BBP Frost & Sullivan Singapore Energy Management Solutions Entrepreneurial Company Of The Year. Barghest Building Performance Pte Ltd

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1 2016 Frost & Sullivan Singapore Energy Management Solutions Entrepreneurial Company Of The Year BBP Barghest Building Performance Barghest Building Performance Pte Ltd SINGAPORE EXCELLENCE 2016 AWARDS 2016

2 Table of Contents Letter of Congratulations Background and Company Performance Industry Challenges Growth Performance and Customer Impact of Barghest Building Performance Conclusion Significance of Entrepreneurial Leadership Understanding Entrepreneurial Leadership Key Benchmarking Criteria Best Practice Award Analysis for Barghest Building Performance Decision Support Scorecard Growth Performance Customer Impact Decision Support Matrix The Intersection between 360-Degree Research and Best Practices Awards Research Methodology Best Practices Recognition: Steps to Researching, Identifying, and Recognizing Best Practices About Frost & Sullivan Copyright

3 Letter Of Congratulations We are proud to present you with this year s award for best practices in Entrepreneurial Company of the Year in the Energy Management Solutions industry. Frost & Sullivan has a global team of analysts and consultants continuously researching a wide range of markets across multiple sectors and geographies. As part of this ongoing research, we identify companies that display true entrepreneurial spirit in creating innovative and potentially disruptive new services or solutions in specific markets. This research involves extensive primary and secondary research across the entire value chain of specific markets. Against the backdrop of this research, we are pleased to recognize Barghest Building Performance as the Entrepreneurial Company of the Year in the Energy Management Solutions market. To achieve excellence in entrepreneurial innovation is never an easy task, but it is one made even more difficult due to today s competitive intensity, customer volatility, and economic uncertainty not to mention the difficulty of innovating in an environment of escalating challenges to intellectual property. Within this context, your receipt of this award signifies an even greater accomplishment. Moreover, we recognize that your receipt of this award is the result of many individuals (employees, customers, and investors) making daily choices to believe in the organization and contribute in a meaningful way to its future. We believe that such an achievement should be acknowledged and celebrated. We hope you use this award as a platform for strengthening your brand, building awareness among new and existing customers, and inspiring your team to even greater levels of performance. Once again, we congratulate you on your achievements and wish you great success in the future. We are here to support you on any future endeavors. David Frigstad Chairman Frost & Sullivan 03

4 Energy Management Market Overview Until 2025, the market will be the era of service business model innovation as suppliers compete to maximize the real benefits for customers through strategic partnerships or acquisitions. Energy management has emerged as a fast growing sector with the increased emphasis on improving energy efficiency and sustainability across industries. Both emerging market participants and start-ups have introduced innovative energy management solutions that include IoT platforms, energy dashboards, and cloud services to lead innovation efforts and compete with the giants of the industry. Since 2010, energy management development has seen huge levels of technology innovation, with smart technology re-defining the landscape. Until 2025, the market will be the era of service business model innovation as suppliers compete to maximize the real benefits for customers through strategic partnerships or acquisitions. Performance contracting will become the preferred business model for customers; suppliers will need to develop service capabilities or partner with facilities management (FM) companies or energy service providers in order to compete in the most dynamic part of the market to maximize value co-creation. Demand response and supply chain management solutions, along with building energy management (BEM) solutions on the cloud will enable dynamic real-time energy management across the globe. The business model rendering such a turnkey solution to customers will entail convergence of services- and solutions-based industries. The focus on energy management is, and should be leaning towards building energy efficiency. According to the United Nations, buildings typically consume 40% of global energy, 25% of global water, 40% of global resources, and emit 30% of greenhouse gas. Therefore, BEM solutions have become an indispensable part of the total energy management solutions industry and are considered one of the fastest growing service segments in the buildings industry. For instance in Southeast Asian countries, compound annual growth rate (CAGR) of BEM ranges from 10.9% to 17.2% from 2015 to Frost & Sullivan Global Scan of Emerging Market Participants Emerging participants that are both nimble and innovative will increasingly drive the pace of technology change in the BEM industry. Since 2014, Frost & Sullivan, in its market studies, have identified emerging and important participants in the BEM solutions. Emerging companies mentioned in the Frost & Sullivan study Emerging Participants and New Entrants in Energy Management Markets (2016 Edition) include GE Current, Ecozy, Gridium, FirstFuel, Flywheel, Electric Imp, Switch Automation, Helium, Actility, Dexma, and BBP. These companies are key contributors in one or more aspects of BEM solutions such as building automation, control and devices, data analytics, cloud services, demand response, communication and M2M, and performance contracting. 04

