Global Building Technology and Service Business Model Innovation and Growth Opportunities

Competitive Intensity Calls for Business Transformation and Creative Service Models

In this study, Frost & Sullivan segments building technologies and services into building automation systems (BASs) and facility management (FM). Frost & Sullivan discusses examples of business models and how they support the building industry, specifically the BAS and FM markets.

The study provides forecast and analysis of BAS and FM markets and the entailing business model innovation revolutionizing BAS and FM. The global building technologies and services market generated a revenue of $901.69 billion in 2022. The market grew by 6.8% in 2022 and will register a compound annual growth rate (CAGR) of 6.5% from 2022 to 2028. By the end of the forecast period, the market will reach $1,313.70 billion.There is a shift from conventional business models to service-based models, especially for large-scale building equipment and controls businesses. However, resistance to change from conventional business operations to new business models among small and medium-sized enterprises (SMEs) is still prevalent. This study touches on building as a service (BaaS) as a business model innovation. BaaS is established on the foundation of a building's energy efficiency and has since evolved into platforms for providers and consumers of information.

The BaaS value proposition enables flexibility in terms of building operations, control, and maintenance. Instead of signing up and paying outright for installed software and contracted services, customers subscribe to the performance guarantee or business performance outcome from BAS and FM companies. Frost & Sullivan has identified several innovative business models that support BaaS development: personalization, outcome-based models, co-creation, asset as a service, energy as a service, sustainability as a service, and buildings as material banks.

The study also highlights some best practices of major market participants in business model innovation, including ABB, Siemens, and JLL. Building technology and service market participants should observe and undertake several growth opportunities, including green upskilling, sustainability-driven coopetition, value chain compression, and digital service aggregation.