All the benefits, none of the risk. Sounds like a great deal, right?!
That’s just a glimpse of what has made the “as-a-service” business model so popular, first in enterprise software – think Salesforce.com – and now across physical markets, such as cars and manufacturing equipment. In fact, Gartner forecasts the software-as-a-service sector will grow another 20 percent this year as more suppliers look to repackage their on-premise portfolios and relaunch them as cloud-enabled products. Platform-as-a-service models are expected to grow by similar margins.
As-a-service solutions are appealing because they leverage multiple technologies – from cloud and analytics to infrastructure and sensors – and tie them together in a framework where the whole is greater than the sum of its parts. It’s a model that is simple: it scales easily, reduces implementation headaches, shifts the burden of upkeep and management to the vendor – effectively making it “future proof” – and enables deeper insights across the enterprise with consumption-based (i.e., pay as you go) services that drive numerous efficiencies and better business outcomes.
Now, there is a new kid on the as-a-service block. A new model that will drive this space forward and energize business, quite literally.
Energy-as-a-Service – An Important Shift in Thinking
Energy-as-a-service is the newest entrant to the as-a-service business model, and it is redefining how businesses think about their relationship with energy. Today, energy is usually considered a cost beyond their control – a necessary expense required to run a business. In the new energy-as-a-service model, companies are changing their relationship with energy in two important ways:
- Businesses are realizing their own ability to reduce, produce and shift energy use by deploying financed on-site equipment to ensure immediate cash-flow benefits.
- Companies are using sensors from intelligent lighting to align their energy spend to business metrics, such as dollars per square foot in a retail business.
These two changes shift energy from a cost to a business enabler that leverages a company’s real estate as an asset to grow their business.
Across the globe, energy consumption is increasing and putting continued strain on the grid and the cost of doing business. Worldwide energy consumption is expected to grow 56 percent between 2010 and 2040, and commercial energy rates are increasing 3-5 percent annually. This confluence of factors has the world turning to distributed-energy models (including solar and combined heat and power systems, or CHP), where advances in technology are driving down the cost of adoption. It is also increasing 1) the adoption of energy efficiency solutions to reduce consumption and 2) energy management software to make all the pieces work more productively together and at less cost.
At the same time, “Internet of Things” (IoT) technologies, or, as we say for the Industrial world, the “Industrial Internet,” are growing at a rapid pace. As a consequence, 50 billion machines are expected to come online by 2020, pumping out reams of new, real-time operational and environmental data into the enterprise. As the Industrial Internet and IoT are progressively adopted, businesses are expected to continue their big shift from on-premise to cloud-based solutions to keep up with these changes – and begin to master them.
The convergence of these trends – the growth of as-a-service models, the maturation of the Industrial Internet, the influx of new operational and environmental data, and the rising cost of energy – is setting the stage for companies to improve how they think about energy use. Companies need to manage all this complexity with scalable, holistic solutions that can keep pace with change while making them greener, more efficient and more nimble. And they need to do it without breaking the bank. Only one way offers these benefits: energy-as-a-service.
A World Where Energy Drives Outcomes
Energy-as-a-service makes sense on a number of levels. When done right – and by right we mean working with a partner with the solutions breadth (hardware and software), services expertise, objectivity, and deep balance sheet to be there for the long term – it reduces complexity, cuts costs, scales quickly, and keeps adopters running on the best and latest solutions. Think of energy-as-a-service as the great simplifier – it shifts the burden (management, implementation, updates, ongoing technology evaluation and selection) to the vendor, makes your enterprise run better, and saves you money with little or no capital expense.
On these merits alone, energy-as-a-service provides a compelling way forward, but this model is also key to unlocking other benefits beyond energy. For example, when paired with Industrial Internet technology, the energy infrastructure provided by energy as-a-service models – such as LEDs, solar, on-site storage and electric-vehicle (EV) charging stations – not only optimizes how energy is used but can spur new digital-centric outcomes that can drive revenue and improve customer engagement.
Imagine an intelligent store that could leverage energy-saving infrastructure with sensors to “talk” to shoppers’ smartphones and send a personalized greeting or special offer based on past purchases to help drive new revenue streams and a loyal customer base. What if that same energy infrastructure could help scan store shelves, measure checkout times or locate missing merchandise? What kind of efficiencies could that drive?
Now imagine that same scenario in a hospital, where sensors could track medical equipment, sanitation practices by medical personnel, and send personalized health- or prescription-related information to a patient.
Or envision a city where LEDs not only save energy but direct drivers to open parking spaces and give cities a way to accelerate parking revenue? Imagine if that same energy infrastructure could help keep a pulse on traffic, which costs the US economy $100 billion a year, or measure air quality to aid in city planning, or even report automobile accidents to emergency responders the instant they happen.
This is only the beginning of a vast new potential opened up by energy-as-a-service.
Scalable Value to Energize Business
Energy-as-a-service delivers value at scale. It not only curbs one of business’ biggest operational costs – energy - but uses energy infrastructure to drive value, even as needs change over time. In combination with the Industrial Internet, energy-as-a-service gives companies the ability to have a real-time lens on their energy and shift their use accordingly. It even creates a virtuous cycle whereby a business can use the energy savings created by its energy-as-a-service adoption to continue paying for its services or add new ones.
Supplemented by the Industrial Internet, energy-as-a-service helps the enterprise continuously improve energy management over time with new sensors and software to meet changing needs – and companies can pay for that service on an ongoing basis based on use, instead of committing to an array of technology capabilities that might not meet long-term needs. This model is also ripe for partnership, and where there is partnership, there is money, competition, and opportunity – a thriving ecosystem - all driving innovation.
We’re at an epochal moment in energy management where all the pieces are coming together to transform the role of energy in the enterprise, driving new efficiencies, business models and value streams. At the same time, IoT hardware spending is expected to exceed $2.5 million a minute. We need a way to manage that. We need a way to capitalize on it. Why not do both in a way that truly energizes business? It’s time for energy-as-a-service.
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About the Author:
As President & CEO of Current, powered by GE, Maryrose Sylvester leads a dynamic leadership team delivering integrated and technology-enabled energy solutions to manage the complex energy needs of our customers.