# Untapped Cost Savings: Why Smart Building Management Systems are a Finance Department Priority
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-06-22
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Maximising Finance Team Efficiency with Smart Building
Meta Description: Discover how finance departments can drive growth, cut costs, and improve productivity through energy efficiency in smart buildings.
URL: https://financedigest.com/untapped-cost-savings-why-smart-building-management-systems-are-a-finance-department-priorityhtml

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_By **Kas Mohammed,** VP of Digital Energy at Schneider Electric_

The priority for any finance team is keeping costs to a minimum while driving growth and productivity. Traditionally, this has focused on the company’s greatest asset, its employees. Assessing pay, incentivising performance, ensuring KPIs are met, and [managing expenditure have been fundamental to internal finance](https://www.financedigest.com/how-parents-can-help-students-manage-their-finances.html "How Parents Can Help Students Manage their Finances") departments for decades.

While they remain the gatekeepers for spending, as our implementation and understanding of technology has grown, so too has the scope of the [finance department](https://www.financedigest.com/data-analytics-scenario-planning-and-the-finance-department.html "Data analytics, scenario planning, and the finance department"). Today, they must be capable of making informed decisions on a range of factors that could [drive growth and profitability](https://www.financedigest.com/philips-to-cut-13-of-jobs-in-safety-and-profitability-drive.html "Philips to cut 13% of jobs in safety and profitability drive") in the company more widely.

Until recently the energy, productivity and security implications, of smart [building management systems were only of interest to facility](https://www.financedigest.com/li-cycle-to-build-french-battery-processing-facility.html "Li-Cycle to build French battery processing facility") managers and electrical contractors. Its importance is now more widely appreciated, improving the comfort and productivity of employees, and [reducing expenditure through enhanced](https://www.financedigest.com/cobots-in-the-financial-workplace-reducing-costs-attracting-talent-and-enhancing-sustainability.html "Cobots in the financial workplace: Reducing costs, attracting talent and enhancing sustainability") energy efficiency.

**Measuring, benchmarking, and** [reducing energy costs](https://www.financedigest.com/home-start-lincolnshire-implements-flexible-unified-communications-service-to-reduce-costs.html "HOME-START LINCOLNSHIRE IMPLEMENTS FLEXIBLE UNIFIED COMMUNICATIONS SERVICE TO REDUCE COSTS")

A staggering 36% of all energy used today globally is consumed within our buildings, representing a huge potential cost saving. To drive this number down in commercial environments, we first need the means to measure our [current energy](https://www.financedigest.com/euro-zone-current-account-deficit-widens-again-on-large-energy-bill.html "Euro zone current account deficit widens again on large energy bill") use. At Schneider Electric, we now have sight of 95% of our buildings’ energy use in the UK. We are using this information to identify where energy is being wasted and where we can reduce our energy use. We have targets to reduce energy usage by 5% each year, benefitting both the environment and our overall expenditure.

Smart devices enable real-time measurement and optimisation. In the future, smart buildings will become completely flexible and adaptive to a variety of uses within the same physical building. Spaces will become more interactive and agile to the needs of the occupant. Behind these buildings will be a series of artificial intelligence-enabled tools that will be able to predict emerging faults, dynamically optimise [heating and choose between different sources of energy](https://www.financedigest.com/analysis-forget-showering-its-eat-or-heat-for-shocked-europeans-hit-by-energy-crisis.html "Analysis-Forget showering, it’s eat or heat for shocked Europeans hit by energy crisis").

During its lifespan, 20% of total building costs go on its creation, and 80% on operation. Broken down further, 40% is spent on [energy and 30% on maintenance](https://www.financedigest.com/heavy-norwegian-gas-maintenance-adds-to-energy-price-pressure.html "Heavy Norwegian gas maintenance adds to energy price pressure"). The implementation of any smart building technology represents a massive long-term saving – a study by the American Council for [Energy found a cost saving](https://www.financedigest.com/top-5-ways-businesses-can-save-on-energy-costs-in-q4.html "Top 5 Ways Businesses Can Save on Energy Costs in Q4") of 32% when using connected HVAC and lighting systems. For the [businesses occupying offices](https://www.financedigest.com/tips-for-choosing-the-right-chief-finance-officer-for-your-business.html "Tips for Choosing the Right Chief Finance Officer for Your Business"), smart buildings offer a return of 10 to 1 on investment. Easy to introduce features, like lighting and window-side sensors, lower energy bills and reduce maintenance costs and directly impact and [improve any businesses](https://www.financedigest.com/5-ways-to-improve-your-business-finances.html "5 Ways to Improve Your Business Finances") bottom line. These basic upgrades are fast becoming some of the biggest [business open goals](https://www.financedigest.com/how-to-create-financial-goals-for-your-business-in-2021.html "How To Create Financial Goals For Your Business In 2021").

