Erik: Welcome to the Industrial IoT Spotlight, your number one spot for insight from industrial IoT thought leaders who are transforming businesses today with your host, Erik Walenza.
Welcome back to the Industrial IoT Spotlight podcast. I'm your host, Erik Walenza, CEO of IoT ONE. And our guest today will be Bob Sharon, founder and CEO of Blue IoT. Blue IoT develops and delivers smart building environmental management systems that integrate their encompass blue platform with edge computing technologies, wireless sensors, and open source analytic solutions. In this talk, we discussed how improvements in wireless connectivity, cloud computing, open source API's and SaaS operating models enable more flexible and cost effective solutions. We also explored the potential benefits of improved building management systems, including reductions in carbon footprint, energy and maintenance costs, as well as improvements in cybersecurity employee health and wellness and productivity.
If you find these conversations valuable, please leave us a comment and a five-star review. And if you'd like to share your company's story or recommend a speaker, please email us at team@IoTone.com. Thank you. Bob, thank you so much for taking the time to join us today.
Bob: Yeah. No, my pleasure.
Erik: So Bob, you're running this company, Blue IoT, and that I think will be the focus of our conversation today. But before we get into the discussion of what solutions you're bringing to market, I want to understand a bit more about your background and how you ended up founding Blue IoT back in 2016. I see you've been very active in a lot of different organizations in Australia. Can you just walk us through the path that led you to start in this company?
Bob: Yeah, sure. Well, basically, I come from an IT background. One of my first jobs was operating an old IBM 360 computer with ads. [inaudible 02:13] was ancient when I got there, and we had to retire very quickly. That machine ran on assembler, which few people will be aware of today. It's basically machine language. And then in the 90s work with a company in Australia, we were the first distributors for the first commercial firewalls checkpoint. And we flew out the CEO, still the CEO of checkpoint [inaudible 02:35] from Israel in 93, ran seminars around the country and sold our first commercial firewall in 1994.
And then in the early 2000s, from working in the mid-range space, I got into data centers, and basically became a bit of a data center nerd, bit of a subject matter expert around data centers. And currently, I'm a global data center judge for the broad group. And they do global data cloud awards, of which I'm one of the global judges.
Then, my problem was I was a square peg in a round hole, quite Steve Jobs. I did not fit the corporate mold. I would call a spade a spade. And of course, you don't do that in big companies. That can be a career limiting move. So in 2012, I started a company called Green Global Solutions that is around sustainable data centers and office buildings. However, in those days, electricity was still quite cheap and a lot of people paid lip service to sustainability. I also made a lot of mistakes in the operation of that business. So that was about four years or so with that experiment.
But then I came to realize the future was very much around data-driven operations, data-driven automation buildings, smart cities. And so I formed Blue IoT in June 2016. And the point of the blue in that is the blue economy. What does it take to build something? What does it take to maintain it? What effect does it have on the people using it? And what effect does it have on the planet as a whole? So that's the Blue. And IoT is not some great, wonderful technology, but rather, it is an enabler. Some people try to flog IoT and sell IoT. Or why don't you buy this IoT widget, isn't a great? Well, why is it great? What's it going to do for me?
And a lot of people don't understand this. It is only an enabler. And so we leverage the Internet of Things as an enabler to support smart buildings, smart cities, smart places, smart assets. And so we started on the journey back in 2016. We tried different things to experiment with in terms of how we're going to pick up data? Are we’re going to use CP? Are we’re going to use WiFi? What are we going to use? What platform is a workhorse?
But we then selected a very robust protocol, which is cyber secure. It is a non-IP network so we can ensure a greater level of cybersecurity and lower risk. And at the same time, we then were able to build and develop the world's first virtual building management platform. But my background is very much that IT space, but then tried some things around the entrepreneurial side, failed in the first one, and now, certainly moving onto more appropriate things.
Erik: I think before everybody got distracted with this COVID-19 crisis, Australia was having also a fairly public crisis around the forest fire this year, what is the landscape or the mindset right now in Australia? I mean, has this really fundamentally shifted how people think about environmental conservation and technology to reduce our impact on the environment? What have you seen over the past five years in terms of the evolution of the conversation around the importance of these technologies in Australia?
