Connected Home Council (CHC)

Connected Home Council (CHC) Chair: Yann Kulp (Schneider Electric) Vice-Chair: Obiorah Ike (ABB, Inc.) Vice-Chair: Roy Perry (Alarm.com, Inc.)

AgendaGreg Walker (CABA) 1. Agenda 2. Call to Order, Welcome, Introductions, about CHC 3. Administrative 4. “Connected Multi-Dwelling Units & IoT” (30 min) • Research Update 6. White Paper Sub-Committee Update 7. New Business 8. Announcements 9. Adjournment

2. Call to Order, Welcome, Introductions, About the CHC Yann Kulp (Schneider Electric) CHC Chair Yann Kulp VP of Strategy Schneider Electric CHC Vice-Chair Obiorah Ike Product Marketing Manager ABB Inc. CHC Vice-Chair Roy Perry VP Ecosystem Alliances Alarm.com Established in 2004, the CABA Connected Home Council initiates and reviews projects that relate to connected home and multiple dwelling unit technologies and applications. The Council also examines industry opportunities that can accelerate the adoption of new technologies, consumer electronics and broadband services within the burgeoning connected home market. http://www.caba.org/CHC

Administrative Yann Kulp (Schneider Electric) 3.1 Motion to approve past CHC Minutes: www.caba.org/chc

Connected Multi-Dwelling Units & the Internet of Things Market Study:Executive Summary Harbor Research Harry Pascarella

This report will provide actionable insights and data as well as develop business cases that will identify barriers to adoption, and will identify new revenue opportunities for organizations in the MDU value chain as well as potential entrants. This research examined the opportunities provided by IoT for MDU stakeholders including building occupants, owner/operators and property managers, builders and developers, integrators and installers, technology manufacturers, equipment manufacturers, and service providers including insurance companies, net service providers and utility companies. To meet these goals, a detailed analysis concerning the future state of the MDU marketplace was conducted, encompassing the identification and evaluation of key trends, buying behaviors, technology challenges and opportunities. Case studies of IoT technologies and applications that highlight current adoption patterns in the MDU marketplace have been identified and the innovative players driving successful solutions highlighted. Top applications for IoT technologies in MDUs have been examined in business cases, examining the technical makeup of solutions and value proposition to various market participants. Within each business case, go-to-market/channel requirements were developed to highlight the role of different stakeholder types in these solutions and recommendations were made for how firms should organize to capture new value from smart, connected offerings. The goal of this research is to examine in depth the impact of IoT technologies and the services that they enable will have in the multidwelling unit (MDU) buildings market segment. Connected Multi-Dwelling Units & the Internet of Things Market Study

About Harbor Research Founded in 1984, Harbor Research Inc. has more than thirty years of experience in providing strategic consulting and research services that enable our clients to understand and capitalize on emergent and disruptive opportunities driven by information and communications technology. The firm has established a unique competence in developing business models and strategy for Smart Systems and the Internet of Things. Strategy Consulting Our strategy and business development consulting services deliver creative innovation tools, practical methods and applied problem solving. Research and Content Our research, tracking, and market intelligence services provide an accessible learning environment for those who are trying to wrap their arms and minds around emerging disruptive opportunities. Smart Systems Lab We are creating a real-world laboratory where organizations design, prototype, and test new models for delivering value and differentiation. The Lab’s mission is to enable business model, technology, and system-level innovation enabled by the Internet of Things.

Harbor Research Clients and Community Harbor Research works with leading technology innovators and developers, product manufacturers and service providers. We bring together a unique combination of domain knowledge, facilitation processes and an extended community of partners and expertise that enables our clients to discover, design and develop smart systems and services.

