IBM Smarter Buildings: Overview & Demonstration

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1 Gene Moran Worldwide Sales, TRIRIGA 10 September 2013 IBM Smarter Buildings: Overview & Demonstration

2 IBM provides an open, and holistic approach to managing the delivery of products & services across smarter infrastructures. 2

3 Today s infrastructures are smarter, interconnected, and virtually without limits Smarter Physical Assets Growing Access Mobile Unpredictable Data Flows Expanding risk and cost 200 Billion 1 Billion 62% 60,000 Connected physical assets & devices Consumers will have SmartPhones of workloads will be Cloud-based Cyber attacks every day 3

4 Organizations are investing to optimize increasingly complex, dynamic business infrastructures to deliver of business value Transitioning to Smarter, flexible infrastructures Converging Digital & Physical Assets Leveraging Mobile & Web Endpoints Addressing data growth, threats, & compliance 4

5 The need for efficiency in Infrastructure is clear 2 Real estate is the second largest expense on the income statement for most companies. 3 In most organizations the real estate portfolio is on the balance sheet as the third most valuable or expensive single asset. 30 percent Facilities investments and operating costs can be more than 30% of corporate annual spending. 42 percent Worldwide, buildings consume 42% of all electricity up to 50% of which is wasted. 1 Buildings are the number 1 contributor to global CO2 emissions. 5

6 Smarter infrastructures provide new opportunities to deliver better business outcomes 40% less energy 85% higher occupancy 18% rise in productivity Energy usage reduced by up to 40% and maintenance costs by up to 30%. Facility utilization increased by up to 85% with 210% higher annual savings in Total Cost of Occupancy. Employee productivity increased up to 18% on average. World Business Council for Sustainable Development Aberdeen Group US Green Building Council 6

7 However, organizations are challenged in Optimizing the portfolio & service delivery, and in turn, driving Innovation. Reduced costs Property is often the 2 nd highest cost after staff Legislation GHG emissions, energy use, water use, waste tracking, environmental measures, accountancy laws Globalization Benchmarking globally disparate operations Properties operating as silos of systems and data Too many business processes require manual intervention Difficult to determine the value of FM services Loss of corporate knowledge to 3rd parties Difficult to identify true full cost of operating a property Disparate building management systems Rich data is often unexploited in pursuit of business efficiency Disparate facilities providers in soft and hard services 7 Real estate & facilities functions NOW have an opportunity to drive strategic business value

8 Buildings are Complex! Getting enough information is not the issue. The problem is getting the right information Portfolio RE Mgmt Asset Mgmt Lifecycle Energy Use Passive/Active Building Services Maintenance/Projects Occupancy Space Mgmt Tenant Services Help Desk Waste Mgmt Trash/Water/Recycle Project Mgmt Project Delivery Industry Specific Hospital, Hotel, Etc. Analytics and Optimization Energy Smart Meter, Demand Response Water Smart Meters, Use / Flow Sensing IT/Telco Services Capital/TI Projects Lease administration, tenant services Fire Functionality Checks, Detector Service Space Utilization Occupancy/ Management Voice/Video/Data Elevators Maintenance, Performance HVAC Fans, Variable Air Volume, Air Quality Lighting Occupancy Sensing Access/Security Badge In, Cameras, Integration Perimeter, Doors, Floors, Occupancy External Integration Weather Current Predictions Emergency Services Alerts, Actions Utilities Demand Mgmt, Cost Control Community Services Transportation, Traffic, Events Commercial Potential Advertisement Integrated Integrated Building & Communications Services Services 8

9 A better approach to bridging business, real estate and IT is needed one that balances Optimization & Innovation Visibility to see and understand your business in real time Control to transform and adapt while limiting risk & cost Visibility, Control & Automation will be central, because you cannot control what you cannot see. You cannot automate what you don't control. And if you cannot automate, costs skyrocket and innovation stagnates. Automation to achieve greater efficiency and agility 9

10 Smarter Physical Infrastructure: Instrumented, Interconnected, Intelligent A comprehensive set of integrated enterprise capabilities that help organizations to keep plants, facilities, data centers, or cities operating effectively. Dashboard views of service health Predictive analytics & reporting Mobile workforce support Asset, work and inventory management Complex & embedded systems IT & Enterprise assets Facilities & real estate Event filtering and correlation Process & workflow automation, and rules management Enterprise content management Complex and Embedded Systems Analytics Process Automation Enterprise Assets Mobility Facilities and Real Estate 10

11 Smarter Physical Infrastructure: An integrated lifecycle approach Traditional Approach Lifecycle Approach 11

12 Smarter Physical Infrastructure: End-to-end asset management Facilities & Real Estate Transportation & Fleet Linear Assets Plant & Production IT & Network Equipment 12