Bob: I think the discussion has been finding correctly. Look, I remember when I met Marshall Saunders in San Diego, about three years ago I had the privilege of meeting the founder of the Citizens Climate Lobby, and I met him in San Diego at its headquarters. And when I explained to him the way I talked to people about the environment, see, a lot of people say, oh, you know, global warming or climate change, and they just say, okay, well, we're going to shut everything down. Well, unfortunately, that's the wrong discussion to have. You can't play with people's lives. You got to have a practical discussion. And it's got to be what people can see feel, smell and touch.
I can tell you for a fact that in New South Wales, the biggest state of Australia, 197 people were arrested for deliberately lighting fires in that bush fire. That's number one. Number two, that the land clearing, as defined by a Royal Commission we had from the Black Saturday fires in 2008, the states were negligent in doing the back burning that was supposed to do for the clearing that was supposed to do at about 75% of the cases. And also farmers are not allowed to clear their own land, because a lot of policies.
So there were a lot of those contributing things. And there is a Royal Commission into this. And this will define what really happened and the role of climate change as well. That is also part of this. So I'm not saying that is, but I'm just saying there are also many underlying reasons why that took place.
Now, let me talk about the practical discussion. I was originally a total skeptic myself. But then I came to the conclusion logically because I hate pollution. And I said, well, hold on a minute, what can people see feel and smell and touch? Well, go to LA, go to New York on a bad day, what do you see? Shocking smog, you can smell it and people die of respiratory disease because of the smog in the air. You got to other parts of the world, of course, it's a lot worse. So with all the garbage, factories and cars and all the things going up in the air, how can this not affect the environment? How could it not affect the whole atmosphere? This is how I came to the conclusion that we have a problem. But it's a practical one.
In other words, well, people are dying at the moment of respiratory disease because the pollution that we put in the air. So how can we fix this? This is the discussion. When I told this to Marshall Saunders say can you write this to me, put it on an email, which I did because it was a practical solution that common people can relate to and say yeah, yeah, the pollution are some days it's really bad. And everyone can relate to it, because they can smell it, see it, feel it and touch it, and it's close to home.
Whereas when you talk about global warming and the impact of the higher temperature point to of a degree, that's a harder discussion to have. Backend computing systems are now controlled from an IT perspective, we're not there yet. We'll probably make quantum computing to properly quantify the number of these various parameters and the precise effects they have in common is most certainly changing. There's no doubt about that.
So, my discussion now is how from a market based point of view and the Citizens Climate Lobby, also themselves are putting forward a carbon trading scheme that is market based, that's why I like their whole approach, it's very practical and market-oriented. Now In what we're doing is how can we both help companies solve their bottom line? In other words, we're talking about the triple bottom line.
How can we help companies reduce their capital costs, reduce their operating costs, and while improving productivity for their staff, people, guests, visitors, whatever? And guess what? You have a winner. We have a winner. We have something that everyone can buy into. And that will help look after the planet. Wow! You heard? Hey, you heard? We're onto something here. Now small people can do things like that. Guess what? Companies will come on board, because everybody wins. And I see I'm about getting stuff done. And if we can find ways to get stuff done, and it's going to help everybody along the way, guess what, there'll be a lot more buy-in.
And I think as a result of COVID-19, more companies will be looking at innovative solutions to reduce their costs. Because up till now, the company is making money we're very lacks, and Warren Buffett actually made a quote some years ago, that companies do not want to innovate if they're sitting pretty making money. But most companies, they just relax. We don't need to save more money on energy or the operation. Because our staff numbers are bad, we've reduced the staff. We're okay with that.
But in 2008, after the GOC, what happened, people move to the cloud because they weren't afraid anymore of the cloud, because they had to reduce their costs. This is what's going to happen with COVID-19. So the atmosphere here is I suspect it will be in the US and Europe and everywhere. More companies will start to look at things beyond staff and say, okay, yes, you know, even if they're making money, they're going to be able to look and say, okay, what are practical ways? Well, if we introduce these cloud based systems for managing our buildings, and facilities and factories, well, we can reduce energy by 30% or 40%. That's going to be a good contributor to the bottom line. Now, we're open to the new technology. This is the sense I'm getting. and I think this will be a common thing around the world.
Erik: And I'm completely on board with you that it's very difficult to solve problems if they're in the abstraction of global warming, and so forth. So it really needs to be at the level that people are impacted. And it needs to an extent speak to their personal interest. So we really need commercial solutions that are on the market that are profitable businesses that are also helping to achieve this common goal. So tell me a bit about who you are working with? I mean, are we primarily talking about commercial office buildings? Is the solution also scalable to more industrial type environments? What would be a typical deployment environment?