Landmark Study Funders Figure ES.1

Connected Multi-Dwelling Units & the Internet of Things Steering Committee Members Figure ES.2

Survey of MDU Stakeholders in Canada & United States • Survey of 1,500 MDU stakeholders • 1,150 MDU Occupants • 150 Owners, Operators, Developers, Engineers and Architects • 100 Technology Suppliers • 100 OEMs and Service Providers • 50 in-depth interviews with operators, developers, architects, technology suppliers, OEMs, service providers and thought leaders • 15 Delphi-style interviews with thought leaders to validate survey and in-depth interview findings Figure ES.3

The Value of Smart Systems in Increasingly Complex Applications Increasing analytic capabilities, combined with connectivity, data storage, and processing advances are enabling use cases to become more complex, creating more value for a wider variety of stakeholders. • Smart Systems have traditionally focused on “simple” applications involving a single device used in monitoring and alerting cases. • Interoperability and increasing capabilities are enabling “compound” applications, in which a simple application is coordinated with other such apps, sharing data and orchestrating device actions. • “Complex” applications, which drive interactions across many devices, systems and people, are no longer predominantly held back by technology, but rather by business models. • Without the structures in place to develop and capture value from multi-vendor solutions, these applications will remain elusive. Figure ES.4

Smart Buildings Market Map MDUs share characteristics with single-tenant homes and commercial buildings, and have remained underserved largely due to the complexity and variety of end user requirements. • The physical structures and centralized building systems of MDU buildings share characteristics with commercial buildings. • The needs of building operators and property managers (which are interchangeable stakeholders for our intents and purposes) are alike with regard to building and equipment management across these customer segments. • However, the presence of occupants means that individual units and common areas must operate more like single-family homes, prioritizing the comfort, convenience, and peace of mind of occupants. • Suppliers coming from both angles, commercial and single-family, have failed to adequately meet the unique needs of this market. Figure ES.5

MDU Requirements Represent a Blend of Residential & Commercial Needs • Multi-dwelling units (MDUs) sit at the intersection of single-family homes and commercial buildings, sharing characteristics of each. • Owners and operators (including third-party managers, owner/managers, and owner/occupants) have two unique needs which must be met to justify adoption of connected offerings. • They must retain an appropriate level of service control, which does not impinge on occupant privacy but provides the ability for the manager to manage services during turnover and ensure that terms of the lease are maintained. • They must realize an attractive ROI from connected offerings, achieved in multiple ways: • Reducing ongoing expenses • Increasing system and managerial efficiencies • Reducing turnover with increased satisfaction Figure ES.6 The inability of both commercial and home automation players to organize successful offerings for this market has left the door open for agile startups to create solutions tailored to the unique needs of MDU building stakeholders.

Framing the IoT Opportunity in MDUs The makeup and delivery of opportunities for connected offerings in MDUs are primarily affected by three factors: type of MDU structure, owner/occupant type, and MDU occupant persona. • Combination of these factors determines: • Demand for use cases • Technical capabilities required • Stakeholder who captures value from adoption • Stakeholder who makes decisions regarding adoption • Suppliers who are best positioned to deliver solutions • Traditional suppliers of building automation systems are challenged by both the complexity posed by the three dimensions of MDU opportunities and the demand that solutions be tailored for a specific structure/manager/occupant combination. • Smart home suppliers have attempted to scale their offerings out of single family residential and into MDUs have been challenged by the requirement to meet the needs not only of building occupants but also of property managers. Figure ES.7

MDU Competitive Structure A broad range of technology, equipment, and services providers, many of whom have a role to play in providing IoT offerings to both operators and occupants of MDU buildings. • Traditional automation suppliers have been challenged by the complexity of the space, leaving the door open for a range of IoT enablers. • These disruptors have evolved from the enablement and networking spaces with an expanding suite of offerings. • A range of specialty services providers to the Buildings venue are providing services to MDUs. • A class of these services providers are specifically tailoring offerings to the MDU market. Figure ES.8

Occupant Drivers and Barriers While occupants recognize the benefits of connected devices and services, high initial cost remains a major adoption barrier. Figure ES.15 Occupant Adoption Drivers Figure ES.14 Occupant Barriers to Adoption

Owner, Operator & Developer Interest Awareness of and interest in connected offerings is significantly higher among operators and developers of large portfolios of MDUs, reflecting the focus of suppliers on the attractive scale offered by these targets. Figure ES. 16- Owners, Operators & Developers: Barriers to Adoption Figure ES.17 - Owners/Operator Portfolio Size & IoT Interest Small property managers and developers, as well as operators of single buildings, are individually less attractive of a target than a larger firm, though the market for offerings tailored to operators at these scales is large.

