July 2016


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Steve RaschkeEMAIL INTERVIEWSteve Raschke and Ken Sinclair

Steve Raschke, CEO Candi

Steve has over two decades’ experience leading teams focused on networked data and building control systems. His background includes: CEO of Sage Systems, a pioneering provider of smart grid networking and M2M demand response products and services to energy companies; VP of Operations at Engineered Environments, a global luxury systems integrator; Chairman of D-Tools, the leading design software for CEDIA systems integrators; Division Manager at AMX, a global building controls leader; Senior Manager for digital living room products at Seagate; President of Meda Systems, ground-breaking digital media streaming servers; Chief Engineer and Director of Marketing at IBM spinoff Home Director. Steve is a serial entrepreneur and team builder who has participated in multiple IPOs and acquisitions. He has authored numerous patents, white papers and industry articles, and holds awards for innovations in control systems and electronics.

Controls Industry is Ripe For Disruption

A wave of next-generation low-cost, easily deployed devices and services has hit the beach, and lots of new players are making smart buildings compelling and accessible for the other 90% of the market.

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SinclairHow are you seeing IoT and cloud technologies affect the next generation of building controls?

Raschke:  Some of today’s building controls leaders are doing a great job of adding IoT and cloud features to their systems. Schneider, KMC and Tridium are good examples. But because IoT and cloud technologies are so disruptive and easily leveraged, I believe the building controls industry as a whole is about to face a fundamental, maybe even existential challenge from the outside.

SinclairWhat kind of industry challenge are IoT and cloud technologies bringing?

Raschke:  The building controls industry is ripe for disruption. It’s at the same inflection point today as the computer industry was during the PC revolution decades ago.  Like IBM and HP back then, today Honeywell, JCI, Schneider and a handful of market leaders control the high-end systems sold into 10% of the world’s largest businesses and buildings. It’s terrific to see the value they’re adding to their products in the form of cloud-based analytics and dashboards. But soon, all that will be old news.

Just like Apple and Microsoft launched personal computers way back when, there’s now a fundamental challenge to the building controls market and mindset. A wave of next-generation low-cost, easily deployed devices and services has hit the beach, and lots of new players are making smart buildings compelling and accessible for the other 90% of the market. They’re coming in at a fraction of the cost with more applications than today’s leading products. Examples include Intel’s Building Management Platform running on industry-leading gateways, or Microsoft providing normalized IoT data to thousands of app developers via Azure IoT Suite, or Lucid providing cost-effective cloud-based building management on low-cost hardware.

SinclairDo these newcomers have the right products to challenge the building controls industry?

Raschke:  Well, most of these new IoT solutions aren’t full BCS or BMS in the traditional, big-equipment sense. Yet. But many can handle specific use cases like energy management, remote control, alerts, tenant sub-metering or thermostat control. They may not employ PID loops, but they’re getting good enough to provide justifiable ROI to owner-operators in mid-market buildings. Sooner or later, these services will develop enough value and market share to start coming upstream.
And beyond affordability, this new approach has a secret weapon:  it is cloud based, and it’s open. This is in every real sense of the term an industry-changer. Open source, IoT and cloud are quietly democratizing the world of data and services. Together they allow for mash-ups of products, data, analytics and visualization layers across protocols and standards. This enables more developers in more places with more tools to compete with more innovation. The building controls industry is not immune.

Sinclair Isn’t industry expertise and credibility an important factor?

Reliable ControlsRaschke:  Of course. The science doesn’t change. Honeywell, Schneider, JCI, Delta, ABB and others are still absolutely the right choice for large-footprint applications. It’s up to them to continue to own their turf. My point is that this multi-billion-dollar market is rapidly shifting underfoot. The question now is how to capitalize on the massive new market opportunity in the other 90% of buildings.

This means that the definition of credibility may change in this context. Recognize that the new wave of building management solutions is backed by global, highly influential outsiders such as Intel, Microsoft, Dell and Google. These are the leading experts on IT, cloud, security and embedded tech. They may not yet have the depth in smart building applications, but they are moving fast and partnering where necessary. Just look at how serious Intel is about this market. And when the big news is about hackers gaining access to traditional BMS, then the credibility conversation quickly shifts from VAV fault detection to critical network security.

Don’t forget that the companies behind this new wave also have massive sales and distribution channels. Their channels today are primarily IT focused, but there is a lot of crossover with OT systems integrators and VARs too. Controlco is a great example of a building controls SI that can bridge both worlds. Marc Andreesen once remarked that “software is eating the world.” It’s true here. Since IoT and cloud services are shifting building controls solutions from OT toward IT, it’s important to understand that new solutions backed by these powerful players will not only wrap in the expertise, but also may carry higher credibility with customers’ IT departments.

SinclairWhere does Candi come in?

Raschke:  Candi believes there’s a massive new sales opportunity for SIs and VARs in buildings that are 100,000 square feet or less. We help IoT services companies and SIs/VARs target that market. Candi is a device and data management service that spans both legacy systems and new IoT devices, via low-cost, quick-to-install commercial gateways. For example, Intel IoT solutions work with Candi to power Intel’s Building Management Platform on industry-leading gateways. The gateways communicate BACnet, Modbus, Ethernet, Wi-Fi, ZigBee, INSTEON, and a bunch of other protocols so they can integrate device control and data for secure remote access through cloud-based services like Microsoft Azure IoT Suite, Enernoc and others, for a complete smart building solution.


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