November 2004

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Frost & Sullivan Interview Anto Budiardjo

as published in the BuilConn Update October 2004

In an interview conducted by Frost & Sullivan, Anto Budiardjo, Clasma President, shares his thoughts on leadership and what it takes to succeed in the rapidly progressing networked buildings industry. Understanding how the industry has matured over the decades is vital in understanding where the industry is heading. With a unique perspective on the industry fuelled by a wide range of industry experience in marketing and product development, Anto is motivated to unite the disparate sectors of the buildings industry in order to realize the immense benefit of intelligent and integrated buildings.

Frost & Sullivan: How do you define your leadership from a CEOís perspective?

Anto Budiardjo: I would say itís kind of a vision-driven perspective in terms of doing activities that would move the industry forward into a better industry that delivers value.

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Frost & Sullivan: How is this different in the BT industry?

Anto Budiardjo: My vision is that technology -- especially what is available today -- can have an immense positive value for the building owners and therefore the industry that provides services to buildings. I think there is a lot of technology that is not being well used to leverage value in a building so that applies dimension to both industry delivering the building services as well as the owners which ultimately affects the big society picture.

Frost & Sullivan: Although you are operating a company that is bringing things together and helping the building technologies industry from a different angle, trying to reach a consensus, but you have come from the building technologies industry yourself, how is your experience in the industry helping you do what you are doing?

Anto Budiardjo: I think that experience I have gone to understand what the issues are and what the challenges that exists in the industry and a lot of that challenges are to do with like any other industry. The industry behaves in a certain manner and the key to that is that the building industry essentially has grown out of the construction industry, which is very much a mechanical-centric and that a lot of the processes and lot of how the industry works is very much unchanged what they were several decades ago and yet there is quite a significant growing force by way of people who understand that there is a different way of doing things and there is a benefit that technology can bring to this industry. So from my years in the industry and prior to that in my own company in Europe I have come to understand what those dynamics are. Also those dynamics both in the HVAC, environmental and controls side as well as the security and lighting and other sorts of building systems.

Frost & Sullivan: You did bring the issue of challenges this industry is facing. What in your view are the top challenges that the building industry is facing today?

Anto Budiardjo: I think the most significant thing that jumps out is that the commercial building industry, by that I mean everything thatís not residential, has its own time table driven mainly by the fact that most buildings have a life span of several decades and much of the technology advances that we see today have a very different time table. These two things are creating a very significant friction because from the building industryís perspective itís very difficult to look into the very short-term technology that evolves and changes very dramatically year on year. Whereas buildings themselves donít really change for decades and from the technology perspective it is very difficult to try and move things along with that when the building industry itself moves at a very slow rate. Probably thatís the most significant challenge that I have seen is the collision of speed.

The other challenges is in the middle of all these changes how the manufacturers, players, and each of the participants in the industry can continue to add value to the building owners. The building system industry of 20 years ago is going to be very different from what it will be 10 or 20 years from now. I think a lot of the vendors of systems are trying to figure out how to change and so there is a lot of change thatís probably is keeping a lot of CEOs up at night trying to figure out.

Frost & Sullivan: What is being done by the key players in the industry to address the challenge of the speed collision between the buildings themselves and the technology?

[an error occurred while processing this directive] Anto Budiardjo: I think they are trying to figure out how their companies can change to deliver new types of products and thatís causing them a lot of problems. It is because the products that they have currently are essentially based on the industry that is basically of the past and they are trying to develop new channels to market. Companies are trying to develop new products leveraging new technologies and it is very difficult for them to do all this because everything is changing in a random manner, whether we are talking about the open system technology or the route to market or the significant consolidation that is going on. I think it is making it very difficult for the vendors to plan exactly what to do but they know they have to invest into IT centric technology, they know that they need to invest in developing a channel that will deliver those solutions and those products and I believe there is a lot of strategic thinking and observation going on trying to figure out what to do.

Frost & Sullivan: A very important part is played by technology as you said, Internet is revolutionizing every industry. Do you foresee any such kind of revolutionary technology coming into the BT industry?

Anto Budiardjo:  There are several answers to that. First of all the way we (when I say Ďweí I mean both building tenants and owners and operators) see buildings will be very different in several years, there will be a portal to a building and everything that needs to be done related to the building will be done through the portal. So everything from requesting the maintenance work or changing the signage or requesting out of hour heating or cooling or changing access controls or looking at the energy usage and even finding out what is on the menu on the cafeteria all of those things to do with a building will be available on that single portal of that building or corporation. So thatís kind of big thing from the end-users perspective. I think the plumbing that needs to happen underneath that are technologies that are basically with us today, TCP/IP, IT based technologies as well as a number of field type protocols for open systems such as LonWorks and BACnet and several others and all of those will continue to evolve and mature and provide a very important Ďdevice to deviceí technologies and the TCP/IP will actually provide connectivity of the building up to the higher level enterprise picture of the building such as the portal that I mentioned earlier.

Frost & Sullivan: Although we see a lot of enthusiasm among the BAS industry for integration of security we see that the security industry do not foresee the integration to happen in the near future. Why?

Anto Budiardjo: You are absolutely correct. We have seen the same thing and itís a very interesting observation. I suspect itís to do with business models, its nothing to do with technology. The security industry feels that their space is being encroached by building automation and controls and the security industry do not consider that there is any importance or demand for building systems to be integrated with the security systems. But I think slowly the two must converge but slowly being the key word, there are signals that some of security players are seeing that there are business opportunities to build systems that way and some of the mergers and acquisitions in the recent years in very large organizations are starting to go across these two fields.

