Mega Trends in Built Assets

A new Era of Connected Living, Changing Workplaces, Energy Management,

Business Productivity and Smart Technology

Presented to:

Constructing Excellence Asset Management Group

May 2016

2MBEB-19

Sustainability

Energy Efficiency

Smart Cities

Global

Energy

Demand

Environment

Energy

Supply

& Costs Capacity Optimisation

Connectivity& Integration

Efficiency &Intelligence

Water Stress

Carbon

Reduction

Market

Globalisation

Source: Frost & Sullivan

New Business

Models

Fuels for

the FutureBig Data

Internet of Things

Energy, Environment & BuildingsTop Mega Trends defining our future: Converging trends are re-defining value propositions, business models,

customer expectations and the future of competition

3MBEB-19

Source: Frost & Sullivan analysis

Technology in Buildings: Top Developments to Watch to 2025Digital technology, connected living, distributed renewable energy and cloud solutions will converge to make

smart buildings and facilities a mainstream reality by 2025

Fire & Incident

Prevention

Energy Efficiency &

SMART Buildings

LED Lighting

Revolution

Top 10 Markets

of the Future

Battery Energy

StorageSolar PV

IoT & Cloud

Control

Small Scale

Distributed

Generation

Connected Living

Energy

Harvesting

DC Power

Distribution

4MBEB-19

Source: Frost & Sullivan analysis

Connectivity & ConvergenceIn the near future, there will be seamless integration of the city, workplace and home infrastructure. New

applications integrate video, voice, and data to provide access and connectivity anytime and anywhere

Connected

Home

Connected

City

Home Automation

Heating, Ventilation, and Air Conditioning (HVAC) controls, lighting control systems,

security controls, and entertainment controls (audio and video switchers and

processors)

Home EnergyMetering systems (inbuilt or taking input from external smart meters), and energy

display systems

Home

Entertainment

Video streaming, multi-functional smart devices, and new media value-added

services

Home HealthRemote monitoring and control, symptom checks through sensors and surveillance,

remote delivery of advice, and telemedicine

Education Remote education service and virtual tutoring

CommunicationTelepresence, unified messaging, remote desktop access, virtual private network,

audio, video and Web conferencing tools

MobilityMobile email, enterprise mobile applications, people locator applications, human

resource applications, and BYOD

CollaborationWeb-based project collaboration tools, cloud-based file sharing services, desktop

sharing, and enterprise social media

Governance eServices, eAdministration, and eSecurity

Banking Mobile payments, kiosk services, online banking, and online stock trading

Transportation Passenger-car telematics, smart mobility cards, and mobility applications

Connected

Work

5MBEB-19

Technology Roadmap towards Smart & Connected BuildingsDeployment of technology, cloud-based control, IoT and data analytics will further accelerate the

convergence of property management, FM services and energy management

Key: M2M—Machine-to-Machine;

2010 2011 20122009 2013 2014 2015 2016 2017 2018 2019 2020

Capture, analyze, and

manage data from

BAS using FM and

EM software

Real time service

delivery via cloud for

buildings and cities

Balance supply and

demand of energy in

an infrastructure/city

using EM demand

response solutions

Basic energy

management

using automation

and controls

Smart, self-

learning hardware

for measuring,

monitoring, and

optimization

Sustainability, facility

management, and

asset management

blends with EM

solutions

M2M networking

and Internet of

buildings

Integration of building data

along with enterprise data

and portfolio-wide building

management

Source: Frost & Sullivan

Convergence of

Property

Management, FM

Services & Energy

Management

Industry Vision: Technology Timeline, Global, 2009-2020

IoT and

connected

sensors for real-

time asset

management

6MBEB-19

Source: Frost & Sullivan analysis

The Global Future of WorkChanges in technology, the labour force and the workplace will have a significant impact on Built Assets in

the future in terms of customer base, value proposition and service needs

The Future

Labour Force

The Future

Place of Work

The Future of

Workplace Technology

• Increased influence from women, millennials and an older

workforce will have different service requirements to the

employees of today

• A more mobile and flexible workforce will need to be supported

in more complex and varied settings

• 17% drop in office space by 2020 and 15% fewer desks per

worker

• Choice, flexibility and collaborative working becoming key

considerations in workplace design

• Workplace optimisation will become recognised as a driver of

productivity and a tool for attracting and retaining top talent

• Connectivity will drive a wider range of employment models and

be a key enabler of online collaboration

• Human and robot collaboration in work will be commonplace by

2025

7MBEB-19

Key Shifts in Demographics and TechnologyMillennials will transform labour markets by 2025 in spite of increasing age of workforce; Technology will

facilitate new employment models and enhanced productivity and buildings will need to respond

Artificial Intellugence (AI)

and automation promise

increased productivity,

but experts are split as

to how these

technologies will affect

labour demand.