Bob: Okay, well, obviously, we've started from office buildings, is where we've started. Now we're working on our first hotel. So we're working with our core, which of course is a very large operator. And we're also about to do an art gallery as well. And yes, look, this is expandable into oil and gas. It's expandable into manufacturing. It can go into agriculture. It can go into maritime. It can go into a whole host of things, entertainment facilities, cinemas, shopping centers. We’re expecting to work on our first shopping center shortly as well. So this first system only ever went in in December 2018. And yet, we already have a number of case studies where the savings are absolutely incredible, up to 50% of the total electric bills.
Erik: So, on your website you compare to a traditional BMS, or BAS or scattered based system, what is the architectural difference or the difference in the technology that allows you to be more cost effective in terms of the deployment but also to achieve high efficiency improvements?
Bob: Basically, firstly, the system is open. We use open API's, which is very important. It's not proprietary. So the systems we use a non-proprietary for a start. Secondly, the architecture is wireless. Not WiFi, is not suited to this scenario. It's a non-IP wireless network of sensors. And in fact, we've developed our own sensors using a traditional LoRaWAN network backbone, which has a long range wide area network, a low power network. And our sensors, in fact, designed so we can send firmware updates over the year to tell it how and when to send data in order to preserve battery life, which means we can up to double the life in some cases up to 10 years.
Even WiFi sensors, would you believe, require power, and they need power wiring to them unless you want to change battery every two weeks. Our controllers that control replace the traditional DDC controllers that control your actuators to open and close fans and control fans and chillers and things like that, they're all microprocessor based. So we have edge computing almost again wireless communication. And we can again, send firmware updates so they don't have to be hard programmed like traditional DDC controllers.
So any updating logic is sent over the air, and encrypted, authenticated on a non-IP network and then it can run itself even if there's a disconnect from the cloud. So again, we don't have the Ethernet cabling or the BACnet, Modbus, RS-485, or whatever proprietary cabling to the various actuators and systems in a building. So it saves a fortune on installation and time taken to install.
The other thing is we have no central logic on site. All the central logic control is not in the supervisory which the traditional BMS has have, but is in our analytics platform in the cloud. And all the global rules and logic is in the cloud. But then we send local rules to the individual controllers, and they reside in those individual controllers till we change them. And so what that means is with that kind of an architecture is that we have a very agile system, but yet we're managing the whole ecosystem, not just you have separate things controlling separate devices, but rather we manage the water flows, we manage the pumps, we manage the chillers, the air handling units, we manage all the different things, even the lighting, and people going through and the meeting rooms.
For example, in a meeting room, if you have too many people in a meeting, after an hour, you're getting sleepy and hot because your CO2 levels are above 1,000 parts per million. Well, we're able to control that, and the amount of air, and so forth, so people don't fall asleep, so we don't have too much CO2. So we go into health and safety, air quality, dust particulates, mold within the building, and a whole bunch of things like that. So it gets pretty detailed. But it's open. And the data is owned by the client, unlike with the big companies where the data is owned by the vendors.
And the best part is, in a traditional system, if you want to change something after you've put it in, so say you put it in six months ago, and you want to make a major change, you have to call that project managers, you have a bunch of meetings, you work out the logic that bring the programmers out because we were changing the function of a number of rooms and what it's going to do, we're going to change all the logic, that can take several months, and $20,000, $30,000, $40,000 to make a change. Well, on our platform with the subscription service we have which covers maintenance. Under premium and comprehensive, it covers logic changes.
So we had a situation where one of our clients called us and said, look in December, which is summer in Melbourne at 7:00 in the morning when the system started, the heating went on. And he asked me why? And I said, well, we checked the date, it was 50 degrees Celsius, or Fahrenheit, which is quite cool. And I said the system should start. But it was a 28 degree day that day Celsius. And I said it's I think what you're saying is you want us on a warm day to ensure that it doesn't start with heating, if we know we're going to have a warm day.
So I said, okay, we can implement that and have the system look at the weather forecast and decide whether the thing should start or not, or just the fans. So he said yes, send me a variation. I said, now I can't send you one. You're on a premium subscription. You're going to get it for free. So six logic changes in a year I've done for free. So it means your operating costs is a lot lower because we don't hold people for ransom by the throat and say we've got you and now are we going to charge you.
