Analytics - What Problem are we Trying to Solve?
Author: Paul Oswald, Managing Director, CBRE|ESI
Analytics has been a hot topic in our industry for the past three or four years. In that time, numerous analytics products have appeared and much has been written about the power, and benefits of analytics. For all the new technologies, players, and attention analytics has received, the actual adoption by clients has been somewhat painful. There are success stories, but widespread adoption of analytics has been slow and sporadic. This article is a first step in identifying underlying causes for this and developing new and more effective ways to position analytics.
Let’s begin by addressing a couple of common perceptions about analytics.
Perception: Analytics, fault detection, automated diagnostics or continuous commissioning saves money.
Truth: Analytics by themselves do not save money for a couple reasons. First, it’s not about the technology; it’s about people and process. Technology is the enabler. Second, analytics is a tool, not the remedy. Think of it this way; you don’t feel well so you go to the doctor and the doctor orders an MRI. However, the MRI does not cure your ailment; it simply gives the doctor insight as to what is wrong. The cure could be relatively simple (low cost) in the form of a prescription, or it could be major (high cost) in the form of surgery. Either of these remedies (corrective actions) will cost money to fix your ailment. The MRI is analytics; you need to spend money on it but by itself, it will not save you money. Similarly, meaningful bottom-line results from analytics is the result of people and process. While it’s true that you need good technology, technology is only an enabler; not the solution itself.
Perception: We are considering analytics to save energy.
Truth: While it’s true analytics can help save energy, if we only consider energy as the justification then we miss the bigger issue. Consider this from a building manager’s perspective: in a typical building energy represents a $1 - $9/SF cost. Lease/maintenance and operations represent a $10 - $99/ SF cost, and people represent a $100 - $999/SF cost.
Clearly, focusing on and addressing occupant experience issues have two orders of magnitude greater impact. In a tight labor market, this can be the difference in employee attraction and retention and in corporate offices, this can have an impact on employee productivity and engagement. It is logical that if we focus on occupant experience, we will have a positive impact on operations and energy costs. However, if we only focus on energy cost, that doesn't necessarily mean we will be addressing the most significant business cost: people.
In most cases, the majority of work orders processed are for hot/cold complaints. This is a direct correlation to occupant experience and focusing on the root cause of these hot/cold complaints will likely result in a better occupant experience. Addressing hot/cold complaints, requires more than just technology. It fundamentally requires changing our attitude towards maintenance and building operations. We should not be discussing innovation and new technologies, if we’re not willing to discuss taking care of the fundamentals of proper building operation and maintenance.
Even though it is a relatively new technology, analytics has primarily been viewed as a technology that is attached to a building automation system and its primary justification has been based on energy savings identified because of fault detection algorithms. Admittedly, this has led to much debate over how to determine cost impact values for each rule and the fact that you cannot show real savings until you fix the identified issue or fault.
For this reason, it has been difficult to get adoption of analytics technology because decision makers are not convinced it can produce results to justify its cost. This is correct thinking if we are not going to change our attitude toward fixing and maintaining equipment. As previously stated, analytics do not save money; they are a tool that provides insight and without an organization’s commitment to fixing, maintaining and budgeting to support that, no hard savings can be realized. Based on this reality, it’s time to look at implementation and justification of analytics from a different perspective. We need to look at analytics as a business tool that will give us greater insight as it relates to the buildings in our portfolio.
If we consider analytics as a business tool, the question then becomes what problem are we trying solve; the 1x, 10x, or 100x problem? Let’s assume that the area of focus is the 100x problem, then before we consider an analytics implementation, we need to address some fundamental questions that have little to do with technology, but are critical to a successful outcome.
Current Condition: What is the current condition of the equipment and is there an active program for maintenance and improvements? Once the analytics solution is implemented, what is it likely to find? A building whose equipment is well maintained and has a regular replacement cycle will likely result in fewer ‘major’ issues discovered. However, applying analytics to equipment that has not been properly maintained will likely result in significant findings. This needs to be considered when planning an analytics solution because the findings could be overwhelming. However, these are excellent situations for analytics and the opportunity for meaningful results is significant.
Implementing analytics should be done with the understanding that analytics is a continuous process where issues are identified and corrected in a prioritized manner. When those tasks are completed, another level of issues are identified and addressed. As each successive layer of issues is resolved, the process narrows its focus and moves to greater levels of detail, which continues to drive greater levels of efficiency and ultimately cost savings.
Budget: How much money is allocated for corrective action? This may seem obvious, but all the money spent on analytics won’t return a penny to the bottom line if the issues identified are not actually addressed. It is frequently assumed that simply implementing an analytics solution will produce results. If an organization’s maintenance strategy is “run to failure,” it is virtually impossible for any analytics solution to achieve the desired results. Sufficient money and resources must be allocated to correct the issues identified. If the current condition is poor, the amount of money required to improve will be greater than if the current condition is good. Given the amount of deferred maintenance that exists in most organizations today, we need to ensure that clients understand the realities of the on-going care of their building systems and assets. New technology will not fix this; only a commitment of money and resources will solve this problem.
Change Management: Corrective action needs to be implemented in the context of a clearly defined process. The key to a successful implementation is to build a process around the technology. The process manages the rate at which corrective action is taken to reflect what the organization can effectively support. An organization must be willing to change its processes to achieve successful outcomes. Like the need to commit money to fixing and maintaining assets, resources need to adopt new work flows and procedures to embrace and utilize the data.
Summary: While it is clear that analytics can address the 1, 10 and 100x issues, current implementations have largely focused only on the 1x issue. We need to expand our thinking and ask ourselves what problem are we really trying to solve and what really matters. We also need to address the issue of deferred maintenance. Clients need to commit resources, primarily financial, to fixing identified issues and dealing with deferred maintenance. It should not be acceptable to enter discussions about new technologies unless there is a firm commitment to funding corrective action, eliminating deferred maintenance and a commitment to change management.