Employers will seek

hybridized labour

pools, as Internet- and

mobile-based

employment models

grow.

Millennials will

account for almost

half of 2025’s labour

force, and Generation

X over one-fourth.

Aging populations will

greatly influence 2025’s

labour market,

delaying retirement

and increasing

dependence on

female and immigrant

labour.

Demographic shifts Technological Influence

By 2025, the global

median age will have

risen 2.6 years.

Millennials will make

up approximately

48.3% of 2025’s

global labour force.

In 2015, in the UK, over

50% of food and

administrative

support services were

zero-hour employees.

52% of experts say

that AI and automation

will have a positive

impact on employment

in 2025. Source: Frost & Sullivan analysis

8MBEB-19

Aging PopulationJapan, APAC and many European countries will have hyper- or rapidly aging societies by 2025; either

technological innovation or immigration will be required to meet the needs of an aging demographic

+5.3%+4.2%+3.9%

+4.5%+4.8%

+6.5%

+6.4%

+7.9%+5.5%

+6.2%

+4.0%+11.2%

+7.5%

+7.6%

Rank

Perc

en

t o

f T

ota

l P

op

ula

tio

n o

f

tho

se 6

5 o

r O

lder

(%)

Hyper-aging society:

20.0% or more of the

total population will be

65 or older

Rapidly aging

society: 15.0–20.0%

of the total population

will be 65 or older

Aging society:

10.0–15.0% of the

total population will

be 65 or older

Average aging

society: 5.0– 10.0% of

the total population will

be 65 or older

Robots in the workplace?

0

5

10

15

20

25

30

35

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Japan

GermanyItaly

UK

Korea

US

Russia Thailand China

BrazilTurkey Vietnam

ColombiaMexico

France

Top 15 Aging Countries by Rank, Global, 2025

+8.8%

Change in old age

dependency ratio

from 2015 to 2025

Hyper-aging Rapidly aging Aging Average aging

9MBEB-19

Source: Frost & Sullivan analysis

Generation Y EmployeesIncreasing Gen Y population and the rise of the middle-class economy are set to transform cultural values

and practices in future workplaces

Strategy Systems

StyleSkills

Shared

values

Structure

Transparent and

collaborative

leadership

Flexible working

styles will be the

norm

Tele Meetings, Video

Conferences

Real time feedback (eg

Eliminate annual

reviews)

Gamification of

targets and

applications

Logic over Authority

(Level Hierarchies)

10MBEB-19

Source: Frost & Sullivan analysis

Office Design to Drive CollaborationA variety of conversational settings will help engineer impromptu interactions and better sustain organization-

wide collaboration

Collaboration

Formal Serendipitous

Office interiors will support three levels of collaboration: formal, with visual virtual collaboration technology capabilities

mandatory and holographic capabilities on the near horizon; informal, with a mix of spaces designed for multiple privacy

needs; and serendipitous to facilitate idea cross-pollination and innovation.

Workplaces will emphasize the human element, with designs meant to increase spatial productivity;

worker well-being; and, most importantly, communication.

79% of millennials view collaboration as

physically working in the same space.

Up to 80% of workplace learning occurs

through informal channels.

Informal

Pillar 1

Design trends position staircases to

maximize chance encounters.

11MBEB-19

Source: Frost & Sullivan analysis

FM Industry RoadmapService evolution, technology innovation and new value propositions will drive the growth agenda as the

global market decelerates and low hanging fruit becomes harder to find

1980 20001990

Evolution of

Facility

Management

Markets

2010 2020

PPP/ BTO

Offerings

Soft FM

Outsourcing

Sustainability

Management

Service

Integration

Energy

Contracting

2016

Total Facility

Management

FM Automation

(e.g. CAFM)

Hard FM

Outsourcing Contract

Management

Value Driven

Design

IT Services

Waste

Management

Property

Management

Strategic

Outsourcing

Service

Bundling

Workplace Change

Management

Regional/ Global

Contracts

Service

Externalisation

BPO

PFI

Managing

Intelligent

Buildings

Sustainable Work

Space

Environmental

Performance

Integrated Facility

Management (IFM)

