In the immediate aftermath COVID-19, when organizations were struggling to figure out what their “new normal” would look like, the idea that they could become “future-proof” and “technology forward” was especially alluring. Many companies embraced smart building technology to help them achieve these ideals.

With macroeconomic conditions now more challenging, the bar for convincing senior management to invest in smart building technology is higher. There is no question that smart building technology could provide a range of opportunities for organizations – cutting costs, optimizing space, achieving sustainability goals and improving operational efficiency. But to build a strong business case for adopting these technologies, and to realize their value, internal champions must be able to demonstrate their advantage and how they benefit the entire organization.

Leveraging smart building tech

Smart building and workplace management solutions can empower organizations to do a lot of things, from reducing energy usage to optimizing space. But most companies initially deploy these systems to address just one issue, like indoor air quality. They adopt the technology to monitor indoor air to help ensure their employees’ well-being. 

But by limiting the technology to one issue and just tracking the metrics associated with that, they are leaving value on the table. 

As with any change program, the teams tasked with procuring, implementing and driving adoption of these systems will establish goals and KPIs against which the business impact of the technology will be measured over time. The problem is that, by tracking just one or two metrics – like employee sick days or time spent in the office – these organizations are only measuring and recording a fraction of the value smart building and workplace management solutions represent.

It’s true, for instance, that monitoring IAQ, and taking steps to improve it, can increase employee performance and reduce absenteeism. A Harvard University study estimates that doubling the rate of ventilation boosts productivity by $6,500 per person per year. But there’s another, less direct benefit to tracking IAQ. Unexpected changes in temperature, humidity or particulates can be a sign of suboptimal equipment performance. By giving facility managers early warning of potential issues, monitoring IAQ can reduce wear-and-tear on equipment, decrease energy waste, improve efficiency, minimize disruption to occupants and cut greenhouse gas emissions. Ignoring these additional benefits can handicap the perception of a system’s value, making it harder for internal champions to justify expenditures, much less build a business case for adoption of new capabilities.

On the other hand, business leaders who understand the value of applying smart building tech across a range of use cases, and can effectively track and report that value, can become heroes within their organization. That expertise and added credibility empowers these champions to drive increased adoption of smart building solutions to achieve business goals.

Everything has its price

When it comes to monitoring and quantifying the impact of smart building tech, many organizations begin and end with energy consumption. It’s easy to see why: everybody knows how much their electricity costs per kilowatt-hour (kWh), and once you have visibility of consumption over time, translating that into cost over time is just a matter of multiplying one variable by the other. The process of quantifying the impact of smart building tech on other areas of the business follows this same formula. 

One great example is directly related to energy consumption: reduction of greenhouse gas emissions. For instance, at 13.1 cents per kWh, a reduction in energy consumption of 1.3 million kWh will save you more than $170,000. But it will also reduce your carbon footprint by 873 tonnes of carbon dioxide equivalent (tCOe2). Once you understand and quantify that additional impact, you’ll find that that $170,000 is only a fraction of the total potential cost savings.

According to an analysis by Carbon Brief, two-thirds of the world’s biggest companies with net-zero targets use carbon offsets to help meet climate goals. For these organizations, the cost of offsetting 873 tCOe2 in GHG emissions is pocket change: $6,000 at current prices of around $7/tCOe2. But the price per ton of COe2 offset could rise as high as $254 by 2037, according to BloombergNEF, bringing the bill for offsetting those 873 tonnes to nearly $222,000.

Fines and fees associated with environmental reporting and building performance laws are another source of potential costs tied to emissions. While these laws and the penalties they assess vary widely, CBRE estimates that noncompliance for a 500,000 square foot building in three cities with existing laws – Boston, Denver and New York – would decrease the building’s net operating income by as much as 5.8%. 

Finally, organizations can consider the “social cost of greenhouse gases” (SC-GHG), the monetary value of the net harm to society from emitting a metric ton of carbon dioxide, methane or nitrous oxide into the atmosphere. The SC-GHG rate, which is set by the U.S. Environmental Protection Agency, can be a useful metric in sustainability initiatives, decision-making and cost-benefit analysis. Using the EPA’s rate of between $140 and $380 for the social cost of carbon dioxide[C6], our reduction of 873 tCOe2 equates to a “savings” of between $122,000 and $332,000.

Achieving a holistic view of value

Building automation technology empowers organizations to increase efficiency across a number of metrics. At the same time, accurately quantifying the true impact and value of these solutions can be complex and time-consuming – the very challenges these systems are deployed to help eliminate. That’s why partnering with a provider who already has a robust framework in place for tracking these metrics is essential. They can provide full visibility of a system’s positive impacts and allow you to monitor them from within the product – eliminating the need to export data from multiple systems and manually consolidate them in spreadsheets. The right partner will also be able to provide supporting information for proposed solutions, like proof points from past deployments and ROI and payback forecasts.

Identifying, quantifying, and articulating the full spectrum of benefits will reveal the true ROI and risk management value of these solutions. This, in turn, will make it easier for internal champions to create bulletproof business cases for future building improvements and automation capabilities.