Or if I want to add two more sensors, for example, and again, 10 minutes, because we can put the sensor in the right place because we don't have to wire it up at all, or a motion sensor even, and we can then put it in and then just add $20 a month or whatever to the subscription and you don't have to pay another $20,000 to the vendor because you're changing your logic. I have a comparison chart actually, which depicts a whole lot more than what I've said, but they're some of the major highlights.
So the upfront cost is about traditionally around half that is a traditional system. And the ongoing savings are huge because we have a focus on optimizing continuously using machine learning. And we're building all of these things to ensure we're continually looking to improve performance the whole time. A traditional system, you get it, it's commissioned, and they leave. They say thank you. If it breaks come to us, we'll fix it under warranty. That's it. We permanently partner with our customers, whether it's through our channel partners, and we do have channel partners in the United States now and around the globe that we're setting up.
Erik: So you basically run through quite a number of the big cost levers that I see a lot of startups starting to deploy these and a lot of the more traditional market leaders being a little bit tentative to deploy them because they impact their legacy businesses. So you talked about moving towards wireless and the cost improvement in the deployment of the system when you don't have to do the cabling. And also, of course, you avoid the cost of the proprietary wired systems that are on the market.
Talked about open source, I suppose when you're getting into machine learning, and so forth., being able to work with open source solutions is a huge cloud processing, of course, and centralizing the logic in the cloud, a SaaS model. And I think this is important for people to keep in mind when they're talking about IoT, sometimes it's a little bit easy to get focused on, you can say the cutting edge, and really most cases, that's not the interesting thing. The interesting thing is how are the core functionalities becoming more cost effective? Having more convenient form factors, you're talking about a 10 year battery life, so you don't have to send somebody out to change the battery. What does that cost, $50 per sensor to change, right? And so that, for me, can be really the impactful innovation. It's about getting efficient systems. And it sounds like you're doing that system integration internally. Is it right that today you're an integrated solution development and system integration house?
Bob: Yes, correct. We do it even the first controller. We built the board in-house, hand-soldered it from nothing. Now we, of course, outsource the manufacturer, we have been making them in China. However, we kind of have alternate source of manufacture by later in the year. So we have two sources, one within China, which primary will have secondary source. So it might be other point in Asia or the United States for our components, sensors, IC boards and controllers. But yes, we integrate the whole lot. So everything is very much integrated, though we work with various partners. We don't do asset management. We don't do FM management. So we can integrate and connect through API's into these various platforms and collaborate.
Erik: With a system like this, there's the underlying architecture to collect the data and analyze the data. And then there are potentially a huge number of different applications and a huge number of different users. So you've already touched on energy efficiency. You've touched on building environmental controls and health and safety issues. So you have multiple business functions that would have an interest in there's multiple stakeholders that might want to access the data, or make requests. Who would be a typical buyer or initiator of a system?
I have two questions here. One is on the stakeholder side on who is purchasing these, and making the decision given the number of stakeholders involved? And the second is building the applications to serve specific needs, is that also something that you're doing primarily in-house, or have you found it possible to find narrow open source applications that you can kind of build on top of your platform? Because I imagine there's a lot of complexity then in solving specific end user needs, and getting the application right despite having the data at hand?
Bob: Certainly, our primary targets are building owners. So these are people who either own the buildings because it's their pocket. If you can reduce the cost of running the building, you improve the asset value because you're improving your yields. Because if I can have body corporate fees reduced, and outgoings reduce because it's a higher efficiency building, it sends the value of the building higher. Also, if you're running the building yourself, again, you're saving money.
So building owners, whether it be a family office, whether it be a hotel operator, whether it be or an FM company that holds responsibility for the operating costs, some do, some don't. If they don't hold the keys to the budgets, then they don't care. They would rather not go for a new technology because a lot of the people in the industry, if it didn’t broke, don't fix it. But by going to project managers, senior project managers who are putting projects together, usually, in existing facilities, but we're starting that talk to Greenfield, so these are the project managers or even construction companies putting together new bills, they're starting to come to us.
But certainly the people responsible for the budgets on an ongoing basis, so whether that's an owner, or someone responsible for sustainability with teeth, there aren’t many that have teeth, but the ones that do, again, because we're delivering outcomes, so we're also working with local government councils, and now there's a big shift on the environment and energy savings. And so we're starting to take hold on a number of councils as well helping them reduce their energy and improving their sustainability credentials. So anyone responsible for budgets, for the money, and for the outcome of those places or factories or buildings, they're the people we're talking to.
