FBC Corporate member KONE blogs “Towards Smarter Buildings through Digital Ecosystems”

Jukka Salmikuukka, the Head of Ecosystem Business Development @ KONE Corporation speaks about smart buildings and digital ecosystems around them and is amazed about Singapore.

Towards Smarter Buildings

From the ’80s, the main drivers for the smart buildings have been related to energy savings. This makes perfect sense, as according to the United Nations Environment Program, buildings and their construction together account for 36 percent of global energy use and 39 percent of energy-related carbon dioxide emissions annually. So, from global, national and individual building owner’s viewpoints, there is a clear business case favouring rather “smart” than “dumb” buildings.

Energy efficiency is still in many ways in the center of a smart building concept, but today, it is not the only driver for the smart building trend. While energy efficiency is in many cases achieved with smarter controls and interplay of core building systems, especially heating, ventilation and air conditioning, that is mainly touching only the running costs of the building. Based on today’s thinking this is just the baseline and starting point for a wider concept of smart buildings and real estate.

Both building owners and tenants are increasingly evaluating their options in a similar manner, assessing with varying priorities between energy savings (or eco-efficiency), direct rental fees and possible productivity gains. This, combined with the possibilities of new digital technologies and changes in the way we work, has created new kind of needs and new kind solutions address those needs.

Some of these solutions are created by traditional players in building and real estate business, but lots of new start-ups are also born to address the new market needs with their innovations. This new technology domain combining digital technologies and platform economies is often called proptech.

Digital Ecosystems – the Power of Collaboration

Thanks to the increasing speed of the technical development, and continuously shifting customer needs, the change has become a new normal. All this has made the world so complex to manage that no single company can succeed on their own but are increasingly dependent on collaboration. As an example, iPhone nor Android would have never been so successful without the developer ecosystem creating all those useful and not so useful Apps we have in our reach in smartphone application stores.

With proptech, digitalization is changing the building and real estate industry big time. As described earlier, being able to address new emerging customer and user needs with more comprehensive solutions require smooth interaction and data sharing between various building systems and applications.

Regardless of the industry, APIs, or Application Programming Interfaces, are one of the key enablers of this smooth interplay between different software systems and applications. As an example, in KONE we have also launched our APIs allowing third parties, our customers and partners, to seamlessly interact with our elevators connected to KONE Digital Platform. A simple practical example of such interplay would be a hotel operator having their own App for their customers and wanting to create better customer experience by enabling automated elevator calls from their App. Through our APIs this interaction is possible to achieve in a cost-efficient manner.

The beauty of APIs is that they allow also 3rd parties to innovate on top of what we provide ourselves. KONE has a strong track record in innovation (one indication of that is that last year we were ranked the 59th most innovative company in the world by the Forbes magazine), but even still only a tiny fraction of all the innovation can take place inside of one company. We strongly believe that we create much more value to our customers and the tenants of their buildings by allowing others to create and connect their innovations on top of ours.      

Why this is so interesting especially in Singapore?

During the last 6 months, I have had an opportunity to dig deep into Singapore smart building and real estate markets. I have been amazed about the amount of innovation I found here. The proptech like some other business domains seems to be in many ways much more digitized here compared to Europe or US.

How such a small nation with the population roughly the same as in Finland can achieve this? I found out that there is no silver bullet but several reasons explaining this.

  1. Singapore government has selected digitalization to be the spearhead of the nation’s future. As Dr Vivian Balakrishnan, the Minister-in-Charge of the Smart Nation Initiative described in his speech, the aim is to make the entire country to be “a living laboratory for digital technologies and AIof the future”. Also, the local private sector seems to be very committed to the initiative and consumers appear to be very digitally savvy and open for new technology.
  2. To attract also the external brainpower to the country, Singapore has been able to create a very favourable environment for large multi-nationals to set their SEA operations into Singapore. Roughly 80% of the world’s top 100 tech companies are present with their RHQs and innovation teams in SGP, together with a critical mass of Digital Centres of Excellence from Fortune 500 companies across from non-ICT industries.
  3. Very strong and vibrant start-up ecosystem. According to the Singapore Economic Development Board, Singapore has more than 4,000 tech start-ups, from which about 15% are international rising stars, and more than half of the 11 SEA unicorns are either based or have expanded their operations to Singapore.
  4. Singapore government has introduced various monetary mechanisms to drive the adoption of smart solutions, and more than S$30 million funding has been assigned to accelerate digitalization to benefit just SMEs over three years.
  5. Thanks to the strong innovation capabilities, also lots of external investors have found their way to the SEA region. Based on the statistics by Singapore Economic Development Board ”in the first half of 2019 alone, Southeast Asia’s tech companies saw investments worth US$5.99 billion. More than US$37 billion (S$51 billion) capital has been invested in the region’s internet economy over the past four years.”

With this said, there is no reason to not believe that the proptech and smart building industries in Singapore will lead the way to the future. This makes Singapore a very interesting place for anyone seeking collaboration for a smarter future.     

Jukka Salmikuukka, Head of Ecosystem Business Development, KONE Corporation