**Ensuring productivity at every level**

It’s now unanimously understood that productivity drives profitability. While working from home has become the de facto choice in 2020, research found 71% of us are struggling to adjust to remote work, 65% say maintaining [employee morale has been a challenge](https://www.financedigest.com/how-to-deal-with-challenging-employees.html "How to Deal With Challenging Employees?"), and more than a third of businesses are facing difficulties with company culture. While the [future of work remains uncertain](https://www.financedigest.com/smes-facing-an-uncertain-future.html "SMEs facing an uncertain future"), it’s clear more must be done to promote productivity in all locations.

Employers [can’t ignore](https://www.financedigest.com/accountants-cant-afford-to-ignore-making-tax-digital.html "Accountants can’t afford to ignore Making Tax Digital") these findings. Talent is the single biggest [cost for most businesses](https://www.financedigest.com/cutting-business-costs-pros-of-using-commercial-heat-pumps-in-2016.html "Cutting business costs: Pros of using commercial heat pumps in 2016") and attracting and retaining the right candidates is challenging. The workplace environment, well-being initiatives, flexibility, and brand image – including sustainability credentials – are all increasingly important to employees and [must be a priority for finance](https://www.financedigest.com/2019-year-must-re-build-public-trust-finance.html "2019 is the year we must re-build public trust in finance") teams.

Smart building technology helps to provide greater convenience, comfort and wellness, both inside and outside the workplace. It improves the office environment on a granular level, providing comfort or monitoring indicators such as air quality or humidity that in the end benefit employee productivity. We have all worked in overly hot or cold, stuffy or poorly lit environment, and can appreciate its impact.  To drive flexibility outside the built environment, smart building technology is connected to mobile applications that can automatically update [employees on office](https://www.financedigest.com/hundreds-of-tyson-foods-employees-to-depart-as-company-closes-offices-wsj.html "Hundreds of Tyson Foods employees to depart as company closes offices – WSJ") closures, transport issues and help with personal development, all on a single platform.

Considering that roughly 60-80% of all [business costs](https://www.financedigest.com/green-initiatives-cut-self-storage-business-space-stations-energy-costs-by-75.html "Green initiatives cut self-storage business Space Station’s energy costs by 75%") are the workforce, their productivity and wellbeing cannot be overlooked. [Implementing smart building technology has the potential to drive](https://www.financedigest.com/how-cloud-is-driving-forward-implementation-of-zero-trust-security.html "How Cloud is Driving Forward Implementation of Zero Trust Security") costs down, all while improving the output of the business.

**Driving business resilience**

If the pandemic taught finance anything, it’s that business operations need to be rock solid to [meet the changes ahead](https://www.financedigest.com/sterling-steadies-vs-dollar-ahead-of-boe-ecb-meetings.html "Sterling steadies vs dollar ahead of BoE, ECB meetings"). For true resilience, a business must have a building infrastructure that can adapt to circumstances and ensure companies can continue to [operate efficiently and profitably](https://www.financedigest.com/ikea-stores-owner-ingkas-annual-operating-profit-rises-9.html "IKEA stores owner Ingka’s annual operating profit rises 9%").

This, in turn, requires a building management system that is able to support any changes, aggregating and integrating data to [drive efficiency](https://www.financedigest.com/iforces-route-genie-to-drive-efficient-carrier-management-for-freestylextreme.html "IFORCE’S ROUTE GENIE TO DRIVE EFFICIENT CARRIER MANAGEMENT FOR FREESTYLEXTREME"), and improve the decision-making process. Crucially, the finance department must be able to interact and understand the intricacies of building performance in order to [control costs](https://www.financedigest.com/dutch-telecom-kpn-locks-in-2023-targets-helped-by-cost-controls.html "Dutch telecom KPN locks in 2023 targets helped by cost controls").

**Making building [management a finance](https://www.financedigest.com/finance-management-for-small-business.html "Finance management for small business") focus**

As we look to emerge from Covid stronger, [data and technology hold](https://www.financedigest.com/sterling-holds-firm-after-uk-jobs-data-muddies-rate-outlook.html "Sterling holds firm after UK jobs data muddies rate outlook") the key. We must create a smarter building with joined-up [systems allowing us to monitor and automate key processes](https://www.financedigest.com/solvency-ii-pushing-existing-systems-and-processes-harder-is-not-enough-for-compliance.html "Solvency II: pushing existing systems and processes harder is not enough for compliance"), including staff seating arrangements based on capacity and occupancy levels, and ensure smart heating, ventilation and lighting provide health benefits and comfort, while reducing the energy bill and helping protect the environment.

The potential for savings and productivity are clear, but companies can also command greater value from spaces that have lower carbon emissions and higher levels of comfort. Building management is now firmly a [finance focus and will remain so into the future](https://www.financedigest.com/enterprise-automation-is-the-future-of-finance.html "Enterprise automation is the future of finance").


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