5 Energy Management Market Overview The Singapore Direction The Singapore BEM solutions market is rapidly developing and is most established in Southeast Asia, with a comprehensive regulatory framework in place, driving market momentum. The strong awareness for energy conservation together with a conducive business environment encourages the growth of BEMS in the country. Singapore s green building initiatives are the most advanced in Southeast Asia, as it aims to turn 80% of its buildings green by The government s implementation of a sound masterplan and robust market incentives has resulted in its status as one of Asia s green building leaders, and further underscores the need to drive energy consumption change in buildings. Frost & Sullivan estimates that the market revenue in Singapore s BEM solutions reached US$50.5 million in Thriving building retrofit with mandatory energy conservation measures will aid BEMS growth at a CAGR ( ) of 11.2% to reach a revenue forecast of US$86 million by Market participants in Singapore s BEM solutions market included global companies such as Siemens, Honeywell, and Hitachi. Nonetheless, the market has witnessed increased participation and contribution from emerging companies such as BBP. As a young company in the energy management and optimization solutions market, BBP has an ambitious expansion plans in regional locations around Southeast Asia. Industry Dynamics Majority of central chiller systems operating sub-optimally In Singapore, energy management solutions are considered very relevant and important due to the fact that electricity cost is one of the highest operations expenditure for most establishments. Building energy efficiency has also been earmarked as one of the five national energy technology roadmaps. Chiller systems are identified as one of the most common sources of immense energy consumption in modern and large buildings. It is not unusual that industrial and commercial building owners may not be aware that most central chiller systems in Singapore are operating at sub-optimal levels, hence the incurrence of high energy cost. Consequently, concerns over energy optimization due to inefficient chillers are often motivated by the plight to reduce operations cost. Asia-Pacific is the largest region in the global chiller equipment market, accounting 40% of total global market revenues of US$17.6 billion in Although Singapore s market size is significantly small, it is still sizable, accounting for 1% to 1.2% of the total Asia-Pacific market size. The growing chiller market through new installations and retrofit will drive energy efficiency opportunities. Companies such as BBP are in the right position to facilitate HVAC optimization through chiller performance improvements. Improving energy efficiency awareness paving way for pioneer solution providers In Singapore, rising customer awareness has provided the necessary boost for the adoption of various energy management solutions that helps in energy savings. While many market players offer innumerous solutions for newly built buildings, there are hardly any companies in the market that offer reliable and cost effective solution for existing buildings. BBP has identified this unmet need quickly and can capitalize on opportunities as with a first-mover advantage. BEM solutions progressing towards performance contracting and business model innovation Though consumers acknowledge the need for energy efficient systems to curb operating costs, the initial high cost of installation of new systems and solutions prevents them from adoption despite the long-term benefits. In such cases, a path-breaking business model from the service provider can propel the industry further. It can act as a crucial stepping stone for market penetration and subsequent success. To address this industry challenge, BBP offers its solution to prospective customers without customers incurring any upfront cost. The company offers a fully-financed, shared savings solution to the client. This unique business model has resonated well with customers in the market. 05

6 Background and Company Performance Entrepreneurial Innovation and Customer Impact of Barghest Building Performance Financial Analysis A new company faces tremendous resource challenges in the initial years of incorporation. Challenges include high operations cost, price competition, price-sensitivity, profitability, and human resources. Entrepreneurial innovation of a new company entails successful turnarounds in revenue and profitability, business sustainability, and disruptive service innovations that challenge BEM solutions market incumbents. BBP was incorporated in 2012 in Singapore. In a highly competitive and fast growing market, BBP has been phenomenally successful in selling its proprietary technology to commercial and industrial real estate companies, thereby increasing its revenue over 185.7% in a span of just 3 years. Its market share growth was estimated to be 2.0% in the overall BEM solutions market, and is poised to maintain its high growth momentum in Frost & Sullivan finds that BBP s achievement in growing its market share in the BEM solutions market is commendable. As the market is highly competitive, established and Tier 1 BEMS solutions providers such as Johnson Controls and Honeywell registered negligible growth in market share in the Singapore market. In a highly contested space, BBP is slowly and steadily gaining visibility amongst leading customers in Singapore and is well positioned to achieve its target of doubling its customer base measured in total refrigeration tons under management. The company is also well positioned for significant market growth in the future as its technology and solutions fits very well in a country like Singapore that has a high concentration of operational commercial and industrial buildings. Technological and Product Innovation An emerging company needs to stand out with best-in-class solutions that are beneficial and affordable for its customers. Its key differentiator will determine the immediate and long term impact of the company s financials. At the year of BBP s incorporation in Singapore, regulations for implementing energy efficiency solutions in commercial buildings were highly favorable. It is important for a young company to utilize its technology in the most efficient manner for the growth of its business. The company s patent pending intelligent software especially in the HVAC segment is unique in the market due to three main reasons; 1) it can be seamlessly integrated with almost 90% of the existing commercial and large industrial buildings without causing any operational disruption to the customers, 2) it is proven to reduce current HVAC electricity consumption up to 30%, and 3) no operations disruption during installation. A major competitive differentiator and success of BBP stems from its proprietary technology that converts sensor input to precise level of controls of current systems and equipment at clients sites or buildings. BBP s innovative energy management system incorporates the use of cloud technology and analytics that supports signal and data transmission of energy consumption and performance of its clients. Collected data is translated into predictive maintenance, better control of equipment, and improved energy efficiency that ultimately leads to cost savings. 06