Erik: And so the big buckets here are primarily, and I guess energy consumption is number one, what would be the other big cost buckets that would be prioritized?
Bob: Energy, number one. Number two is maintenance. So, quite often, with traditional systems, it breaks. There's a lot of unplanned maintenance, or even planned maintenance for that matter. So for example, companies will have a regular thermal scan of a switchboard to make sure they're not going to get a short circuit, whereas we can have sensors in the board so we know the temperature in the board. You don't have to have thermal scans. Or people will send your providers to go to look at the filters of your air conditioning systems every 6 months or 12 months, no need to do that, we measure pressure differential. So we know when to send people at the right time.
But we also know in advance if a motor is going to break, by the sound, vibration, by the power, affect the numbers that we get measuring the energy. So with all of that, we can reduce maintenance costs because we don't have to wait for it to break. We can then know in advance, there's a problem, have it looked at all the parts in advance in an orderly fashion, and then have it repaired or replaced again in an orderly fashion. And in places that use a lot of water like the Middle East, and we're going to be working in the Middle East quite a lot, we'll be able to save a lot of water.
Erik: So these would be owned by the building management company, these cost. And I guess, a separate set of the KPIs but softer KPIs that are around productivity, so making sure that you have an effective environment, so you mentioned earlier CO2. I guess there's a different stakeholder group. The building management doesn't so much care about that, it's the tenants of the building. Are you able to make a value proposition directly to them? Or is this like a soft, nice to have that's maybe not the primary value proposition?
Bob: Depends. Because for companies like Dexos, I don’t know if you got Dexos in the US, but all the big JLL, so these guys, a number of them are starting to get gold in the way they look after the buildings are not productivity, but on the occupants on the satisfaction of people inside because you've got things like Wells rating, for example. So you got your lead rating, of course, but then you got Wells, which is how was it good for people, and how productive. So you've got the younger generations that want to work in offices that are really nice, and have a nicer environment.
So companies that provide that environment will get better people and this is how the argument goes. So from that point of view, we will add a value proposition around that. So more and more it's still a small percentage. But more and more, this will become more important. And yes, we will be able to add very good value propositions around that.
Erik: I think this COVID-19 will have an interesting impact on how we view office buildings. As people get more comfortable working remotely, then you're going to have to have a better value proposition to bring people into the office which is not just you have to be here from 9-5 but this is an effective environment to get real work done. Are you seeing much of an impact in these early weeks of the spread in terms of buildings already looking at how to add capability or insight into their management of buildings in response to COVID-19 or is that something that you expect to maybe see later in the year after people have had more of a chance to digest the impact?
Bob: We'll see that later in the year. Because at the moment, you have people they got various companies, including global ones that we deal with. So we partner with companies like TELUS, which is a global integrator, a French company, and they do a lot of work with governments and Department of Defense, and so forth. And they're working from home. And many big companies who've got their staff working from home. Others like us, were working in four square meters per which in your terms, I think, is 40 feet per person, or whatever. That's what the rules are for us. But now we're obviously adhering to the rules with that in doing that.
So in terms of what you're saying, that will happen when this is over. And when this is over, that will become a discussion point. But we're too early for that discussion point yet. That will come. So give it three months, four months and that will certainly a discussion point around it. Because remember, we are social beings, by nature, we are social. Some people like to hibernate in a way. The majority of people don't. What this will mean is talk about how we can make officers a better place, how we can make them a place where people can communicate better, can collaborate better, and not just sitting there and little cubicles which is more of a traditional type office. So yes, I think there's going to a lot of those discussions held later this year.
Erik: Because we're also thinking for our company, does it make sense to allow people to work from home more often? And on the one hand, if you're just going to be sitting at your desk working by yourself, then sure, work from home if you have a sure environment at home. But of course, there's a lot of situations when you want to collaborate. It will probably see that a mix where people will maybe be working from home 50% of the time or 20% of the time when they don't need to collaborate openly.
But then certainly, there's a lot of circumstances where you need to collaborate. But then we can have greater square footage and not break up offices into little cubicles, but really transform them into more collaborative environments. Bob, you've already given us a good overview of the underlying architecture. What are the technology trends that you see developing right now and over the next, let's say, five years that you think will be impactful for you and how your company operates?