Frost & Sullivan: So who will drive this integration? BAS companies, security companies, or the building operators and managers?

Anto Budiardjo: It really needs to be driven by the owners and managers, however they are not well positioned to drive it because they really donít care. Now depending upon the category of end user this is changing, real estate people really donít care but the corporate end-user cares because they understand that this may have tremendous impact on the business and the organization as a whole.

Frost & Sullivan: Do you see a new breed of technicians coming in?

[an error occurred while processing this directive] Anto Budiardjo: Yes I think whatís going to happen is there is a separation on how a building functions. There needs to continue to be the main expertise that involves itself in HVAC and those are the people who may need to know how to fine tune the air balances and all that kind of stuff and recognize the controls strategies. These are the lower level strategies but none of that goes away. They will still be there. The second level is really the Ďintegratorsí, one of the terms being used is facility management systems integrators and thatís the world that sits above the building. Thatís the role of the individual who has the responsibility of making the interface and provide its information up to the enterprise as well as integrating the systems. So that is the new role that is starting to emerge.

Frost & Sullivan: How is the industry planning to handle the growing demand of people who have insight into the IT as well as BAS?

Anto Budiardjo: Well each of the vendors are obviously doing what they can, trying to train their channel to use their products and to sell to the new types of buyers such as the CIO, CEO and CTO. Organizations are doing what they can in terms of general education. Conferences like the one that we are organizing are proving a forum to address those issues to be discussed and people to be educated more. There has to be a lot more education going on and the industry is organizing itself to prepare for the skill base that is necessary but some of the skill base is going to come from the IT world and there are a lot of IT people that are now dealing with building. IT industry has been relatively good at delivering results and delivering value. One of the reasons why the western world is so efficient these days is the significant amount of IT that has added value to corporations. So you are going to get some pressure from the IT people to manage the buildings as well as some of he buildings related integrators that want to play in the IT world.

Frost & Sullivan: Until now what has happened is that IT people have been very defensive about their systems and they do not want any other system such as BAS to encroach on their domain. Similarly the BAS people donít want to play a subordinate role to the IT guys. How is this resistance going to end?

Anto Budiardjo:  I think its going to end.....I think that you need to look at other industries. If you look at the HR industry, it now relies on the IT and the enterprise very significantly because the human resources is one of the largest cost factors and one of the largest elements of an enterprise in terms of effectiveness. Yes there is a very effective relationship between the HR and the IT industry and again thatís based on the fact that there is domain expertise in the HR that remains in the HR and then there is expertise in infrastructure and IT as well. I think thatís exactly whatís going to happen in buildings. I think there will be people effectively managing the building then there are others who will be responsible for how the building relates up to the enterprise. I think they are going to be two very different people and its more likely that the IT people will be the one who will dominate the IT perspective and most of the BAS industry is likely to be limited to what is happening inside the buildings and most of the people are likely to see it as a subordinate role to something big but I donít think thatís necessarily a good way of looking at it. They have to co-exist for the venture to succeed.

Frost & Sullivan: A lot of industrial automation companies are making inroads into the BAS world. For example Schneider, do you see that as a trend with other companies following suite?

[an error occurred while processing this directive] Anto Budiardjo: I believe we have been seeing that trend for a number of years. Schneider is only the most recent. Look at Siemens, they have been doing that, GE tried to do that before, I believe that is a trend that is inevitable that is in a number of years from now will basically be these large conglomerates such as Schneider being the ones that will be the leaders in the industry which will include the buildings. Again part of that has been until recently a building has just been a box to put stuff into it, now buildings can not only be managed from a cost point of view but can be a significant entity to strategic assets to facilitates the companyís objectives so it has much more value than just a box, and the entire industry is getting the realization now.

Frost & Sullivan: If you were to look five years from today, what do you think you and Clasma will bring to the building technologies industry?

Anto Budiardjo: I believe and I would hope that it would bring an increased size of the market, which will be beneficial to the industry and also increase value in what building systems and building technologies can bring to the enterprise. There is an enormous amount of value that I think I mentioned right at the beginning thatís really the vision and the way thatís going to materialize is by the industry getting bigger and the industry getting more, delivering more value and therefore more profitable and therefore more growth and benefits to owners and corporations.

Frost & Sullivan: What skills do you believe are the key to be a successful CEO in the building technologies industry?

Anto Budiardjo: I think the most fundamental skill that is necessary is the understanding of what the building automation and the integration market is all about. I have seen many top level executives who have come out from outside of the industry from technologies like telecom that really do not have a deep understanding of what this industry is all about and they have quite often failed in making a huge impact. The deep understanding is very important attribute for any CEO in this industry.

Frost & Sullivan: But do you think a CEO who comes from the industrial automation industry can add value here?

Anto Budiardjo: Probably such a person is much better off than CEO maybe from outside of the industry because they understand the importance of controls and close loop and the technology and the type of engineering. So I think they would be better placed than most but I think there is a lot stuff that they do not understand what happens in buildings because the industrial automation deals with mainly machines and manufacturing which is predictable but the element about buildings is that although most of it is predictable in terms of heating and cooling and doors and security and lighting and everything else it also have to deal with humans which is very unpredictable.



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