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How Disruptable is the BAS Industry? Walmart Applies the Porter's 5 Forces Method to Answer.
As we've covered many times at Nexus Labs, the history of the smart building industry is that incumbent building automation system (BAS) vendors maintain market dominance by bundling disciplines and monetizing lock-in through proprietary tools and recurring licenses. For service providers and owners, this creates a stagnant environment where switching costs are prohibitively high.
At NexusCon, Chris Tjiattas, Senior Manager of Business Strategy at Walmart, applied the Porter’s Five Forces framework to analyze whether this industry is actually ripe for disruption—or if owners are stuck with the status quo for the foreseeable future.
The analysis suggests that the "threat of new entrants" to challenge the BAS OEMs remains low because incumbents possess massive branch networks and the deep pockets required to defend their territory. Tjiattas estimated that standing up a new competitive OEM controls hardware line would cost between $100 million and $200 million—an order of magnitude that makes hardware-level disruption unlikely. Furthermore, because there are many buyers and few major suppliers, vendors can simply "skip" owners who don't offer enough money.
However, a significant opening exists in the "threat of substitutes" force. Software overlays, independent data layers, and fault detection and diagnostics (FDD) platforms are beginning to strip power away from the underlying hardware.
“There actually is an opportunity for you to come in and threaten,” Tjiattas told the audience, specifically pointing to device-agnostic software platforms. To force this change, Tjiattas argued that owners must standardize specs to demand open systems and "reward integrators that keep your systems open".
“Hopefully we all together can help shake up the industry a little bit and change those forces in the favor of the buyer,” Tjiattas concluded.
Watch the full recording → https://www.nexuslabs.online/content/how-one-owner-side-leader-thinks-about-open-bas-vendor-power-and-real-leverage
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As we've covered many times at Nexus Labs, the history of the smart building industry is that incumbent building automation system (BAS) vendors maintain market dominance by bundling disciplines and monetizing lock-in through proprietary tools and recurring licenses. For service providers and owners, this creates a stagnant environment where switching costs are prohibitively high.
At NexusCon, Chris Tjiattas, Senior Manager of Business Strategy at Walmart, applied the Porter’s Five Forces framework to analyze whether this industry is actually ripe for disruption—or if owners are stuck with the status quo for the foreseeable future.
The analysis suggests that the "threat of new entrants" to challenge the BAS OEMs remains low because incumbents possess massive branch networks and the deep pockets required to defend their territory. Tjiattas estimated that standing up a new competitive OEM controls hardware line would cost between $100 million and $200 million—an order of magnitude that makes hardware-level disruption unlikely. Furthermore, because there are many buyers and few major suppliers, vendors can simply "skip" owners who don't offer enough money.
However, a significant opening exists in the "threat of substitutes" force. Software overlays, independent data layers, and fault detection and diagnostics (FDD) platforms are beginning to strip power away from the underlying hardware.
“There actually is an opportunity for you to come in and threaten,” Tjiattas told the audience, specifically pointing to device-agnostic software platforms. To force this change, Tjiattas argued that owners must standardize specs to demand open systems and "reward integrators that keep your systems open".
“Hopefully we all together can help shake up the industry a little bit and change those forces in the favor of the buyer,” Tjiattas concluded.
Watch the full recording → https://www.nexuslabs.online/content/how-one-owner-side-leader-thinks-about-open-bas-vendor-power-and-real-leverage
Sign up for the newsletter to get 5 stories like this per week
This is a great piece!
I agree.