Bob: Well, of course, you've got the traditional providers. They're all saying, look, we're in the cloud now, isn't it great? You can access our BMS from the cloud. Well, what we'll be do? That's all technology. Anyone can get an IP address over the web, pick up something from somewhere. Well, wow, they think they're in the 21st century. But anyway, that's a given a long time ago. But the real trends are certainly moving into more wireless or secured wireless technologies, low power wireless technologies. So we don't have to wire things up.
The other one is moving to open platform. So those that want to keep proprietary, good luck to them. But that's not a good trend moving forward. And again, where data ownership is owned by the client, again, that's definitely a trend that we will see much more of. The other one that we'll see is, of course, the use of machine learning and AI.
A lot of people talk about AI at the moment saying we're using AI. One of the websites in the US are we sweeping they got a beautiful, wonderful animation. So it's got a radar screen. We sweep across all these areas of buildings and people with our AI. But the marketing is just amazing. The smoke and mirrors that they're using is, well, something to behold.
But all I can tell you is 99.99999% of people are not using AI at all. There is a small portion starting to use machine learning. And that is starting now and a number of people have as we do. But even we haven't yet got to the AI. We're about to start and we're going to certainly be moving on that journey with AI in a more formal sense. Because AI, people use it bandied around, in most cases, it kind of means a smart set of rules to be honest, but that's not true AI.
See AI have been around in advertising, marketing, financial services for a long time, using AI to interpret people's movements on your phone. Ah, right, you just went to this site. Ah, we’ll advertise this. That's been around for a while. But in facilities, no, it has not been. So it's all quite new.
Then again, if you look at a video from Siemens, well, it will tell you when this motor is going to fail to the hour. Well, that is not possible at this stage. But at any rate, the moving into AI or robotics, so maintenance, getting more maintenance done with drones and robotics, and knowing where all the assets are, that's happening now. A digital twins is another one. We’re adopting digital twins, but what I call true digital twins, which is where we can take the 3D CAD model, the rivet model, and then position the assets, see where the people are and then do modeling off site. If we change that parameters, how will it affect the building? What can we do? But the AI will do all of that by itself.
We're going to see a lot more holograms, and certainly a lot more collaboration and democratization of data. So we can collaborate with other companies, what they're doing with buildings, and then swap information, then improve the optimization regimes that we do, and collaborating with other companies. So they might have algorithms, for example, certain types of motors, so we can detect failures earlier.
We do have a front end, and so we got the dashboards, but we might collaborate with others for different types of dashboards. So I can see lots of trends, lots of collaboration with different companies working together, partnering together, especially tech companies in order to deliver really, really decent outcomes to various types of end users. That's really where I see the trend. So that will form a part of the Net Zero type scenario. If beyond Net Zero to net positive, where we're contributing to environment, so producing our own energy, local waste to energy within buildings, for example, generating more solar from walls and windows, and then managing that smartly with the automation systems as to where that excess energy goes.
So we can swap using Blockchain and swap power to other users and it's billed automatically through blockchain. Rather than going back to a central energy retailer making a lot more money. But it's more democratized to smart grids, local micro grids. So, they’re kind of general trends that I see moving forward.
Erik: You can say the value is, in many cases, fairly apparent in underutilized space, underutilized data, energy wastage, and so forth. So there's a lot of data, but there is really very, very little collaboration around optimizing the value of this. And I think right now, the technical challenges have largely been solved, certainly not entirely solved, but they're certainly very solvable in most cases. It's more than the business models, and it's the legal frameworks and how to enable this from just an organizational perspective.
And I think that's just a learning process of trial and error. And once you have a few success cases, it'll be follow the leader type process. So I'm fairly hopeful that we do become much more collaborative as we kind of prove out some of these value cases, and also just figure out where liability lies and so forth. So, that's going to be very interesting trend around data but also around how we can use IoT to share other assets and other benefits that are currently being underutilized.
Bob, I think it's always quite useful to have somewhat of an end-to-end perspective of a solution because otherwise it's kind of like the story of the elephant You kind of look at it from different perspectives and you get a little bit of a feel of what we're talking about. But it's hard to understand the whole perspective. Can you walk us through end-to-end in one of your more recent deployments, who you first engaging with? What were the problems being solved, etc, through deployment?
