Prabhu Ramachandran is the founder and CEO of Facilio Inc., an enterprise-wide platform for facilities operations and maintenance across real estate portfolios, headquartered in New York City and with operations in United States, Middle East, and India. His career spans over 18 years of product, business, and customer experience focused on enterprise-scale software for IoT-based connected services, sustainable building solutions, and telecom network management.
Facilio harnesses IoT and AI to centrally consolidate existing building systems and automation data across portfolio, onto the cloud. Here, Ramachandran expresses his views on the digital frontier in commercial real estate and facility management.
How do you assess the adoption of technology within the real estate and facility management (FM) industry? What is the approach, in your opinion, that will help the industry transition to next generation operational capabilities?
Ramachandran: The most recent previous wave of automation, in the context of buildings, was hardware-centric and some decades ago. The primary aim for that generation of automation was to “manage”, “maintain” and “repair” and it was characterized by the use of sensors, siloed management systems, and large chunks of dormant unanalyzed data.
What we are seeing, across the U.S. market, is a growing awareness about the benefits of an enterprise-wide facilities O&M platform, as an enhancement strategy. There is a monumental shift from passive asset management to active value creation. In a developed economy like the U.S., with a large stock of existing buildings, the challenge is to incorporate key requirements, like seamless and real-time customer experience, into existing legacy assets. In addition, FM’s and CRE owners are also under pressure to balance sustainability targeting regulations, while ensuring the building realizes operational efficiencies to keep it competitive and deliver high ROI.
All of this can become impossible to achieve with legacy systems, especially where multiple building portfolios were involved. Traditional automation suppliers have systems which are time and cost intensive, and are not geared to deal with needs of the new era of service-led facilities experiences – agile, flexible, real-time, unified solutions to manage assets, talent, tenants and sustainability. The “big data” wave came and went, but the built environment did not respond to its potential, until now. With the growing focus on Smart Cities and an emerging customer base of young millennials in the U.S., CRE owners are now demanding that their facilities be well-managed, modern, experience-driven structures.
What would you say are the emerging trends that are driving the need for tech-led change and innovation in commercial real estate?
Ramachandran: The FM industry is on the threshold of a massive digital transformation. The ambitious benchmarks being set for Smart Cities created the need initially, but FM operations were quick to realize the potential for an enterprise-wide facilities operations and maintenance platform model, to disrupt the industry by driving efficiencies and creating new revenue models. Some of the several trends driving this perspective include:
- Customers expect more value added services than those the “manage”, “repair” or “firefight” model permits. They expect the same experience with buildings as any consumer brand – seamless, responsive, real-time, and delightful.
- Sustainable, agile, modern and service-led facilities are a prerequisite for competitive buildings that provide return on investment.
- The legacy systems being used are mostly re-purposed from other domains like industrial and oil and gas. They are slow, rigid, and time consuming to implement.
- CRE owners and FMs are demanding enterprise-wide real-time, data-driven digitization and optimization platforms, built specifically for buildings.
- Trends like co-working and co-living are making it essential for CRE owners to differentiate their assets, by facilitating these experiences
- CRE owners want to be in control of making centralized decisions and driving their operational efficiency with data-enabled predictive decision making
- CRE owners/developers are demanding better facilities experiences, and a more evolved role of FMs as partners and stakeholders in business growth
So what do CRE owners and FMs really need technology for? They need optimized asset performance; an energy positive building; and a smart workforce that delivers delightful experiences to tenants. Software led automation enables connectivity, unification, and centralization, to provide a single dashboard view of the performance of their building and their portfolio. AI and IoT extract the goldmine of data lying dormant in legacy systems, analyze it to generate nuggets of actionable insights, and generate immediate impact on operational efficiency and their bottomline. I believe we will see a rapid adoption of an enterprise-wide facilities operations and maintenance platform model globally, as awareness builds about their multiple benefits.
We hear a lot of discussion around retrofitting existing CRE assets. What do you see as the role of facility management is contributing to the retrofit, construction, and MEP sector?
Ramachandran: With nearly 80% of the cost of a building’s lifecycle incurred post-construction, it stands to reason that better facility management can be a huge source of savings. Presuming the embedding of software-driven enterprise wide platforms, from the pre-construction design stage of buildings, is ideal but retrofitting existing structures is also being enthusiastically adopted. FMs are realizing the value in leapfrogging their massive old building stock, into an era of enhanced efficiency, using retrofits.
The apprehensions that real estate owners and FM or MEP professionals had about a full-fledged physical retrofit can be avoided through a digital and software-driven retrofit. In fact, I believe digital retrofits will be the sweet spot for CREs and FMs to achieving sustainability metrics quickly and with lower investment than traditional retrofits. The industry needs to look above and beyond traditional energy-saving plug-ins, towards digital retrofits to drive continuous efficiency in daily operations. FMs leading the move to the next frontier of modern facilities, without the hassle and investment of traditional retrofits, are looking at IoT/AL/Cloud led digital retrofits to enhance the competitive edge of their buildings.
Coming to challenges the U.S. commercial real estate market faces specifically, what is your assessment of the impact that technology can have in this context?
Ramachandran: There’s actually a widespread consensus on the benefits of technology to unlock efficiencies for FMs and CRE owners, the U.S. facility management sector. Nevertheless, there’s also some uncertainty on how to go about achieving this outcome. Despite the disruption the sector is experiencing, and despite the awareness of technology benefits, what we found is that players are at two ends of the spectrum — some that are still using Excel and paper-based systems and waiting to join the tech wave, while others are already using automation and technology extensively. For those who have not jumped on the tech bandwagon, there is the intimidation of high costs, long execution times, and massive complexity. They are looking for guidance on best practices, steps to execution, and the easy implementation areas that can showcase fast ROI, which can then encourage them to go for more comprehensive digitization.
In terms of those who are already using extensive automation and legacy software solutions, the key challenge is the inflexibility and “closed” nature of these systems. Having to pay for every change and limited or no access to their own data — to be able to analyze and extract the insights that are relevant and pertinent for their specific business — are preventing CRE owners and FMs from evolving rapidly, to address changing market conditions.
Actionable insights derived from data analysis are now essential tools for FMs and CRE owners but data is lying dormant and wasted, in legacy automation systems. Another key challenge is that traditional BMS systems are not being utilized to their full potential, as either service providers or user teams are unaware of all the applications and benefits these solutions can deliver.