7 Background and Company Performance Evolving Business Model A successful emerging company or entrepreneur possesses visionary ingenuity that defines a remarkable competitive edge in the market. As the market becomes diluted by many participants, it is important to stand out from similar aspirants and incumbents with unique propositions. New or innovative business models are necessary to develop a better outreach to customers and to serve the changing customer dynamicity. As energy management solutions and modernization are considered costly for most building owners, BBP runs on a business model that leverages on performance contracting fundamentals. A performance contract that is engaged with a customer could range between 2 to 6 years. There are no initial upfront costs to be borne by the prospective customers during installation. BBP is paid through a fixed term contract where BBP either takes a fixed share of the savings generated or guarantees a specific improvement in efficiency in return for fixed monthly payments. BBP s solutions enable clients to achieve sustained savings of ~30% on existing Chiller Plant energy consumption, resulting in savings anywhere from hundreds of thousands to millions of dollars per year. Post contract period, BBP customers get to keep all installed hardware and full benefit of savings. Customer Experience Customer experience is an important factor that can determine business sustainability, and contributes to market development. As markets become increasingly competitive, companies strive to increase revenues and expand customer bases. A great customer experience can bring viable expansion opportunities for market participants. BBP s customer base is large and highly diversified in a country like Singapore that has a high concentration of commercial buildings. The company is building a steady track record of industry references for future projects. The fact that many reputed multinational companies in the commercial and industrial real estate sector space chose to work with BBP shows that technology and solutions provided by BBP is truly best-in-class. Singapore provides one of the most thorough regulatory supports in the region, and it is consistently raising its requirements to improve and encourage energy efficiency adoption. This has resulted in market participants striving to continuously improve while new entrants are making positive impacts with innovative energy solutions. Innovative companies such as BBP have begun to make waves in regional markets after a considerably successful market penetration in Singapore. The company s commendable work in Singapore will prove to be a strong showcase to customers in other regional markets. Unique Market Position It is common that market participants strive to find niches in service propositions to avoid head-on competition and to establish differentiations. It is relatively daunting for new entrants or emerging companies to carve its market position as they compete with incumbents and established market participants. BBP has succeeded in integrating its position with the market ecosystem. The number of energy service companies (ESCOs) is noticeably lean in Singapore, but the demand for specialized solutions for building energy efficiency is increasing. BBP, as a registered and certified ESCO, is well-positioned to address energy efficiency issues and future demands as Singapore gears up to be greener. Additionally, the number of certified green buildings in Singapore by gross floor area is estimated to be around 30% only in 2015, which translates into vast growth opportunities for companies such as BBP in assisting building owners in green status achievements in the future. This unique market position will aid BPP to offer customized EE solutions to more customers, thereby ensuring company s long term growth. Conclusion With its participation in a promising market with a commercially viable technology and a strong growth strategy, BBP has definitely made a strong headway in the Singapore energy management solutions market. This makes them a deserving recipient of the 2016 Frost & Sullivan Singapore Entrepreneurial Company of the Year award in energy management solutions market. 07