Bob: Yeah, sure. So we have a recent one that we implemented in October last year. That's a council building. It's a 40 year old building. In fact, it's near 45, 47 years, very old building. And they're going to mixture of 40 year old infrastructure and 20 year old HVAC back in infrastructure. They got a mixture of packaged air conditioning systems, heating systems. They got a central system with a big air handling unit and a huge fan and a huge compressor driving it with separate boilers for the hot water to provide heating in there. They got 19 mixing boxes, running a proprietary bus on a traditional BMS, and very little visibility yet to go into the plant room they upgraded five, seven years ago, and you could at least go to a PC in the plant room to see what was going on. But other than that, there wasn't a lot you could do with it.
If you wanted to change anything other than your setpoint temperatures and things like that, it was a major change in cost. And the bass line to all the actuators in the mixing boxes that lets both hot and cold air in at once. So they were all over engineered because in those days, energy was cheap. And you could make hot and cold air to get what you want, was a proprietary bus, wasn't even a mud bus line. It was proprietary. So they had very little visibility.
Something went wrong, they didn't know that to go down to the plant room from another building somewhere else and temperatures in different zones were up and down and all over the place. So it was very hard to manage. Energy costs were very high. So basically, we were engaged. We had done another one of their buildings. So this is a council not too far from us actually in Melbourne. And so they engaged us to replace this BMS system.
And so what we had to do is rip out the old controllers running these 40 year old actuators that open the vents are the hot and cold air, the mixing boxes. And believe it or not, our brand new technology controllers were able to run these 40 year old actuators and replaced with the old controls, they were wireless so we didn't have to rewire a new cable and do all these things. And then we put in a variable speed drive to control the supply FN, was 22 kilowatts, which is quite substantial. And then we put temperature probes in the supplier, that's we're controlling the individual mixing boxes and the amounts that the events would open by whatever percentage, and then we're measuring the water flows and temperatures through condenser water loop system.
And anyway, we took a few months to put it together. And then in October, we commissioned this last year. Immediately upon commissioning with the system, in the first month of operation, we saved 72.5% of HVAC energy and 45% off the total electricity bill. Now, the way we compare this is comparing the utility bill for the previous year. So same office usage, same number of working days, so we normalize the working days in that billing period, it's an office building, very easy to normalize. And so, we compared the number of working days, and the billing numbers from the utility bill. And that's how we determine the savings.
So unequivocal savings, much better human comfort, full visibility to all the facilities, people and ops people throughout the organization from their device. From wherever they are, doesn't matter. It could be home. It could be in Moscow for that matter. Doesn't matter. So they can engage through the web interface, through Active Directory. So if they leave, then they can't view anymore.
And control, they can change setpoint temperatures. They can change their band control. They can do all sorts of things from their phone or their desktop, wherever they are in full control of the building. And then with that, there’s monthly reporting provided, which gives them the analytics, myabe they've got live dashboards on power usage, and energy consumption and all of that. But we analyze the data and give them monthly reporting as well, which comes with it and they're very happy. So they're in the process of giving us an art gallery at the moment, another new building there they're putting in, and a whole lot of other things. Aquatic Center is another one so they just happy with that several buildings now are with them. And this happy way out delivering true outcomes, and we deliver what we say. So we have this published, by the way, this case study if it is available, I can send that to you.
Erik: We can certainly publish with the link to the case study along with podcast. And I think these near term impacts make it much easier to justify the investment in an IoT system and then you can build other functionality and value on top of that. So it sounds like the cost here is broken down but between the CapEx of the equipment, the system integration costs, and then an ongoing SaaS cost that also includes maintenance. And you mentioned that the installation is roughly maybe 50% of what a traditional system, maybe not giving us the exact quote for this project. But could you give us a range for what a building might look like from the upfront deployment cost and then the SaaS?
Bob: Well, yeah, certainly. Well, basically, let me wrap that up first. I'll give you all of that. But what I'm going to tell you is your payback. Because people say, well, that's all very nice. What does that mean? So the bottom line, when do I get my money back? How long does it take? This assumes you don't have to change something in a brownfield building. This assumes your current one is working properly. If it's not working properly, then you got to change it anyway. But let's say you don't have to, typically, we're talking around two and a half year payback. And that includes subscriptions. That includes your subscriptions and your CapEx.