Devices and Revenue Streams Figure ES.11 - Installed Devices by Device Segment, 2017-2022 Figure ES.12 - Smart Systems Revenues by Revenue Stream, 2017-2022

Value Added Application Revenue by Application, 2017-2022 Figure ES.13

Overview of Devices within Application Segments & the Stakeholders Who Stand to Benefit • Connected devices and services within MDU buildings and individual units can be combined in numerous combinations to enable simple, compound, or complex applications. • Depending on the complexity of the use cases installed in and across MDU buildings and units, stand to create value for multiple stakeholders. • Five distinct value added application segments have been identified that create value for building occupants or operators in different ways. Figure ES.20

Value Proposition of Smart Systems for Suppliers • Among service providers, network service providers (including Internet, phone, cable and satellite providers) stand well positioned to capture primary value across application segments. • All service providers stands to gain significantly from enhanced engagement with end-users, who have an increasing number of choices in the provider and scope of services. Figure ES.18

Value Proposition of Smart Systems for End-Users • Property managers are in a unique position to capture value from Smart Systems in multiple ways. • Connected devices and services enable property managers to: • Reduce operating expenses with enhanced visibility and systems optimization. • Create unique occupant value with differentiated MDUs, which reduces turnover and therefore increases margins. • Providing new revenue, customer acquisition and retention opportunities for suppliers, enhancing relationships with these vendors. Figure ES.19

Property Manager Priorities are Key Variable: While occupant persona and building structure affect the IoT opportunity, property manager persona has the biggest impact on the type of solutions desired and the delivery of these solutions. Creating Multi-Stakeholder Value. Offerings that create new value for adopters while opening new revenue streams or increasing the service delivery efficiency for suppliers can be offered at a lower cost than traditional and competing offerings and provide suppliers a competitive advantage. Access management provides significant convenience value for occupants while enabling managers to limit access to a defined set of tenants and reducing time and labor expenses during tenant turnover. Opportunity Targets and Timing. Managers of all-inclusive or high turnover properties are most likely to adopt offerings that provide resource expense reduction and building access management. Retrofitting unit-by-unit during occupant turnover presents the largest opportunity for devices requiring owner/operator installation in MDUs, requiring that firms develop cost structures suited for the small margins and lack of scale which unit retrofits offer. Property manager needs are critical to consider in solution development – while variable, solutions that simultaneously enhance occupants’ experiences in the MDU and create operator value which can be installed during occupant turnover are widely valued. Key Smart Systems Opportunities and Targets in MDUs

Technology Success Factors Connected offerings that overcome interoperability with software tools, leverage analytics to automate actions, and enable users to adjust and scale as needs change are poised for greatest adoption by end users. • Software Enabled Interoperability. Operators are looking for offerings that integrate disparate systems with each other and share data with analytics engines and automation services. A focus on open sourced data modeling and communications protocols enables this communication to occur innately, though middleware platforms and hubs are being utilized to provide interoperability in the absence of adhered-to standards. • Benefits in the Background. Operators and occupants alike seek tools that move beyond data visibility and control, which rather than demanding a user’s attention reduce costs and/or increase comfort, convenience, and peace of mind with automated actions that occur in the background without direct user interaction. • Flexibility and Extensibility. The variability of opportunities and rapidly evolving technological and regulatory environment have adopters eager for solutions that adapt and expand with ease. Cloud-based platforms for managing IoT offerings within a single MDU can readily be scaled to provide monitoring and control of systems across a portfolio of buildings.

