Strategic Partnerships Emerge as Crucial Pathway to Complete Smart Building Solutions

The burgeoning ecosystem of vendors vying for smart buildings market share reflects the maturing and growing demand. There are three aspects to a winning smart buildings market entry strategy: a complete solution, clear channel to market, and focus.

How Should Vendors Overcome Gaps?

However, vendors go to market with gaps, such as a stunted offering that fails to deliver impactful use cases or innovation that fails to scale. Organic product development, acquisitions, or partnerships are the three main pathways vendors can take to improve their offerings. There has been significant acquisition activity among building equipment manufacturers (e.g., HVAC and lighting) and application software startups. As customers expect even more robust and comprehensive solutions, strategic partnerships are emerging as a powerful pathway to market entry or expansion. A few recent examples include:

1. On October 11, STRATIS and PlumChoice announced a partnership that combines STRATIS’ smart device data integration and control with PlumChoice’s property management services. The partnership is focused on multifamily and student housing and combines support services and Internet of Things (IoT) technology.
2. On October 15, OSRAM and Rifiniti announced a new partnership “to offer smart building IoT solutions to the commercial real estate industry that improve operational efficiencies, occupant comfort, and the bottom line.” OSRAM has the scale, established channels to market, and the IoT platform through its Encelium acquisition. Rifiniti rounds out the solution with AI-enabled business analytics.
3. On October 17, Siemens and Atos announced a partnership that "links the global portfolio of the leading solutions of Siemens Digital Factory with Atos IoT-driven integration, infrastructure, consulting, and security services for MindSphere and Microsoft Azure Stack technology.” The partnership allows Siemens to extend its domain expertise alongside Atos’ consulting services capabilities.
   

Partnerships can amplify capabilities, expand the potential customer reach, or add services. In doing so, a vendor can better align with customer demand for complete solutions while effectively outsourcing challenging day-to-day pressures that hit the bottom line.

Are Partnerships Better than Acquisitions?

One of the major benefits of partnerships over acquisitions is the ability to maintain a distinct business culture and processes that can get buried through an acquisition. These characteristics can be the foundation of the innovation and nimble product development processes that are key to the creation of best-in-class smart building solutions. There are also benefits in retaining brand differentiation for separate aspects of a solution tied to the innovation of startups, the brand value of incumbents, or the recognized customer experience of services. As the smart buildings market continues to evolve with the expansion of IoT-based offerings, strategic partnerships may be the preferred pathway to market leadership.