Performance

Contracting

2016 Hot Issues:

• Service integration & contract globalisation

• Convergence of FM with workplace optimisation

• Business efficiency value propositions

• Vertical alignment with growth opportunities

• Adoption of smart building solutions

• Active energy management services

• Technology enhanced service business models

Smart City

Integration

Energy

Management

Services

Business

Productivity

Complete

Workplace

Management

12MBEB-19

Source: Frost & Sullivan analysis

Transformational Trends in Buildings & FacilitiesTechnology is converging with service innovation; These trends are not mutually exclusive but are combining

to provide a new future for construction and service suppliers to drive value for their clients

Business ProductivityValue propositions to drive

customer profitability

Anything as a ServiceGrowth in XaaS Models

Energy ManagementConvergence of EM with

FM

Partnerships &

CollaborationSkill sharing

Performance ContractingGuaranteed efficiency

outcomes

Cloud ServicesDigital transformation and

data analytics

SustainabilityCorporate and Government

Initiatives

Selling to the CXO

Driving C-level

relationships

13MBEB-19

Source: Frost & Sullivan analysis

Business ProductivityAccelerating shift towards value propositions based on guaranteed business outcomes to drive up the

customer’s productivity and profitability

Business

Productivity

Increases for

Customer

=

Workplace Optimisation(workspace design, fit-out, PM etc.)

Note: PM = Project Management; IWMS = Integrated Workplace Management System; CAFM = Computer Aided Facility Management; IoT = Internet of

Things; O&M = Operations and maintenance

+FM Services

(O&M, support services, environmental

services, IT etc.)

+Technology & Software

(CAFM, IWMS, IoT, data analytics etc.)

+Property Services

(real estate management)

Converging Elements for Business Productivity

Offerings, 2016

14MBEB-19

Source: Frost & Sullivan analysis

Business Productivity (Contd ….)Innovative service suppliers are building new value propositions to address productivity of their customers

from the bottom up by selling service outcomes based on the clients’ biggest pain points

Staff Retention

Financial Stability

Brand Protection

Sustainability

Labour Law

Management

Employee

Satisfaction

Operational

Excellence

Technology

Optimisation

Key Areas of Impact for Business Productivity Offerings, Global, 2016

15MBEB-19

Source: Frost & Sullivan analysis

Business Productivity (Contd ….)To drive the business productivity agenda, firms will need to demonstrate to senior executives that buildings

can be designed and managed to drive up productivity and sustainability to add real value

Functional Areas of Innovation for Business Productivity, Global, 2016

Key Message: For most businesses, people and facilities represent the two biggest (and most expensive) assets. By

considering combined technical, service and human-centric solutions to both of these categories, creative FM firms have the

opportunity to deliver value to clients by providing financially sustainable and productive assets.

As well as representing up to 30% of energy costs in buildings, lighting is

increasingly being seen as an ‘asset’ than can be leveraged for added value

beyond illumination. Examples include health & wellness, security, staff

productivity, indoor positioning, architainment and comfort/experience.

Function Innovators Opportunity

• Philips Lighting

• Trilux

• Osram

• Zumtobel

Lighting

Strategic design of workplaces to improve health, wellness, user satisfaction

and productivity. The driver is the need to optimise productivity and attract

and keep talent. This will increasingly also include solutions to optimise the

indoor environment in terms of temperature, noise, air quality etc.

• Zentura

• HOK

• Hassell

• Knoll

Workspace

Design

By combining cloud solutions with Big Data analytics in FM, significant

productivity gains will be made by connecting the field to the office (or the

shop floor to the top floor), streamlining and integrating workflows, delivering

real time actionable insights and optimising entire building portfolios.

• Planon

• Corrigo (now JLL)

• Archibus

• Manhattan Software

Data

Analytics

Competition will increasingly focus on service excellence at the human/user

level. That means moving beyond optimising the performance of the

building or asset but also improving the experience of each individual to

drive up satisfaction, motivation and ultimately productivity.

• ISS

• MITIE

• Sodexo

Service

Excellence

16MBEB-19

Broad Perspectives on Business Productivity“increasing staff wellbeing and productivity, and to encourage employees to enjoy work” and “we have

established a tangible link between a great working environment and commercial success”