So now, let me go back in a typical building. So we've just put together a quote for a 24 storey building, in your parlance, in square feet, we're talking about 10 may be nearly 250,000-300,000 square feet of a building, and that came out at about with installation somewhere around, I’m going to translate this into US dollars, Australian dollars, we're looking at around 620,000, like an end user would pay, somewhere around about 620,000 Australian dollars.
But in US dollars, that's going to be more like around 350,000-370,000, somewhere around there, 370,000 US dollars fully installed, something like that. So then includes your physical install all the hardware or software integration, reporting setup, logic, programming everything. So that's all the upfront cost. We have three levels of subscription. But premium or comprehensive will give you all the service including data interpretation by domain experts: electrical, mechanical, and controls engineers as part of the subscription.
So we identify issues and report them and make sure we're working with your contractors to ensure that we're finding problems and eliminating them. So we get rid of waste that's unknown and keep optimizing your usage. On that you'll be looking around 15% of the capital cost annually for your subscription for premium.
So in the example I gave it’s 350,000 USD, then you'd be looking at, around 52,000 USD per year, which is around 15% of the capital costs per year. But that includes hardware warranty extension, telephone support. You get a whole lot of services, including the engineering team and data interpretation, regular reporting, the dashboards, the cloud services, the whole operation and the logic in the cloud analytics and open API's connectivity to other platforms. All that forms part of that service.
A traditional BMS company, what they do is it's commissioned. If it breaks, you call them back to fix it. But you're left to fend for yourself. The problem is facilities managers, building managers haven't got time to interpret data, unless it's broken, they go out and fix it. But what we're doing is they were permanently there to make sure we're looking after the interests of our clients and finding issues and then giving them reporting on it and letting them know when they need to through alerts or direct to their contractors and then they can go out physically on site to check yes, we found the problem. You identified this, we have now rectified it. Are we getting improved energy performance now? We don't have to wait for it to fall over and break or cause discomfort, that kind of thing.
That's a pretty decent sized building, but I gave you the example of and that would certainly be much more cost effective than the traditional system.
Erik: I appreciate your transparency. At IoT ONE, we spend a lot of time, assessing different solutions. And one of the things that's the most exciting for me that gives me the most hope for this larger market in the futures solutions just like this that are very practical, very directed, and are really very affordable. I mean, it's all about companies being able to realize some ROI, so that they can justify the investment, and then build on top of that. But you need to get a starting point and that starting point needs to be something super practical. I think companies are tired of these IoT for IoT sake AI for AI sake. Bob, I want to be cognizant of your time, I think anything else that you wanted to touch on today?
Bob: Well, just the fact that we are setting up in your neck of the woods. So I have established a company there called Blue IoT LLC registered in Delaware. But we've also got a local channel partner that's starting and we expect to be working in the US after this. I'm hoping our first project will probably start maybe by July, is what I'm thinking. In the Middle East, we’ll be starting in June. It'll be great moving in that US and Canadian market place, and then eventually into Canada, South America, I guess, once we have established well in the United States.
And so I'm very excited actually with the US market myself. Because companies there tend to be more pragmatic and they will now look be more open to new technologies in order to achieve a better bottom line outcome while helping the environment the same time. So with everybody winning, people will be far more open to now finding new ways to do things better. I think there'll be a positive outcome of this COVID-19.
Erik: Well, I hope there is some silver lining on this, in long term that would be nice to look back at. But really appreciate your time. Certainly, we'll put your website online and people can figure out how to contact you there. If you'd like to email me the details for your channel partner in the US, then we can also post this along with the podcast. Thank you. But I really appreciate the conversation today.
Bob: I'll send you a copy also of the case studies concern and some links to articles. So, remembering that we also won the FMA, Facilities Management Association award for industry innovation last November. There are peak body in facilities and the IoT Pioneer Award we won in June from Mixed Media, and they do IT news, computer reseller news and IoT Hub in Australia. So I'll send you some links to these as well. And I'll certainly look forward to talking to you in the future.
Erik: Excellent. Then Bob, we'll get that all posted and have a great day ahead.
Bob: No worries. Thanks to you. Keep safe.
Erik: Thanks for tuning in to another edition of the industrial IoT spotlight. Don't forget to follow us on Twitter at IotoneHQ, and to check out our database of case studies on IoTONE.com. If you have unique insight or a project deployment story to share, we'd love to feature you on a future edition. Write us at erik.walenza@IoTone.com.