8 Significance of Growth Excellence Leadership Understanding Growth Excellence Leadership Ultimately, growth in any organization depends upon customers purchasing from your company, and then making the decision to return time and again. In a sense, then, everything is truly about the customer and making those customers happy is the cornerstone of any long-term successful innovation or growth strategy. To achieve these dual goals (customer engagement and growth), an organization must be best-in-class in three key areas: understanding demand, nurturing the brand, differentiating from the competition. This three-fold approach to successful entrepreneurship is explored further below. Demand Acquire competitor s customers Generate awareness Increase market penetration Build a larger customer base Balance pricing with profability Brand Key Benchmarking Criteria For the Entrepreneurial Company of the Year Award, we evaluated two key factors Entrepreneurial Innovation and Customer Impact according to the criteria identified below. Entrepreneurial Innovation Establish a strong brand identity Align the brand to the company s vision Build a reputation for innovation Inspire customers Push the envelope Competitive Positioning Criterion 1: Market Disruption Criterion 2: Competitive Differentiation Criterion 3: Market Gaps Criterion 4: Blue Ocean Strategy Criterion 5: Passionate Persistence Customer Impact Be a leader in technology development Deliver superior value to customers Establish a clear value proposition Be a leader in innovation Stake out a clear market position 09 Demand forecasting, branding, and differentiation are part of an entrepreneurial company s larger journey toward forming deep relationships with customers and permanently altering the market with their actions. These two concepts entrepreneurial innovation and customer impact are therefore the cornerstones of this award, as discussed further in the next section. Criterion 1: Price/Performance Value Criterion 2: Customer Purchase Experience Criterion 3: Customer Ownership Experience Criterion 4: Customer Service Experience Criterion 5: Brand Equity F RO S T & S U L L I VA N A S I A PA C I F I C B E S T P R A C T I C E S A W A R D S. F R O S T. C O M AWA R D S

9 Best Practice Award Analysis for Barghest Building Performance Decision Support Scorecard To support its evaluation of best practices across multiple business performance categories, Frost & Sullivan employs a customized Decision Support Scorecard. This tool allows our research and consulting teams to objectively analyze performance, according to the key benchmarking criteria listed in the previous section, and to assign ratings on that basis. The tool follows a 10-point scale that allows for nuances in performance evaluation; ratings guidelines are illustrated below. RATINGS GUIDELINES 9-10 Excellent 1-3 Poor 4-6 Fair 7-8 Good Chart 1: Performance-Based Ratings for Decision Support Matrix The Decision Support Scorecard is organized by Visionary Innovation & Performance and Customer Impact (i.e., the overarching categories for all 10 benchmarking criteria; the definitions for each criteria are provided beneath the scorecard). The research team confirms the veracity of this weighted scorecard through sensitivity analysis, which confirms that small changes to the ratings for a specific criterion do not lead to a significant change in the overall relative rankings of the companies. The results of this analysis are shown below. To remain unbiased and to protect the interests of all organizations reviewed, we have chosen to refer to the other key players as Competitor 2 and Competitor 3. DECISION SUPPORT SCORECARD FOR ENTREPRENEURIAL COMPANY OF THE YEAR AWARD (ILLUSTRATIVE) Measurement of 1 10 (1 = lowest; 10 = highest) Company of The Year Entrepreneurial Innovation Customer Impact Weighted Rating Relative Weight (%) 70% 30% 100% Barghest Building Performance Competitor Competitor

10 Entrepreneurial Innovation Criterion 1: Market Disruption Requirement: Innovative new solutions that have a genuine potential to disrupt the market, obsoleting current solutions and shaking up competition Criterion 2: Competitive Differentiation Requirement: Deep understanding of both current and emerging competition to create and communicate strong competitive differentiators in the market Criterion 3: Market Gaps Requirement: A clear understanding of customers desired outcomes, the products that currently help them achieve those outcomes, and where key gaps may exist Criterion 4: Blue Ocean Strategy Requirement: Strategic focus in creating a leadership position in a potentially uncontested market space, manifested by stiff barriers to entry for competitors Criterion 5: Passionate Persistence Requirement: A deep belief in the rightness of an idea, and a commitment to pursuing it despite seemingly insurmountable obstacles Customer Impact Criterion 1: Price/Performance Value Requirement: Products or services offer the best value for the price, compared to similar offerings in the market Criterion 2: Customer Purchase Experience Requirement: Customers feel like they are buying the most optimal solution that addresses both their unique needs and their unique constraints Criterion 3: Customer Ownership Experience Requirement: Customers are proud to own the company s product or service, and have a positive experience throughout the life of the product or service Criterion 4: Customer Service Experience Requirement: Customer service is accessible, fast, stress-free, and of high quality Criterion 5: Brand Equity Requirement: Customers have a positive view of the brand and exhibit high brand loyalty Decision Support Matrix Once all companies have been evaluated according to the Decision Support Scorecard, analysts can then position the candidates on the matrix shown below, enabling them to visualize which companies are truly breakthrough and which ones are not yet operating at best-in-class levels. DECISION SUPPORT MATRIX FOR ENTREPRENEURIAL COM- PANY OF THE YEAR AWARD (ILLUSTRATIVE) High Customer Impact Competitor 3 Competitor 2 Barghest Building Performance Low Low Entrepreneurial Innovation High 11