13 Smarter Physical Infrastructure: Enabling smarter buildings Achieve Sustainability Goals Increase Utilization of Facility Assets Extend the Life of Critical Assets Generate Highest Return on Invested Capital Build More Effectiveness into Real Estate Operations 13

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15 Pending changes to global lease accounting rules will place a huge strain on mid- to large-sized public companies The new lease accounting standard will add an average of USD1 billion in new liabilities to balance sheets of large public companies in Europe, the U.S., and many other countries. 1 Analysis of financial reports from S&P 500 companies shows lease-intensive industries will have greatest increase in liabilities: Retail 18.5% Telecommunications 12.2% Energy 6.2% Information Technology 6.2% Total S&P % 15 Source: Goldman Sachs

16 Joint IBM and CFO Research Services survey of senior finance and real estate executives highlights challenges created by new lease accounting rules A global IBM survey of senior finance and real estate executives found 92 percent consider themselves NOT PREPARED These proposed lease accounting rules increase financial and operational complexity for finance, real estate and other functions that administer leased property, equipment and other assets. 16 Source: CFO Research Services, Beyond the Balance Sheet, 2013

17 Compliance will require new IT systems. Massive amounts of information coupled with inadequate systems, lack of internal expertise and stringent audit requirements creates a need for new solutions. 63 percent of senior finance and real estate executives expect to upgrade, reprogram or acquire new IT systems to comply 17 Anyone who is foolish enough to think they can do this on a spreadsheet is only a few quarters away from having a big problem. John Merino, Chief Accounting Officer, FedEx Source: CFO Research Services, Beyond the Balance Sheet, 2013

18 Why lease accounting changes matter: CXO/Chief Accounting Officer are concerned with Financial Impacts, Compliance and RISK COMMERCIAL RETAIL GOVERNMENT & PUBLIC SECTOR Impact on Ratios Exposure to Analysts Credit Dependency Risk - GL Compliance 000s of Leases Lack Evaluation Criteria Portfolio Mix Changes Balance Rollovers Cost of Compliance Budget Pressure Utilization Requirements Executive Orders 18

19 Where is the opportunity? Financial exposure will require new systems. Massive amounts of information coupled with an inaccurate baseline and lack of systematic financial modeling to build a strategy creates a need for new solutions to create financial precision. Compliance will require increased visibility. Scattered data, large decentralized decisions and accounting practices, and no standard evaluation of real estate decisions weakens control which increases RISK. A majority of mid- to large-sized companies expect implementation to take more than one year. 19

20 Realize the benefits of IBM TRIRIGA Global Top 100 Fast-Moving Consumer Goods Retailer Smart is: accelerated compliance with the new lease accounting standard to mitigate regulatory and financial risk. Global 5 Enterprise Smart is: transforming one of the world s largest real estate portfolios into a highly efficient, high-return operation to save USD1.2 billion annual RE Savings IBM Real Estate Site Operations Smart is: the integration of real-time energy analytics and asset management to lower energy costs by 27 percent. 20

21 Realize the benefits of IBM TRIRIGA Business objectives ROI Points Customer Examples Reduce energy costs Down 1-8% Improve space utilization Up 5-25% Reduce carbon footprint Down 2-5% Increased lease payments Up % Reduce maintenance costs Down 2-5% One of the largest cities in the USA reduced 600M annual energy bill and GHG emissions expected ROI: $32M Leading manufacturer of mobile devices improved facility utilization, Increased space utilization, reduced a global real estate portfolio of 17 million square feet by more than 17% and annual occupancy costs by $625M World wide industrial supplier is able to identify inefficient facilities, assess where opportunities exist for improvement, and manage projects to implement the improvements. Ivy league university is able to keep track of their expiring leases and thus is able to proactively manage their real property occupancy. Large Insurance provider reduced emergency maintenance calls significantly by performing preventive maintenance tasks on schedule with greatly improved ability to report on asset and technician performance saving 22 minutes per day/technician. Reduced time to facility opening through improved project management Down 5-20% Leading coffee retailer increased store revenue by shortening by weeks the site selection to first cup of coffee timeline by leveraging TRIRIGA s template based critical path scheduling and automated task assignments. 21 GE is constantly seeking ways to improve our processes, and to change when necessary to meet critical objectives for success. TRIRIGA allows us to be flexible when we need to be, so we can easily address any requirements imposed by any change resulting from our quest for continuous improvement. - David Kontra, Manager, GE Real Estate Operations

22 Gartner has recognized IBM as a leader in the Magic Quadrant for Integrated Workplace Management Systems Magic Quadrant for Integrated Workplace Management Systems by Rob Schafer May 31, 2012 This Magic Quadrant graphic was published by Gartner, Inc. as part of a larger research note and should be evaluated in the context of the entire report. The Gartner report is available upon request from IBM. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. 22

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