Platform vs. Product-based Solutions for Property Management/Commercial Real Estate
The emergence of the Internet of Things (IoT) based technologies is surfacing a fundamental question for our customers: Is it better to implement a product or platform-based solution?
The following blog is written in the context of IoT-based ‘energy management’ solutions in real estate/property management but resonates across a much wider scope. In parallel with real estate, the article, we believe, is equally relevant in manufacturing, retail, construction, natural resources, and so much more. It covers the decision of product versus platform and leverages Hitachi’s decades of experience in this space to help you decide the best approach for you and your company.
Real estate and property management companies in many city centers across North America are experiencing explosive growth. Year over year, higher monthly rentals and stronger occupancies are fueling top line revenue to record performance. With many of our customers making successful investments, market optimism and the opportunities for continued growth through 2019 and beyond are undoubtedly high.
With that said, occupant expectations are changing. Tenants are envisioning a more connected, community-focused experience where automation contributes to a safer, more comfortable, more enjoyable experience. The proliferation of in-home, residential IoT-based technologies are driving consumer expectations to new heights.
Opportunities for improved operational efficiency for investors who own and/or control the above living/workspaces are similarly extensive. From the parking garage to the penthouse, the paths to enabling an ‘intelligent’ building through IoT technologies are virtually endless.
So where does that leave the average building maintenance/property manager/commercial real estate provider? With millions of sensors and hundreds of disparate solutions, where’s the best spot to start?
It’s our experience that many of our customers have selected energy management as their launch point. With comparatively large and measurable ROI opportunities, improved energy management can generate relatively immediate financial benefits and continued (if not accelerated) momentum for future opportunities. We therefore agree that energy management is a perfect place to begin. With that said, is it better to ‘go-deep’ in an energy management product solution or ‘go-wide’ in a broader platform solution?
Start Small, Move Quick
Energy management is a great place to start. The opportunities to focus on energy management to achieve improved return on capital, improved safety, improved worker productivity, and reduced energy consumption are immense and will deliver measurable ROI in a relatively short timeframe.
But be careful not to go too deep. Our experience (supported by McKinsey Digital in a January 2019 publication titled: “What separates leaders from laggards in the Internet of Things”) tells us there’s a wide gap between companies finding ROI in their IoT investments and those who are not. One of the key findings from the study confirms the requirement for speed and diversity. The companies returning the greatest value from their IoT investments were aggressively pursuing a large number of IoT use cases. In short, they capture the most immediately compelling benefit from a particular area of focus while preparing for the next. According to the article, “there is a disproportionate increase in financial gain” for companies who experiment in a larger number of use cases.
This is where a platform solution begins to earn its merit. An appropriately designed platform solution will invite a ‘rinse and repeat’ strategy for fundamental experimentation and implementation. For example, it shouldn’t matter whether the focus is energy management or security. The solution should provide a configurable foundation designed to deliver insight regardless of the source.
This leads to our next key consideration in the product versus platform debate: Data diversity.
There’s a Lot of Data — Collect It All
IoT data is everywhere and with the right platform solution, it can be easily collected.
Whether the data is mechanical (a sensor), system data (your ERP), weather data, or market data, if you think there’s a remote chance it can help, then invest in a platform designed to effectively collect data of all types. Time and again, our experience has proven that up front it’s impossible to predict where the most valuable insight will surface. Collect it all.
Surfacing insight from disparate sources and mining that data for insight is another key consideration that a traditional product-based solution often lacks. Typically, these solutions are designed to accommodate data related to their specific area of focus. For example, in the case of energy management, it would be unlikely that the solution would effectively capture and deliver predictive analytics specific to flood detection, worker safety, or fitness equipment breakage.
On the other hand, an effectively designed platform solution would not just accommodate these disparate sources but provide end-user intended drag-and-drop predictive analytics/machine learning applications to allow data mining within and across data sets. What data do I collect to determine optimal occupant loyalty for a specific building (versus turnover that may result in higher monthly rentals)? Not only does the platform require the ability to collect these different (non-energy management) data sets, but it also requires the ability to easily leverage that data.
With the right solution, it’s not just about determining the necessity for action. To us, it’s about ensuring the right action occurred and measuring the results of that action. How did the delivered action impact customer satisfaction, for example?
Leveraging automation and bots, where applicable, determined workflows (or actions) should be easily configurable using a repeatable process for easy adoption and integration into a corporation’s existing processes. The workflow can be as simple as sending an error message to automatically dispatching the right technician with the right parts at the right time to resolve an issue while simultaneously resolving other lower priority issues when onsite at the same location or another location en route. Used inventory can be automatically adjusted. Warranty checked. Invoicing generated. Customer satisfaction measured. You name it. A full end-to-end workflow based on a potentially eclectic mix of data sources/data types that only a platform-based solution could accommodate.
Platform vs. Product
To us, a platform-based solution is the stand-out winner. To recap:
- Start small. Move quick. A platform solution allows a company to easily focus on a larger number of potential use cases. This is where the maximum ROI has been proven. Don’t over-invest in diminishing returns; experiment with many. Look for the next big thing.
- There’s a lot of data. Collect it all. Collect as much data from as many sources as possible (IoT and beyond). It’s impossible to tell up front where the hidden gems may be. Ensure your solution can accommodate this broad of an approach. Product solutions often cannot.
- Surface Insight. Leverage ‘data science’ to find insight in the data. An effective platform-based solution will allow users of all abilities the capacity to successfully explore the data. A platform solution is more likely to empower users through basic drag and drop analytics to advanced data science – regardless the data source or data type.
- Take Action. This is perhaps the most important part. Product solutions typically have canned workflows designed for specific actions whereas platform solutions leverage a configurable approach designed to deliver an ideally endless degree of variability. A best-in-class solution will provide end-to-end workflow management from determination through execution and measurement.
In addition to the above considerations, it’s also important to consider the complexities and overall management-related costs associated with the licensing, implementation, training, and on-going management of numerous product solutions. An inevitability of the product-focused approach.
For the vast majority of our customers, we’re confident that a platform-based solution is the right approach. Coming back to energy management, implement the fundamentals and find value fast. Don’t over focus. While implementing energy management, build a roadmap that includes the next potential ‘big-things’. Use a rinse and repeat approach that allows an industrialized approach to implementation – not overly concerned about ‘perfection’ for any one use case. And last but certainly not least, ensure you’re leveraging an end-user approach to data science that allows you to successfully deliver (and measure) actions associated with those insights. Remember, the most successful investors in IoT-solutions are the ones investing lightly in many, versus heavily in few.
For a look at Hitachi Solutions IoT Solution Platform, please contact us today.