11 The Intersection Between 360-degree Research And Best Practices Awards 360-degree research: seeing order in the chaos Research Methodology Frost & Sullivan s 360-degree research methodology represents the analytical rigor of our research process. It offers a 360-degree-view of industry challenges, trends, and issues by integrating all 7 of Frost & Sullivan's research methodologies. Too often, companies make important growth decisions based on a narrow understanding of their environment, leading to errors of both omission and commission. Successful growth strategies are founded on a thorough understanding of market, technical, economic, financial, customer, best practices, and demographic analyses. The integration of these research disciplines into the 360-degree research methodology provides an evaluation platform for benchmarking industry players and for identifying those performing at best-in-class levels. 12

12 Best Practices Recognition: 10 Steps To Researching, Identifying, And Recognizing Best Practices Our awards team follows a team 10-step process (illustrated below) to evaluate award candidates and assess their fit with our best practice criteria. The reputation and integrity of our awards process are based on close adherence to this process. STEP OBJECTIVE KEY ACTIVITIES OUTPUT Monitor, target, and screen Identify award recipient candidates from around the globe Conduct in-depth industry research Identify emerging sectors Scan multiple geographies Pipeline of candidates who potentially meet all best-practice criteria Perform 360-degree research Perform comprehensive, 360-degree research on all candidates in the pipeline Interview thought leaders and industry practitioners Assess candidates fit with best-practice criteria Rank all candidates Matrix positioning all candidates performance relative to one another Invite thought leadership in best practices Perform in-depth examination of all candidates Confirm best-practice criteria Examine eligibility of all candidates Identify any information gaps Detailed profiles of all ranked candidates Initiate research director review Conduct an unbiased evaluation of all candidate profiles Brainstorm ranking options Invite multiple perspectives on candidates performance Update candidate profiles Final prioritization of all eligible candidates and companion best-practice positioning paper Assemble panel of industry experts Present findings to an expert panel of industry thought leaders Share findings Strengthen cases for candidate eligibility Prioritize candidates Refined list of prioritized award candidates Conduct global industry review Build consensus on award candidates eligibility Hold global team meeting to review all candidates Pressure-test fit with criteria Confirm inclusion of all eligible candidates Final list of eligible award candidates, representing success stories worldwide Perform quality check Develop official award consideration materials Perform final performance benchmarking activities Write nominations Perform quality review High-quality, accurate, and creative presentation of nominees successes Assemble board of advisors Finalize the selection of the best-practice award recipient Present candidates to a Board of Advisors Build consensus Select winner Decision on which company performs best against all best-practice criteria Communicate recognition Inform award recipient of award recognition Present award to the CEO Inspire the organization for continued success Celebrate the recipient s performance Announcement of award and plan for how recipient can use the award to enhance the brand Take strategic action Share award news with Coordinate media outreach stakeholders and customers Design a marketing plan Assess award s role in future strategic planning Widespread awareness of recipient s award status among investors, media personnel, and employees 13

13 Auckland Bahrain Bangkok Beijing Bengaluru Bogotá Buenos Aires Cape Town Chennai Colombo Delhi / NCR Detroit Dubai Frankfurt Iskander Malaysia/Johor Bahru Istanbul Jakarta Kolkata Kuala Lumpur London Manhattan Mexico City Miami Milan Mumbai Moscow Oxford Paris Pune Rockville Centre San Antonio São Paulo Seoul Shanghai Shenzhen Silicon Valley Singapore Sophia Antipolis Sydney Taipei Tel Aviv Tokyo Toronto Warsaw Washington, DC About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today s market participants. For more than 50 years, we have been developing growth strategies for the Global 1000, emerging businesses, the public sector and the investment community. Learn more about Frost & Sullivan at Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies? Disclaimer Quantitative market information is based primarily on interviews and therefore is subject to fluctuation. Frost & Sullivan is not responsible for incorrect information supplied to us by manufacturers or users. Our research services are limited publications containing valuable market information provided to a select group of customers. Our customers acknowledge, when ordering, subscribing or downloading, that Frost & Sullivan research services are for customers internal use and not for general publication or disclosure to third parties. No part of this research service may be given, lent, resold, or disclosed to noncustomers without written permission. Furthermore, no part may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the permission of the publisher. For information regarding permission, write to: Best Practices Recognition Group Frost & Sullivan 7550 IH 10 West, Suite 400 San Antonio, TX USA 2016