Editor's Note:Vineet Sinha is Vice President of Product Management for OpenBlue at Johnson Controls. The views expressed in this article are solely those of the author.

In the immediate aftermath of the COVID-19 pandemic, as organizations were still figuring out what the "new normal" would look like, concepts like "future-proofing" and "technological leadership" held great appeal. Many enterprises consequently adopted smart building technologies to realize these visions.

However, as the macroeconomic environment has become more challenging, the bar for convincing senior management to invest in smart building technology has risen significantly. Undoubtedly, smart building technology can offer organizations a range of opportunities—reducing costs, optimizing space, achieving sustainability goals, and improving operational efficiency. But to build a strong business case and realize its value, internal champions must be able to demonstrate the benefits of these technologies and their advantages for the entire organization.

Making the Most of Smart Building Technology

Smart building and workplace management solutions can help organizations achieve numerous goals, from reducing energy consumption to optimizing space utilization. However, most companies initially deploy these systems to address a single issue, such as indoor air quality (IAQ). They adopt the technology to monitor indoor air to safeguard employee health.

However, if technology is confined to a single issue and only relevant metrics are tracked, a significant amount of potential value is missed.

As with any change project, the team responsible for procuring, implementing, and driving system adoption typically sets goals and key performance indicators (KPIs) to measure the technology's business impact over time. The problem is that if only one or two metrics are tracked (such as employee sick days or office occupancy time), these organizations are measuring and recording only a fraction of the total value of smart building and workplace management solutions.

Admittedly, monitoring and improving indoor air quality can indeed enhance employee performance and reduce absenteeism. A Harvard Universitystudyestimates that doubling ventilation rates could increase productivity by $6,500 per person per year. But tracking indoor air quality also has another indirect benefit: abnormal changes in temperature, humidity, or particulate matter may signal that equipment is not operating optimally. By providing facility managers with early warnings of potential issues, indoor air quality monitoring can reduce equipment wear and tear, lower energy waste, improve efficiency, minimize disruption to occupants, and cut greenhouse gas emissions. Overlooking these additional benefits undermines the perceived value of the system, making it harder for internal champions to justify the expenditure, let alone build a business case for adopting new features.

On the other hand, business leaders who understand the cross-scenario value of smart building technology and can effectively track and report on that value may become "heroes" within their organizations. This expertise and credibility can enhance the influence of champions, thereby promoting broader adoption of smart building solutions to achieve business goals.

Everything Has a Cost

When monitoring and quantifying the impact of smart building technology, many organizations often start and stop with energy consumption. The reason is clear: the price per kilowatt-hour (kWh) is well known, and once consumption over a period is known, converting it to cost is a simple multiplication. The process of quantifying the impact of smart building technology on other business areas follows the same formula.

A typical example directly related to energy consumption is greenhouse gas reduction. For instance, at $0.131 per kWh, reducing energy consumption by 1.3 million kWh would save over $170,000. At the same time, this would also reduce the carbon footprint by 873 metric tons of carbon dioxide equivalent (tCO2e). Once this additional impact is understood and quantified, you realize that the $170,000 is just a fraction of the total potential cost savings.

According to an analysis byCarbon Brief, two-thirds of the world's largest companies have set net-zero targets and rely on carbon offsets to help achieve their climate goals. For these organizations, the cost of offsetting 873 tCO2e is negligible: at the current price of around $7 per tCO2e,priceit would only cost $6,000. However, according toBloombergNEFforecasts, the offset price per tCO2e could rise to $254 by 2037, at which point offsetting these 873 tons of emissions would cost nearly $222,000.

Fines and fees related to environmental reporting and building performance regulations are another potential cost source linked to emissions. Although these regulations and their penalty standards vary widely, according toCBREestimates, for a 500,000-square-foot building in Boston, Denver, and New York—three cities that already have relevant laws—non-compliance could reduce itsnet operating incomeby up to 5.8%.

Finally, organizations can also consider the "Social Cost of Greenhouse Gases" (SC-GHG), which is the monetary value of the net damage to society from emitting one ton of carbon dioxide, methane, or nitrous oxide into the atmosphere. This rate is set by theU.S. Environmental Protection Agency (EPA)and can serve as a useful metric in sustainability initiatives, decision-making, and cost-benefit analysis. Using the EPA's range of $140 to $380 per ton of carbon dioxide social cost, the 873 tCO2e we reduced would equate to "savings" of $122,000 to $332,000.

A Holistic View of Value Realization

Building automation technology enables organizations to improve efficiency across multiple metrics. However, accurately quantifying the true impact and value of these solutions can be complex and time-consuming—which is precisely the challenge these systems are designed to help eliminate. Therefore, it is crucial to partner with a vendor that already has a well-established framework for tracking metrics. They can provide complete visibility into the system's positive impact and allow you to monitor it within the product—without needing to export data from multiple systems and manually consolidate it into spreadsheets. The right partner should also be able to provide supporting information for proposed solutions, such as evidence from past deployments, return on investment (ROI), and payback period projections.

Identifying, quantifying, and clearly articulating all benefits will reveal the true ROI and risk management value of these solutions. This, in turn, will make it easier for internal champions to build an airtight business case for future building improvements and automation capabilities.