Key Supplier Considerations Suppliers must work together to deliver new services that prioritize process over product differentiation. Firms must focus on working with end users to understand the unique needs of their environment and prioritize data privacy and network security. • Collaborate between organizations. Industry participants are beginning to realize the importance of having continuous interactions within an ecosystem of partners and allies. As information, automation and equipment systems become more complex, customers are looking to suppliers to provide broader services and address business outcomes. Partnerships that encompass all aspects of production and provision of services are necessary to create and capture as much value from Smart Systems as possible. • Establishing a Service-Oriented Business Model. Simple, product-oriented business models ignore significant opportunities for revenue throughout a product’s lifecycle. Equipment manufacturers must recognize the opportunity to leverage sensing and connectivity in their offerings to provide new monitoring and management services. • Process Differentiation. Successful suppliers are shifting from a focus on product differentiation to focus on process differentiation including customer service, supply chain, delivery, and support. Initial and ongoing support of connected offerings is one of the most significant criteria for success, creating a major opportunity for installers and SIs. • Address the Reality of Customers’ Environments. As customers face large investments to replace legacy equipment which will continue to be part of building systems for years to come, solutions that integrate and share data from legacy systems with new systems will be highly valued. • Security Cannot Be Overlooked. The importance of securing systems to prevent theft of data and IP, as well as to ensure the safety of operations and building occupants, requires players to ensure they address security from the beginning and provide adopters with the tools they need to effectively deploy and use secure systems.

MDUs are a Proving Ground for User-Focused Smart Buildings Solutions that create multi-stakeholder value in the MDU market will emerge from this arena and expand into the broader buildings market, where user-focused offerings will be increasingly demanded. • MDUs sit at the intersection of residential homes and commercial buildings, forcing suppliers to cater to a unique set of needs, with owner/operator type, building physical structure, and occupant persona affecting the desire for various use cases, the makeup of those solutions, and the optimal delivery channel. • We are quickly moving away from an era of buildings that do not create tailored value for building users, as they now expect connectivity-enabled convenience in all aspects of their lives. • Ultimately, providers of tools that create building manager value while delivering personalized value to occupants, including access management and holistic building energy management, will evolve out of the MDU market and dominate the buildings space. • This is why we believe this market to be a proving ground for innovative offerings; ultimately, solutions that find success in MDUs will expand across the market and create broad-reaching, multi-stakeholder value for users in all building types.

Organizing for the Future of Smart Systems in MDUs Incumbent suppliers must begin preparing for opportunities in data brokering, ecosystem control and expansion by platform players, and advanced analytics that will arise from converging technical and business model innovations. • Brokering Emerges with Proven Data Privacy: Transparency and trust will enable suppliers to utilize end user data to provide new services, creating new revenue opportunities as well as enhanced service value and delivery. • If suppliers can prove that end users’ personal devices and data are safe from external attack, users have demonstrated a willingness to share data with suppliers who would use the data to deliver more personalized, higher value services. • Suppliers must embed data capture and two way communications into offerings, make clear the benefits that users will capture by sharing data, and clearly define data usage terms. • Platform Players Leverage Ecosystem Control: The providers of IoT hubs and platform offerings driving interoperability between devices and services sit at a critical control point in emerging ecosystems. • From their control point of ecosystem offerings, platform providers will expand their reach from device and data management and application enablement into adjacent services. • Asset management, insurance services, security monitoring, resource management, energy delivery within increasingly local grids, even network services all fall within the realm of services that disruptive platform providers might expand into. • Hidden Complexity with Intelligent Automation: As more devices become connected and enable more services to be delivered, ensuring that net value creation is positive, that connected value exceeds complexity cost, means that the vast majority of device and system interactions must occur in the background of user’s lives rather than the foreground. • Suppliers should be less focused on whether to provide computing device interactions via touch or voice interfaces and more focused on figuring out how to avoid interactions altogether. • Open-source semantic data models are enhancing the ability of machine learning software tools to contextualize and automate services based on programmed or learned preferences. • AI has the potential to be not just another software tool, but the next platform from which computing takes place, orchestrating automated, personalized actions in the background of end users’ lives that maximize efficiency while increasing comfort, convenience, and peace of mind.

