How to Tackle Budget and Product Knowledge – Two Very Common Problems in Commercial Lighting Program Management

Monday, September 24, 2018 By Kate Reynolds

Tips to help you and your organization overcome commercial lighting program management complications

 

In the first episode of our IllumeTALK podcast, we discussed common obstacles faced by organizations looking to upgrade their lighting systems and increase efficiency.

You can listen to the full episode here:


 

While we’d rather focus on creating solutions, it’s important to identify problems early in order to effectively handle them. So, from budget and product knowledge to deadlines and resource management, our goal is to help decision makers understand two main points:

  1. You are not alone in facing these common issues
  2. It’s easier said than done

With so much to consider along the journey to lighting upgrades, efficiency increases and the continuous optimization of your physical space, we’re continuing the conversation from Episode 1 of IllumeTALK below.

We hope you find this additional insight valuable and, as always, please don’t hesitate to reach out if you have any questions!

 

BUDGET – EVALUATING COST VS. VALUE

“Energy efficient lighting systems are evaluated on their ROI exclusively right now. And while LED is the most energy efficient light source to date, and probably the pinnacle of efficiency, its ability to bring additional value to a workplace or retail location cannot be measured in energy efficiency alone. Lighting as a multi-service platform that can have an impact on conversion rates, customer experience, employee comfort and productivity. Its ability to connect people and enable analytics has to be part of the evaluation as well.  So instead of just thinking about it in terms of lighting, we have to start thinking about it in terms of technology, and realize that people’s expectation of technology is rapidly changing.  The tangible benefits of lighting have to be weighed with the value of connected lighting.” – Erin Plivelich

10 years ago, we knew that LED was going to be a game changer. However, as with the introduction of any new technology, high initial costs often make it difficult for immediate adoption and implementation.

While the price of LED has dropped consistently over the years, the capabilities of the technology – through its integration with data and analytics-producing software – have increased exponentially.

With the technology available today, your lighting infrastructure has the ability to provide so much more than just illumination. As a ubiquitous, always powered asset, it now serves as the platform in which complete digitization, connectivity and integration can be made possible.

This means it’s no longer just a question of energy savings and rebates to offset cost, it’s about the value your lighting infrastructure can provide to the organization overall.

For example, in addition to energy and maintenance savings, your lighting infrastructure can now connect devices and produce an incredible amount of data – actionable, valuable insights that can be used for security, asset protection, customer positioning, and more.

The cross-functional value outlined above brings up another critical point – decision makers are changing.

Traditionally, it has been the responsibility of facility, energy and/or sustainability mangers to make these decisions – and the costs have come out of their budget.

Today, with overarching, company-wide, cross-vertical value coming into play, we’re seeing more departments with major skin in the game – IT directors, marketing, finance, etc. – which can open up new pockets to fund such upgrades.

While budget is an obstacle as old as time itself, it’s vital that all decision makers – regardless of department and title – view cost in the context of the overall value when evaluating what LED and connected technology can bring to their organization.

Read more: The New Return on Investment – Evaluating Cost vs. Value

 

BRIGHT IDEAS: COMPANIES DISRUPTING THE TRADITIONAL FINANCE MODEL

When considering upgrades on an enterprise level, understanding the value is one thing. Coming up with the necessary capital to make them happen across an entire portfolio is quite another.

Traditionally, energy service contracts are reserved for public sector projects that can handle a longer payback, and have payments tied to the amount of energy saved over a set period of time. While those contracts are still effective, new players are emerging to support a more aggressive payback model – a streamlined disruptor to the old school methodology of performance contracting.

Companies like Redaptive out of San Francisco and SparkFund out of DC are pitching efficiency-as-a-service and subscription models that focus primarily on lighting to facilitate faster ROIs, shorter contracts, yet allow companies to benefit from an outsourced model. This allows organizations to remain focused on their core business functions rather than thinking about upgrades, project goals, meeting metrics, etc.

Another key benefit of this model comes from offloading risk. A subscription or “as-a-service” offering assumes all of the risk and builds it into the program structure and pricing. Once inked, the contract guarantees a baseline equipment performance level that also ties in utility rebates, maintenance savings, and HVAC savings, and potentially additional metering capabilities to identify further ECMs down the road.

For many organizations, this new approach serves as an inventive way to gain access to the benefits of energy technology without the risk or logistical strain.

Read more: Meet Efficiency-as-a-Service (EaaS) and Redaptive, the Company Paving the Way

 

PRODUCT KNOWLEDGE

“I find that educating people about products can be a full time job in and of itself. But I believe there are 3 or 4 major factors that play into determining what makes a product worth the investment. Those factors being product performance, warranty, certifications and the manufacturer itself.” – Aaron Woloszyn

Since LED became more mainstream, the market has been absolutely flooded with new products and companies. For example, at LIGHTFAIR this year there were 362 exhibitors, 287 of which were LED Manufacturers. That’s almost 80%.

While this opens up new options for consumers, it also makes product knowledge one of the most confusing obstacles to overcome because it’s almost impossible to know where to begin.

Here’s a little secret – the best place to start is actually at the end. Focus on the outcome you want to achieve and then work backwards to the specific hardware, software and technology that will get you there.

Once an outcome has been defined, here are some additional considerations to keep in mind when working with your provider to specify products:

  • Where is the product made?
  • How long has the company been around?
  • Will the company be around in 5 or 10 years to honor your warranty? Or, with the rate in which technology is advancing, is a warranty even necessary?
  • Is there an established track record of standing behind product performance claims?
  • Is the product conducive to “future proofing”? This is becoming more and more important as we move through this rapidly evolving landscape – don’t cut yourself off from the future of lighting, even when cost is a primary driver.

In a connected, scalable world, product knowledge also means understanding how all of these solutions integrate with each other to achieve a desired outcome – whether now or in the future.

 

CONCLUSION

As we mentioned in the beginning of this article, budget and product knowledge are two very common problems faced by organizations looking to upgrade their lighting systems and achieve increased efficiency.

It’s important to reiterate that:

  1. You are not alone in facing these common issues
  2. It’s much easier said than done

With technology changing at a break-neck pace, it’s a full time job just keeping up. If you or your organization is struggling with budget and/or product knowledge, don’t hesitate to reach out with questions. You can contact us here, or find our team members on LinkedIn.

Read Part 2 of this series here: Overcoming 3 Common Commercial Lighting Program Management Problems – Deadlines, Resources and Fear of the Unknown 

Featured image by rawpixel on Unsplash.

Filed under: Illumetek, LED

About Illumetek

Illumetek is a National Program Management company facilitating installs, updates, compliance and rebates for Lighting, Electrical, and associated Controls. If you have additional questions regarding LED lighting technology or design, please feel free to contact us anytime.


Reach out to Illumetek

Illumetek is a National Program Management company facilitating installs, updates, compliance and rebates for Lighting, Electrical, and associated Controls. Contact us today!