now have sight of 95% of our buildings’ energy use in the UK. We are using this information to identify where energy is being wasted and where we can reduce our energy use. We have targets to reduce energy usage by 5% each year, benefitting both the environment and our overall expenditure.

Smart devices enable real-time measurement and optimisation. In the future, smart buildings will become completely flexible and adaptive to a variety of uses within the same physical building. Spaces will become more interactive and agile to the needs of the occupant. Behind these buildings will be a series of artificial intelligence-enabled tools that will be able to predict emerging faults, dynamically optimise heating and choose between different sources of energy.

During its lifespan, 20% of total building costs go on its creation, and 80% on operation. Broken down further, 40% is spent on energy and 30% on maintenance. The implementation of any smart building technology represents a massive long-term saving – a study by the American Council for Energy found a cost saving of 32% when using connected HVAC and lighting systems. For the businesses occupying offices, smart buildings offer a return of 10 to 1 on investment. Easy to introduce features, like lighting and window-side sensors, lower energy bills and reduce maintenance costs and directly impact and improve any businesses bottom line. These basic upgrades are fast becoming some of the biggest business open goals.

Ensuring productivity at every level

It’s now unanimously understood that productivity drives profitability. While working from home has become the de facto choice in 2020, research found 71% of us are struggling to adjust to remote work, 65% say maintaining employee morale has been a challenge, and more than a third of businesses are facing difficulties with company culture. While the future of work remains uncertain, it’s clear more must be done to promote productivity in all locations.

Employers can’t ignore these findings. Talent is the single biggest cost for most businesses and attracting and retaining the right candidates is challenging. The workplace environment, well-being initiatives, flexibility, and brand image – including sustainability credentials – are all increasingly important to employees and must be a priority for finance teams.

Smart building technology helps to provide greater convenience, comfort and wellness, both inside and outside the workplace. It improves the office environment on a granular level, providing comfort or monitoring indicators such as air quality or humidity that in the end benefit employee productivity. We have all worked in overly hot or cold, stuffy or poorly lit environment, and can appreciate its impact.  To drive flexibility outside the built environment, smart building technology is connected to mobile applications that can automatically update employees on office closures, transport issues and help with personal development, all on a single platform.

Considering that roughly 60-80% of all business costs are the workforce, their productivity and wellbeing cannot be overlooked. Implementing smart building technology has the potential to drive costs down, all while improving the output of the business.

Driving business resilience

If the pandemic taught finance anything, it’s that business operations need to be rock solid to meet the changes ahead. For true resilience, a business must have a building infrastructure that can adapt to circumstances and ensure companies can continue to operate efficiently and profitably.

This, in turn, requires a building management system that is able to support any changes, aggregating and integrating data to drive efficiency, and improve the decision-making process. Crucially, the finance department must be able to interact and understand the intricacies of building performance in order to control costs.

Making building management a finance focus

As we look to emerge from Covid stronger, data and technology hold the key. We must create a smarter building with joined-up systems allowing us to monitor and automate key processes, including staff seating arrangements based on capacity and occupancy levels, and ensure smart heating, ventilation and lighting provide health benefits and comfort, while reducing the energy bill and helping protect the environment.

The potential for savings and productivity are clear, but companies can also command greater value from spaces that have lower carbon emissions and higher levels of comfort. Building management is now firmly a finance focus and will remain so into the future.

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