Harbor Research Contact Information THANK YOU! Harry Pascarella Consultant hpascarella@harborresearch.com P: 303-786-9000 x36 M: 207-632-1780 @HSPascarella

Research UpdateObiorah Ike (ABB, Inc.) 5.1 “Connected Multi-Dwelling Units and the Internet of Things” http://www.caba.org/research

Research UpdateRoy Perry (Alarm.com) Energy Roadmap for the Connected HomeLandmark Research Project 2017Connected Home Council 5.2 “Connected Home IoT Energy Roadmap” www.caba.org/research

Research UpdateRoy Perry (Alarm.com) Energy Roadmap for the Connected HomeLandmark Research Project 2017Connected Home Council 5.3 2018 CABA Research Topics? Personal Digital Assistants? Artificial Intelligent (AI)? Market Sizing?

White Paper Sub-Committee Update Derek Cowburn (Lumen Cache, Inc.) 6.1 In Progress “Enabling Homes with Optical Fiber Solutions" OFS, a Furukawa Company Frost & Sullivan

White Paper Sub-Committee Update Derek Cowburn (Lumen Cache, Inc.) “The future delivery/business models for Smart Home services and infrastructure" Frost & Sullivan Asian Institute of Intelligent Buildings BC Hydro Bedrock Learning, Inc. Behome247 CaSA Chamberlain Group, Inc. Independent Consultant Intermatic Inc. NEEP Paremus Schneider Electric Sustainable Resources Management Inc. Sykes Assistance Services Corporation Z-Wave Alliance

White Paper Sub-Committee Update Derek Cowburn (Lumen Cache, Inc.) “Distribution trends on the home automation market” Independent Consultant BC Hydro CSA Group Intel Intermatic Inc. NEEP Strategy Analytics Trifecta Research Z-Wave Alliance zigbee alliance

White Paper Sub-Committee Update Derek Cowburn (Lumen Cache, Inc.) “Artificial Intelligence and the IoT Connected Home” ArcoLogix LLC Argus Insights, Inc. BC Hydro Frost and Sullivan Ken Wacks Associates Lumen Cache Inc. Sustainable Resources Management

White Paper Sub-Committee Update Derek Cowburn (Lumen Cache, Inc.) “Connected Home Use Case Audit” Trifecta Research Argus Insights, Inc. Core Brands Online Trust Alliance (OTA) Panasonic Corporation TELUS Z-Wave Alliance Schneider Electric

White Paper Sub-Committee Update Derek Cowburn (Lumen Cache, Inc.) “Academic Training for the Connected Home and Intelligent Buildings Industries” Bedrock Learning, Inc. ESPA (The Electronic Systems Professional Alliance) Texas A&M University Wharton County Junior College Algonquin College Automation Federation British Columbia Institute of Technology CEES-Advisors College of DuPage Complete Learning Solutions ETA International George Brown College Heartland Community College Irvine Valley College Lambton College Laney College - BEST Center LonMark International QUEST Rio Hondo Community College District Robert H. Lane and Associates Inc. Seneca College Siemens Industry, Inc. Sustainable Resources Management

New BusinessYann Kulp (Schneider Electric) 7.1 Other new CHC business

AnnouncementsRon Zimmer (CABA) 8.1 Past Event: Shanghai Smart Home Technology (SSHT 2017) Sept 5-6, Shanghai, China CEDIA 2017 Sept 6-9, San Diego, CA BICSI Fall Conference & Exhibition Sept 24-28, Las Vegas, NV

AnnouncementsRon Zimmer (CABA) 8.2 Upcoming Event: Greenbuild International Conference & ExpoNov 8-10, Boston, MA Smart Home Summit Nov 15-16, Palo Alto, CA Solar Business Festival (SBF) Nov 29-30, Austin Texas CES International 2018 Jan 9-12, Las Vegas, NV Next CHC Meeting Oct 19, Webinar

AdjournmentYann Kulp (Schneider Electric) Continental Automated Buildings Association (CABA)613.686.1814Toll free: 888.798.CABA (2222) caba@caba.orgwww.CABA.org www.twitter.com/caba_news www.linkedin.com/groups?gid=2121884 www.caba.org/chc Connect to what’s next™

Connected Home Council (CHC)