New Global Smart Buildings Forecast presents state of the market, drivers for technology adoption, and business value derived from smart building development
IDC Energy Insights today announced the availability of a new report, Global Smart Buildings Forecast 2013-2018 (Doc #EI247447). The new report presents the state of the market, drivers for technology adoption, and the business value generated by developing smart buildings. In addition, IDC Energy Insights’ shares expectations for growth in investment across smart building technology segments and regions. Designed to help vendors better develop the value propositions and case studies to further advance the market, the forecast projects spending to grow from $7.3 billion in 2014 to $21.9 billion in 2018, representing a 28.4% compound annual growth rate (CAGR).
After several years of slower-than-expected growth, the smart buildings technology market is expected to grow rapidly as there is increasingly broad market awareness of the business values generated by deploying smart building solutions. Smart building technologies have matured to enable facility optimization through the convergence of information technology and building automation. Building owners and key decision makers are increasingly aware of the business value of these solutions; however, adoption of these technologies has been slow due to changes in business processes required for deployment and utilization. A number of recent case studies and demonstrations are helping educate the end-user market around the business case and benefits associated with developing smart buildings.
Key findings of the report include:
Different countries face very different drivers towards the expansion of smart buildings, including owners and managers seeking to reduce and control energy costs (U.S.) to governments driving environmental and energy efficiency objectives (Germany) to meeting energy supply challenges (Japan).
This global smart building technology spending forecast projects the market to grow from $6.3 billion in 2013 to $21.9 billion in 2017. Adoption rates are expected to vary by region, with the most aggressive adoption in North America, Western Europe and Asia/Pacific over the next five years.
Prior to 2013, the global smart building market grew more slowly than expected due to externalities such as less expensive electricity in several markets and a slow economic recovery leading to deferred capital investments. In 2014 and over the next several years, adoption is expected to recover as the economic recovery takes hold and as energy costs remain a large and variable component of building operation.
Despite the aggressive growth forecast for the smart buildings market, adoption still represents a small share of the total addressable market. The continued development of case studies and best practices by early adopters will promote awareness and support longer-term expectations for market expansion.
With many basic control and monitoring systems in place, a need is developing for intelligent software and external services to help analyze, interpret, and prioritize the data that is being collected.
In developing this forecast, several trends were identified. The first is that vertical industry has a large impact on the rate of adoption of smart building technologies. Buildings managed in the government or healthcare verticals, for example, tend to be more mature in their appreciation of the benefits of smart buildings, and more advanced in their deployment. Secondly, investments over the past several years have focused on HVAC systems. Customers are now beginning to expand their evaluation to lighting, plug load, equipment maintenance, and other issues.
“As businesses recover following the ‘great recession,’ building owners continue to focus on managing their operational energy costs and risks. Often, gathering building data is not the issue, rather combining, interpreting, and prioritizing that data is becoming the key challenge. Smart building solutions are valuable technologies for deploying energy management strategies that generate operational efficiencies, cost containment, and sustainability benefits that appeal to key stakeholders across chain of command in building management,” said Jill Feblowitz, Vice President, IDC Energy Insights.
This IDC Energy Insights forecast is bullish on the growth of the smart building technology marketplace. Solution adoption may vary by region, business segment, and solution type, but it is evident that demand is growing at the global scale. As business owners see firsthand, the business benefits associated with deploying the enabling technology within the smart building ecosystem, IDC Energy Insights expects continued strong expectations for these solutions in the years to come.